Source: Diário de Notícias - SP, 18/02/2008

This week, the government begins its mobilization to try to place the Tax Reform among the central themes of the 2008 political agenda. To do so, intense contacts with businessmen and workers will not be enough, but an efficient articulation that, in addition to winning the support of the governors, manage to turn them into effective votes in the National Congress.
On Thursday, the government presents the proposal for tax reform to the Political Council that it will forward to Congress. This is the second attempt by the Lula government to propose changes in the national tax system.

More than supporting photos - as happened in 2003, when President Luiz Inácio Lula da Silva had the support of the governors in the launch of the first Tax Reform, which only served to renew the CPMF and DRU -, the government now wants a performance effectiveness of the major stakeholders in the new legislation: businessmen and governors, who have been living with a complicated, costly and inefficient system.

Always discussed, but never approved, the Tax Reform has always come up against regional issues. Producing states did not want to lose revenue, with collection going from source to destination, and states in poor regions did not want to stop having an instrument for attracting investments: the fiscal war.

The bait to garner support and undermine resistance to reform - is the transition period, which takes away from today's governments the risk of dealing with a tight cash flow. According to the former governor of Rio Grande do Sul Germano Rigotto, the idea is to institute a transition period of eight years in the state VAT, which will unify the ICMS and migrate the collection from the origin to the destination, with the objective of eliminating the war Supervisor.

Good news, if confirmed, will be the unification of federal taxes (PIS, Cofins and Cide) in a federal VAT and IRPJ and CSLL. If these taxes are not calibrated upwards after unification, there will be a huge gain in tax efficiency in the economy, both for companies and for the tax administration itself.