Crisis hinders tax cuts, says institute


Source: O Globo, 16/08/2005

SAO PAULO. The political crisis is yet another obstacle to the congressional approval of the bill that unifies the ICMS legislation and, unless constitutional changes are promoted that allow a drastic cut in mandatory government spending, it will be difficult to progress in reforms to reduce the high burden country's tax system. The rationalization of taxes and the consequent reduction in tax evasion, therefore, would undergo a constitutional review. This was the main conclusion of the seminar "Tax evasion x Tax burden: Is there a balance point?", Promoted yesterday in São Paulo by the Brazilian Institute of Competition Ethics (Etco).

? Can only a deeper reform, through a constitutional revision, produce the desired effects (in the fiscal and tax areas)? said deputy Delfim Netto (PP-SP), who participated in the seminar.

Also defended by the economist Raul Veloso, a specialist in public accounts, the need to? Disengage? the Constitution was eventually taken over by the Etco Institute.

? We decided to support the implementation of a constitutional revision, which preserves the rigid clauses of the current Constitution and focuses on three main themes: Social Security, Tax / Fiscal, and Politics? announced the president of the Etco Institute, Émerson Kapaz, at the end of the meeting.

According to Kapaz, the review would belong to a group of notables, who would be elected exclusively for the challenge, without mandates:

? After the review was over, would they return to their states? he explained.

SP Secretary does not expect change before 2007

Despite the current difficulties, Kapaz defended an attempt to advance the approval of the ICMS unification project:

? The realignment of rates will be gradual, and may be accelerated if a compensation fund is created for states that eventually lose revenue.

Participant in one of the panels, Eduardo Guardia, São Paulo's Finance Secretary, recalled that the text of the ICMS project that is being processed in the Chamber needs to be improved and must return to the Senate.

? Is it very difficult to think of anything that does not take effect until 2007? said Guardia.

The executive secretary of the Ministry of Finance, Murilo Portugal, said that the government works on a minimum agenda for Congress, which includes the approval of the unification of the ICMS later this year.

? Do we trust that Congress will be able to reconcile parallel agendas (CPIs and votes)? said Portugal, who denied there was paralysis in the government in the face of the crisis.