Source: Panorama Brasil - São Paulo / SP - IT HAPPENS - 21/07/2010

SÃO PAULO - Underground economic activities totaled R $ 578 billion in 2009, or 18,4% of the Gross Domestic Product (GDP) - the sum of all the country's wealth. The performance of the informal and illegal segments was measured by a study carried out by the Brazilian Institute of Economics of the Getulio Vargas Foundation (Ibre / FGV), in partnership with the Brazilian Institute of Ethics in Competition (Etco). This total includes everything from the work of street vendors to criminal occupations, such as drug trafficking.

In absolute numbers, the research points to the growth of this type of economic transaction. In 2003, R $ 357 billion were handled. Percentively, however, there was a reduction, since the value represented 21% of GDP for seven years. These activities, which do not pay taxes or comply with labor rights, can offer products and services at a lower price, weakening the formal market, according to Ibre researcher Fernando de Holanda. "You create a bad business environment, with unfair competition."

The proportional decrease in the shadow economy was driven, according to the Netherlands, by the consistent growth of the economy, an increase in the supply of credit and greater efficiency in enforcement. With the economy more stable, the advantages for the entrepreneur and the worker who is regularized increase. “With the accelerated growth, small firms have to formalize themselves to have access to credit”, points out Holanda. "In order to access real estate credit, workers must have proof of income."

The improvement in the inspection of agencies such as the Federal Revenue also influenced the reduction of informality, but surveillance alone is not able to eliminate the underground economy. For Holland, the preference of workers or entrepreneurs to stay outside the law occurs, most of the time, because taxation is too high and bureaucracy too complex.

There are activities that are only possible if they are carried out illegally, observes Holanda. “Some sectors are only viable if you don't pay tax. Which causes a problem, because, despite being outside the law, they are occupations that generate work and income ”, he said. However, at the same time, informality is damaging to the economy as a whole. The researcher points out, for example, that the more activities that take place outside the law, the lower the pace of investment and economic growth. "The economy as a whole suffers."

The researcher points out that the informality of part of the economy ends up causing legal companies to pay more taxes to compensate those evaded by the others. "All of this creates a vicious cycle."