Author: Elaine Cotta and Carla Jimenez

Source: Brasil Econômico - São Paulo / SP - 31/05/2010

For engineer Everardo Maciel, former secretary of the Federal Revenue, changes in the tax system are made gradually, in a continuous process, and all governments promote theirs.

“We are going to carry out a reform that will simplify the Brazilian tax system, raise the economy's competitiveness levels, increase productivity and that will also improve aspects related to tax justice, which will benefit the Brazilian worker, reduce the impact on the most poor and so increase progressiveness… ”

And it goes on: “We are going to do a comprehensive tax reform, there will be no lack of political will, etc., etc., etc.”

This is the politically correct speech given by presidential candidates and easily and playfully reproduced by former Federal Revenue Secretary Everardo Maciel, for whom the promises of a broad and comprehensive reform of the Brazilian tax system are nothing but blah, blah, blah .

“Tax reform is done gradually and constantly,” said Maciel, 63, during a two-hour conversation with Brasil Econômico last Thursday (27).

For the ex-secretary of Revenue and today one of the most requested tax consultants in the country, promoting reform through constitutional changes, such as the one that is being processed in the National Congress, is a mistake. He also questions research such as the one released last week, which shows that the Brazilian worked 148 days a year just to pay taxes.

“These data are based on studies without the least methodological basis or credibility”, he evaluates. And he concludes with another controversial opinion: “I agree with Hillary Clinton when she says that the Brazilian tax system should be an example for other nations in the region”, she says, echoing a statement made by the American Secretary of State, subject to criticism and even teasing among Brazilian economists and entrepreneurs.

Below are the main excerpts of the interview:

The American Secretary of State, Hillary Clinton, recently praised the Brazilian tax system and became the target of criticism in Brazil. Do you agree with her?

I agree with her. Brazil has an efficient tax system, which should be seen as a model for many countries, especially in Latin America. The objective of the tax system is to collect and ours collects very well.

But the weight of this tax burden is the main target of criticism in the country ...

Does the Brazilian system have a problem? Of course there is. But all tax systems are imperfect, there is no perfect tax collection.

In any country in the world, businessmen and citizens complain about paying taxes.

The tax system is and will always be a territory of tensions. But the tax is a necessary evil and Brazil has a model that follows the international standard.

This is the problem: too much tax is levied without the provision of essential public services.

Yes. But then, the problem is not the amount charged, but the misuse of the money collected. In other words, it is not the tax burden that is the problem, because the burden we have is the size of what we spend. The problem is the quality of spending in Brazil.

And the higher incidence of taxes for the poorest ...

When the tax is levied on income, this is not true.

As well? There is research that shows the harmful impact of taxes on the income of Brazilian workers.

All of this is a lie. They are poorly done studies, without the least credibility and methodology. They make the count as if the charge was just one and the same for everyone.

Sometimes, when I hear people doing these surveys, I feel like having them interned. Progressiveness and fiscal justice are a combination of what is spent and what is collected.

The concept of tax justice must strike a balance between income and expenditure. The surveys that are made in Brazil are ridiculous, without any methodology and do not deserve the least credibility.

There is no serious study in the country on the subject. All taxes are costs and it is silly to say the opposite.

Isn't Brazil behind when it comes to competitiveness versus tax burden?

From the point of view of the tax burden, you can separate the countries of the world into three categories:

    * 1) Those who invest in social welfare, with a load between 40% and 45% of GDP, in which are nations of Europe;
    * 2) Liberals, which include the United States, Japan, Chile and which I would also include China, which have taxes around 30%;
    * 3) Those who are nothing. Here are Africans and South Americans.

Where does Brazil enter?

Brazil has an efficient tax system, which does not compare with Latin Americans, with the exception of Chile.

Which category are we in?

We are halfway between the first and the second, but in reality there is nothing that looks like our system.

Why?

Because Brazil has an excess of tax concepts inserted in the Federal Constitution.

Can the reform in Congress change that?

No. I never heard of anyone who became famous in history for having taken something out of the Constitution. No one was known for making a suppressive amendment. It is known the guy who created it and not the one who took it.

And what does that mean?

It means that making tax reforms in Brazil constitutionally does not improve anything. In fact, all the reforms I saw. And look, I followed them all from 1965 to here - they only managed to worsen what already existed.

Why did it get worse?

Because as the Constitution takes work to change, there is room for lobbies and political bargaining. Therefore, a death trap is created.

What if the reform wipes the text?

It's almost impossible (sigh). I just don't say that it is impossible because nothing is imperative in life.

What do candidates stand for when they say they will do a complete tax reform?

This is speech. I will dictate one for you now: “We are going to make a reform that will simplify the tax system, raise the economy's competitiveness levels, increase productivity, it will also increase aspects related to tax justice, which will benefit the Brazilian worker, reduce the impact on the poorest and in such a way increase progressiveness and etc. etc. etc.

This is the candidates' politically correct speech. It is pure blahblah. It doesn't mean anything.

Do you mean that a comprehensive reform could not be done?

Yes. Their speech follows as well: “we are going to make a comprehensive reform, there will be no lack of political will…” But that does not exist. It's not possible.

What is possible then?

First of all, tax reform should avoid constitutional changes as much as possible because most of the time there is no need for it.

Second, avoid experimentalism. There is no single reform. It is permanent and must be done as problems arise. The secret is to simplify, not to complicate. But this is very difficult.

Why is simplifying difficult?

Because a lot of people live off the complexity in such bureaucratic devices. The problem is with bureaucratic bodies. They are the ones who say no to simplification. That is the big point.