Author: PAULO RABELLO DE CASTRO

Source: Folha de S. Paulo, 15/07/2009

"RECORD, tax burden reaches 36% of GDP." With this headline, Folha showed last Wednesday that in 2008 we reached the official mark of 36% of the State's weight on the citizen's back. Now the government takes up more than four months of Brazilians' annual income! No plausible justification exists for such a stark mismatch between government revenue and consideration for government services. It is clear that a privileged portion of the population has already appropriated the state machine for their own benefit.

In the book “Tributos no Brasil: Auge, Declínio e Reforma” (2008), with Ives Gandra Martins and Rogério Gandra, and a dozen other notable specialists, we show, once again, how much the Brazilian tax system makes the country unfeasible as a just nation and mature in our patriotic imaginary.

In warning against the continued waste of opportunities, today I publish this decalogue of the national tax tragedy - to point out that Brazil is no longer that “Belíndia” (mixture of Belgium and India, created by Edmar Bacha), but became “In-gana” -in the insightful parody of Delfim Netto-, who thus defines the country as being half England, due to the level of taxes it charges, and half Ghana (with due apologies to the Ghanaians), for the quality of the consideration in State services.

Here is the decalogue of the bad tax in “In-Ghana”.

1) "Here the poor pay twice as much as the rich." It has been proved by several surveys (Fipe, Ipea etc.) that the tax burden is so much heavier the lower your salary!

2) "In Brazil, to tax, just catch someone working." It is the only country that punishes work and, especially, crucifies industrialization, via IPI, a scoundrel tax that Lula has wisely reduced. The man knows things!

3) “In“ In-Ghana ”, only half of the tax burden finances State services; the other half is - all of them - to share between interest and pensions! ”

4) "Here, any tax reform will always be to raise the tax burden, so be careful with the next one." See the latest change in the rates of PIS and Cofins, which increased the burden of these taxes.

5) "The administrative cost of being up to date with the tax authorities in Brazil is probably the highest in the world." Here, as a rule, the taxpayer is the one who is wrong.
6) “Our record tax burden corresponds to a record social security inefficiency.” We spend 12% of GDP to have one of the least fair pensions in the world.

7) “In the last 15 years (Plano Real), the tax burden has financed an interest account the size of the original public debt itself.” It is the financial weight of politicians.

8) "With an increasing tax burden, neither the government invests nor lets the private sector invest." The public sector eliminates, via taxation, more than 60% of the annual investment capacity of the private sector, as soon as this intention arises in personal income and, via profit, in the balance sheets of companies.

9) "Contradiction: with a lower tax burden (maximum of 30% of GDP), Brazil could grow twice as much (6% per year) until 2020 and collect the same amount of taxes for the State."

10) "The current tax regime will not allow Brazil to be a leader, even in neighboring countries, let alone project itself on the world stage." While the current political and tax arrangement continues, it is better for “In-Ghana” to continue investing only in football.

PAULO RABELLO DE CASTRO, 59, doctor of economics from the University of Chicago (United States), is vice president of Instituto Atlântico and chairman of SR Rating, a risk classifier. He also chairs RC Consultores, an economic consultancy, and the Strategic Planning Council of Fecomercio-SP. Write on Wednesdays, every 15 days, in this column.