Author: Tatiana Resende

Source: Folha de S. Paulo, 18/04/2008

The so-called underground economy, which encompasses all activities that manage to circumvent official control, grew in 2007 above GDP (Gross Domestic Product), which measures the sum of the wealth produced by the country in formal media.

 

The index created by Ibre (Brazilian Institute of Economics), of the Getulio Vargas Foundation, and by Etco (Brazilian Institute of Competitive Ethics) showed that the underground economy expanded by 8,7%, against 5,4% of GDP.

 

To reach this number, Fernando de Holanda Barbosa Filho, a researcher at Ibre and one of those responsible for the indicator, says that the informal labor market and cash in circulation in the country were considered, since one of the ways to avoid control government is not to do bank transactions.

 

According to him, the tax burden was the factor that most contributed to the increase, because the higher it is, the lower the incentive to exit informality. Last year, the weight of taxes hit a record, with 36,08% of GDP, according to the IBPT (Brazilian Institute of Tax Planning).

 

Exports also interfere in the underground economy, since the bureaucracy to send products abroad leads companies to formalize themselves. Regarding the unemployment rate, the influence is similar to that seen in GDP. "The lower, the greater the level of activity."

 

Between March 2003 - when the index started to be calculated, for technical reasons - and December 2007, the underground economy grew 10,9%, driven by the level of activity and the tax burden. Considering the period started in January 2003, GDP expanded by 3,8%.

 

André Franco Montoro Filho, president of Etco and former state secretary in SP (1995 to 2002) in the PSDB management, mentions the reduction in the weight of taxes and the easing of labor legislation as two of the most urgent measures to be taken to curb the acceleration of the shadow economy. "Before was guesswork, we now have a study that shows that. ”

 

For professor at the Faculty of Economics at USP Nelson Barrizzelli, these activities give “a certain stability” to the economy, since many of today's informal businesses would have to close their doors and dismiss employees if they had to obey all the rules. From the point of view of those who comply, however, competition is unfair, as their prices tend to be less competitive.

 

In the economist's opinion, inspection alone is not enough and a fairer system is needed. "These fiscal, tax and labor models generate this schizophrenia", he argues.

 

Barrizzelli cites tax incentives granted to micro and small companies as an example. As without these benefits the costs are much higher, there are businesses that have already become large companies, but that prefer not to declare the part that would denounce this growth. In this case, they are part of the statistics of formal and underground economies.