Author: André Montoro

Source: Correio Braziliense, 10/04/2009

A possible reform

In a recent article, I defended the unconstitutionalization of tax reform.
I maintained that relevant improvements could be achieved without the need for
modify our already extensive and amended Constitution. In fact, three of the four
biggest alleged deficiencies in our tax system - namely, the high
tax burden, the complexity of the system and its eventual regressivity - not
they derive from the constitutional framework, but from infraconstitutional legislation.
Only the question of revenue sharing among the federal federative entities,
states and municipalities is a constitutional matter. However, this is yet another
issue related to the discussion of the federative pact in Brazil than to reform
tax. Combining two complex and controversial problems increases
geometrically the difficulties in passing a constitutional amendment.

But it is possible to substantially improve the national tax system, without
change the Constitution, as demonstrated in the implementation of the invoice
(NF-e) and the standardized digital bookkeeping system (Sped). That
is a change that is already underway and that can almost represent a revolution in the
taxpayer-taxpayer relationship. The implementation of NF-e has been enormous
success. In large part, due to the democratic and participatory way in which the
process has been conducted. From the beginning, there was an effective partnership between the
federal tax authorities, state tax authorities and private companies. This permanent dialogue,
led by the National Meeting of Coordinators and Administrators
Tributários Estaduais (Encat), a group created by the National Police Council
(Confaz), has allowed the replacement of the paper invoice
the electronic note takes place in an orderly manner.

The potential gains that this system provides are enormous, both for
(honest) taxpayers and tax administrations. In first
First, there is a huge reduction in paper costs and filing expenses.
Furthermore, it significantly reduces the risk of errors in filling
forms. It is an important reduction of bureaucracy that information technology causes. Other
gain, which can be significant, is that with NF-e and digital bookkeeping, the
no longer need to go to establishments to analyze books
accounting and tax. He will have access to all information for analysis at
computer itself. The inspection process may be much more agile and
transparent, reducing the space for tax evasion and corruption.

Since practically, the universalization of NF-e has been practically successful,
it becomes necessary to take the necessary steps for the system to provide
all expected good results. First, the introduction process
was done with great uniformity of information and procedures adopted by
all federative units. This meant huge simplification and therefore
reduction in the time and cost of filling out forms. With the system
functioning well, it is necessary to avoid starting a disjointed process of
introduction of changes and new requirements in isolation for each of the
States. If this does not happen, much of the simplification obtained will be lost.

A second step is to prepare the inspection for the new reality
digital. This involves, on the one hand, courses and programs to increase
qualification of inspectors for the new procedures of the digital age. Otherwise
part, develop electronic tools to use the huge amount of
data generated by the NF-e. With the great wealth of databases, it becomes
possible to prepare reports that facilitate the identification of signs of
irregularities. For example, reports with data crossing between
taxpayers, cross-check tax data with data from other databases, such as
credit cards and countless other analyzes, configuring what is currently
known as Business Intelligence (BI).

It is important that Brazil does not lose or distort this important improvement in
tax area. Well used, the NF-e can contribute to reduce bureaucracy
and at the same time to be an efficient instrument to combat tax evasion.
With the reduction of tax evasion, the imbalance of competition that corrects
favors tax evaders and penalizes good taxpayers, thus promoting
tax justice. And if everyone pays, everyone can pay less. This is the reform
tax that we want.