Author: Fernando Canzian

Source: Folha de S. Paulo - São Paulo / SP - MARKET - 30/06/2010

Informal economy in the country reaches 40%, compared to 16,5% in the average of 12 countries used as a study comparison

The annual cost of bureaucracy for Brazilian companies calculated by Fiesp (federation of industries in São Paulo) is approximately R $ 46,3 billion, in comparison with the expenses with this item in 12 other countries.

A large portion of bureaucracy expenses in the country are only intended to meet tax demands from the three spheres of government (federal, state and municipal).
The calculation is the result of the analysis of several surveys on the topic compiled by Fiesp in a recent 41-page work.

With three blocks of proposals for combating bureaucracy, the document will be discussed among its directors and distributed to thousands of opinion leaders and authorities who could help combat the problem.

According to Fiesp, the relationship between GDP and population (GDP per capita) in Brazil could increase by US $ 1.300, to US $ 9.100 (R $ 16 thousand), if the country reduced the cost of bureaucracy to the average of 12 survey countries.
They are: Germany, Australia, Canada, Chile, Singapore, South Korea, Costa Rica, USA, Spain, Finland, Ireland and Japan.

The R $ 46,3 billion that Brazil spends on bureaucracy is equivalent to more than everything that PAC 2 foresees in investments for basic sanitation between 2011 and 2014.
To reach the conclusions, the Fiesp Competitiveness and Technology Department crossed data from the World Bank with those from FGV, CNI (National Confederation of Industry) and international institutes.

“What we see is the absence of an agenda for the topic. There is nothing to simplify bureaucracy in Brazil ”, says José Ricardo Roriz Coelho, director of Fiesp.
Sought by Folha, the Ministry of Finance was not willing to comment on the progress of the so-called “Microeconomic Reforms” agenda, launched by ex-minister Antônio Palocci in 2004.

INFORMALITY
According to Fiesp, the high bureaucracy not only pushes companies towards informality (40% of GDP in Brazil, compared to 16,5% on average for the 12 countries), but also ends up inflating state expenses.
Brazil spends 12% of its GDP on its staff, above Japan and Spain, countries with superior state services.

A large part of the bureaucracy expenses, according to Fiesp and the IBPT (Brazilian Institute of Tax Planning), are related to what the professor of administrative law at Direito GV, Carlos Ari Sundfeld, calls “tax asylum”.
This consists of paying 63 federal, state and municipal taxes and complying with 3.200 rules, 56 thousand articles, 34 thousand paragraphs, 24 thousand items and 10 thousand items aimed at collecting taxes in Brazil.

“LEGAL PAST”
It is not by chance that tax planning is one of the fastest growing sectors and that most open up vacancies in the tax area in the country, according to Antonio Carlos Rodrigues do Amaral, president of the Tax Law Commission of OAB-SP.
“What we have today is a high technical sophistication in the field of information technology and tax collection. But a Jurassic past from the point of view of the rights of citizens and companies ”, says Amaral.
"To follow the changes, the work in this area ends up being more mechanical than intellectual", he says.