Tax affects competition


Author: Daniel Cúrio

Source: Jornal do Commercio Brasil - RJ, 24/06/2008

High tax burden and impunity in relation to predatory competition practices are the biggest stimulus for the growth of informality in the country. The conclusion is from experts gathered by Jornal do Commercio in the Competition, Ethics and Prosperity seminar. The event was held with the support of Souza Cruz, at the headquarters of the National Confederation of Trade in Goods, Services and Tourism (CNC), in Rio de Janeiro.


According to former Finance Minister Ernane Galvêas, Brazil's tax burden is among the highest in the world. It is already higher than that of the United States and twice that of emerging countries. In 1964 it was 15% and in the first quarter of this year it registered 40%. The ex-minister greeted Jornal do Commercio for the initiative, noting that the title of the meeting could be transformed into an algebraic formula for growth: “More ethical competition equals prosperity,” he preached.


Galvêas also highlighted a recent survey by the World Economic Forum. In the category that measured the speed and efficiency of justice, Brazil ranked ninety-ninth out of a total of 125 countries. Regarding the quality of government regulation, the result was even worse: one hundred and twenty-fourth position.


Former Federal Revenue Secretary Everardo Maciel said the tax reform under discussion in the National Congress is empirical evidence that things could get worse.

"When you think something is bad, take it easy, because it can get worse," he said.


On the same subject, the former president of the National Bank for Economic and Social Development (BNDES) and president of the Brazilian Institute for Competitive Ethics (Etco), André Franco Montoro Filho, stated that the reform is a serious threat to the existing mechanisms to combat evasion.


Maciel drew attention to the effects on competition of a certain legal disorganization. He cited the example of Social Contribution on Net Income (CSLL), which most companies pay and one is benefited by a court decision.


According to the former secretary of Revenue, the government should determine a specific period for injunctions, up to 60 and then the judgment on the merits. Maciel said that the injunctions cannot last forever and that, as is, some of them are lasting up to five years. He drew the attention that for this reason there is already R $ 60 million registered in active debt and that currently the recovery is less than 1%.


FGV. Montoro commented that Etco commissioned a survey by Fundação Getúlio Vargas (FGV) on the variation of the underground economy. The survey revealed that the high tax burden is the biggest factor in stimulating informality.


The advisor to the Administrative Council for Economic Defense (Cade), Luiz Carlos Delorme Prado, stated that there is a risk of lack of order due to the absence of the State in some negotiations. According to him, there must be public control through regulation so that there is no monopoly.


Philosopher Roberto Romano warned that tenders in municipalities are the black box of municipal administrations. He guarantees that through parliamentary funds, the deputies elected in these regions end up becoming municipal councilors through mechanisms that have been perpetuated since colonial Brazil.


At the opening of the seminar, the president of Jornal do Commercio and Rádio Tupi, Mauricio Dinepi, stressed that Brazil is experiencing a privileged moment, with high growth of the Gross Domestic Product (GDP), national reserves that exceed the external debt and 40 million citizens who abandoned the poverty line.


“This evolution results from the right choices. Brazil chose the open economy, based on competition. He opted for democracy, which paves the way for the primacy of ethics. In the treatment of public debt. He preferred negotiation, which favors the pursuit of prosperity, ”said Mauricio Dinepi.


The meeting sought to unveil phenomena such as the growth of the informal economy and the use of tax evasion, smuggling and piracy as a weapon of predatory competition. Participants discussed the impact of these practices on tax collection, the quality of public services and the tax burden on companies. Former Minister of Justice and CNC legal consultant Bernardo Cabral also participated in the event.