High taxation and impunity stimulate informal economy


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. Tax evasion, piracy and the hiring of unregistered workers, more than contrary to ethics, affect prosperity and the competitiveness of the Brazilian economy. The conclusion is of specialists gathered by Jornal do Commercio in the seminar Competition, Ethics and Prosperity. 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 former president of the National Bank for Economic and Social Development (BNDES) and president of the Brazilian Institute of Competition Ethics (Etco), André Franco Montoro Filho, pointed out the high tax burden and the perception of corruption as the main causes of informality in the country.


For former Federal Revenue Secretary Everardo Maciel, the tax reform under discussion in the National Congress is empirical evidence that things can get worse.


"When you think something is bad, take it easy, because it can get worse," he commented. Maciel also warned of the damage to competition from legal disorganization in tax terms. “Constitutional control is diffuse, and a judge of first instance can exempt a single company from paying a tax, with the others being harmed. Even in the higher courts something similar has already occurred, with the Social Contribution on Net Profit (CSLL), from which a group was able to exempt itself, without the general merit being judged ”, he warned.