Source: Monitor Mercantil - Rio de Janeiro / RJ - 11/10/2010

In the past 20 years, there has not been a day when the press and politicians did not talk about tax reform. Lula alone sent two projects to Congress. Every self-respecting economist calls for urgency in this reform and even in labor, because the burden on the payroll is enormous. The greatest evidence of tax inadequacy is the existence of an ICMS regulation for each state. The lawyer Condorcet Rezende goes so far as to say that, in certain cases, there is a legal conflict and, therefore, it is up to the entrepreneur to choose whether to run the risk of being fined by the state of origin or destination of the property. Another proof of the tax irrationality is in the creation of contributions - for which the money goes all to Brasília, without having to be distributed with states and municipalities.

However, two economists had the courage to admit that tax reform is an impossible dream. After all, the Union, states and municipalities want to maintain or expand their share of the pie - never reduce it, which makes the mission unattainable. Likewise, the politician who will take money from the South to the North or from the Southeast to the Northeast was not born. A president who wants to change the constitution to deal with taxes will fight with many, will have few adherences and many criticisms to respond. And he will lose a good tenure in these fights, in addition to winning opponents.

Pragmatically, Cláudio Haddad, from Insper, and Pérsio Arida, from BTG Pactual, saw - like the boy in the fable who detects that the king is naked - that no state will give up revenue. The president would spend political capital and, at most, make little change. In the State of Rio, an additional 5% is charged on energy and communications, under the pretext of combating poverty, and there is also the imbroglio of royalties. Certainly, Rio will be a government playing against the reform. São Paulo, the state that has the most revenue, should also not be enthusiastic about changes. Thus, Haddad and Arida propose to put aside the almost impossible task. They defend the thesis that it would be best to make small corrections and to address the problem.

There is no tax reform formula that will make everyone happy, since redistributing the pie is always a problem. The Kandir Law aimed only at stimulating exports and even today it generates insurmountable conflicts. Regarding the labor legislation, although it charges the payroll in 100%, they remember that no investment has been made in recent years. In return, they propose to impose strict limits on public spending, in all spheres - the opposite of what has just been done for the construction of stadiums, with increased indebtedness. They mention that, in the last eight years, the country grew by an average of 3,6% and public spending rose by 6,9%. And in 2009, only 6% of the federal government's expenditure went to investments.

Problems persist - in the 90s, 90 days of the year were lost to pay taxes and today there are 148 - but Haddad and Arida were able to see that only a superman could do tax reform.