Source: Diário do Comércio / SP, 28/03/2008

There is no one, living or strolling in large and even medium-sized Brazilian cities, that has not encountered this scene: people are walking when, suddenly, it starts to rain. Instantly, as if out of nowhere, moved by an invisible force, street vendors appear offering umbrellas, plastic covers or other types of protection: “Just take it. One is six, two is ten ”.

In São Paulo, in the suffocating hardships of a bottled or literally stopped traffic, under a sun of rising conscience, we see, also from some unidentified point, providential sellers of mineral water, soft drinks, popsicles and even snacks to mitigate thirst and hunger of those who sometimes feel that they are condemned to spend hours trapped in a car and surrounded by others.

The two episodes of our daily lives were remembered in Rio de Janeiro, at a seminar promoted by the Brazilian Institute of Ethics in Competition (Etco), to discuss the phenomenon of informal economy, its causes and consequences. The first was cited by Italian economist Vito Tanzi, former director of tax affairs at the IMF, former minister of economy and finance in Italy, currently senior consultant to the Inter-American Development Bank (IDB). Another guest was the professor at the University of Linz, Austria, Friedrich Schneider.

Tanzi and Schneider participated in meetings with technicians from Fundação Getúlio Vargas (FGV), in Rio, to discuss the creation of an index of the underground economy in Brazil, commissioned by Etco and coordinated by economist Samuel Pessoa. The results are expected to be ready in April.

Tanzi used the history of umbrella sellers to exemplify the difficulties of accurately defining what an informal (or underground, as some prefer) economy is and measuring its size. It also serves to demonstrate how, in many cases, informality is not at all harmful and execrable. The economist, a little in a tone of irony and a little bit seriously, recalled that no organization, however efficient it may be, can be so effective in offering its goods and so much sense of logistics.

The definition of informality most accepted by the debaters is that which brings together under this topic the illegal activities that interfere with competition, mask the dispute between companies, distort the national accounts data. Broadly speaking, they refer to tax evasion and evasion, piracy, copies and other types of “fakes”, and corruption. According to Tanzi, they would be those that allow a group, for reasons not only of economic efficiency, to enjoy better market conditions over its competitors. Some activities linked to organized crime are not part of this concept - nor will they be the object of the research. The survey aims to provide companies and the government with information to discuss changes in public policies.

The causes of informality are, according to Professor Tanzi, the same in practically the entire world: taxes, regulations (including what makes hiring labor more expensive), prohibitions and corruption. "The greater the tax burden, the greater the legal and formal requirements and the more prohibitions we have, the greater the informality, the greater the temptation and the tendency to evade the legal". Corruption completes the picture: bureaucracy facilitates the sale of facilities. Poorly executed public policies too, for both Tanzi and Schneider, serve as an appeal to escape economic normality.

Former Finance Minister Marcílio Marques, president of the Etco Advisory Council, summed up, in the Brazilian perspective, our “incentives” for informality: “The perverse combination of excessive tax burden, suffocating bureaucracy and a certain leniency of society form the broth of ideal culture for this type of irregular activity to flourish ”.

Actions to reduce it to civilized levels (it will not end entirely) are also included in all the manuals: less burdensome tax burdens and simpler tax systems, deregulation policies, fewer prohibitions and bureaucracy. “Informality has always existed, since the creation of the State, summarized Tanzi. But there are ways to fight it ”.

Dimensão - Although with the caveat that the data are insufficient, Professor Friedrich Schneider, author of numerous studies on the size and development of the informal economy and its interaction with the formal economy, presented data on Brazil and other countries in South America.

The country is doing well, thank you, in this championship: in 1995, the informal economy corresponded to 20,71% of the Gross Domestic Product (GDP). It grew until reaching the peak of 42,60% in 2004. It then presented small declines, the effects of small deregulatory policies taken in past years, and it must have stood at 40,23% in 2007.

In a group of 21 countries in South and Central America analyzed by Schneider, with comparative data between 2005/2006, Brazil is in 11th place, with 41,8% of GDP, close to the weighted average of 42,2 % for the savings analyzed. It is behind countries like Chile (19,4% of GDP), Costa Rica (26,3%), Argentina (27,2%), Puerto Rico (28,2%) and Mexico 31,7%) . And in front of others, such as Nicaragua (48,1%), Uruguay (49,2%), Honduras (49,3%), Guatemala (50,3%), and Peru (58,2%) .

In the European Union, not counting members from the East, there are cases, such as France, with an underground economy of 12% of GDP, and others such as those of Italy and Spain, with 20% and 25% of GDP, respectively. In the United States, informality is 8% of GDP.

The president of Light, José Luiz Alqueres, gave the cost of this informality in his sector: only with the scammers in the electricity area, companies lose R $ 7,5 billion per year and stop going to the public coffers about R $ 2 billion every 365 days. But, Alqueres recalled, political interests, webs of relationships are too powerful to be overcome. Starting with the State, which does not strive to reduce taxes in general to reduce the appeal to informality.