Source: Yahoo, Investnews, 15/08/2005

By Viviane Monteiro

SAO PAULO, August 15, 2005 - Among the three surveys carried out to analyze the impacts of tax reform - by Gvconsult and the Brazilian Institute of Ethics in Competition (Etco) - the third alternative pointed out a more beneficial scenario for society, according to the president from the Emerson Kapaz institute.
Working with only three of the five tax ranges, restricting the highest ICMS tax rate at 22% of the consumer price of goods, the study provides for a simplified structure allowing for a global exemption. The average nominal rate of ICMS would decrease from the current approximately 11,5%, to 10,7%, reversing the process of growth of the tax burden.

Thus, the study points out that the collection of the ICMS would be practically maintained at R $ 117,187 billion and the collection would be compensated with the economic growth. GDP could grow 3,47% with the approval of this model, with a gain of R $ 48,474 billion and generating 2,316 million jobs. In addition, inflation would fall.

Under the current reform project, the ICMS will have five rates to be determined by the National Council for Farm Policy (Confaz) and approved by the Senate. There are still differences between the federal government, governors and businessmen.

The tax advisor of Innova, a company that operates in the petrochemical market, Veranice Bock Pimentel, said that there is concern on the part of the business sector that the reform will be approved as it stands, as there is a risk that the document will be approved later this year in the attempt government's focus on the political crisis. "As it is, it does not simplify problems."