Source: Economic Vaor, 26/11/2007

Brazil's leadership in the bureaucracy related to the maintenance of taxes is due, in large part, to the different tax administrations of the ICMS. This is the explanation of the Federal Revenue in view of a study released on Friday by the World Bank (Bird) in partnership with the consultancy PricewaterhouseCoopers that presented the time spent by the companies with the maintenance of taxes in 178 countries - and that put Brazil in last place in the ranking, with 2.600 hours a year, 1.400 of which with ICMS alone.

The study raised data on tax laws, ways of calculating and levying taxes that a medium-sized company - with around 60 employees - would have to observe in countries on different continents in 2007. According to the survey, Brazil is also in the 158th place in relation to the tax burden compared to the profits obtained, with the equivalent of 69,2% of the results destined to tax obligations. In the general index surveyed by the study, which ranks countries for ease of fiscal routines, Brazil came in 137th place, behind countries like Chile (34th), Ecuador (57th), South Africa (61th), Albania (118th) and Mexico (135th).

For the deputy secretary of the Federal Revenue of Brazil, Paulo Ricardo Cardoso, the research does not allow a correct analysis of the data, as it places countries with different tax policies on an equal footing. “Mexico's budget, for example, does not depend on collecting taxes, but on receiving royalties for oil exploration. Your tax policy cannot be compared with ours ”, he says. Cardoso criticizes the failure to include Supersimples companies in the study, which would improve Brazil's ranking. According to him, the bureaucracy related to taxes in Brazil is a problem to be overcome, but due to the size of the country, which, for the control of the ICMS, has 27 different tax administrations, each with its own legislation. “I believe that tax reform should focus on the issue of ICMS, which is a chronic problem. We want a single legislation for all states ”, he says. The IRS also studies the merger of the ICMS with the IPI as a way to reduce the costs of administering these taxes. The secretary said that it would not be possible for the country to sustain its budget if there was a reduction in the tax burden. “What determines the collection is the willingness of the public agent to spend”, he observes.

The World Bank's tax research coordinator, Rita Ramalho, says that the difficulty in facing the tax bureaucracy causes companies to migrate to informality, further reducing the tax revenue base. The effects, according to her, reach even the workers, who lose jobs. “Small and medium-sized companies suffer the most, as large investors have more capacity to adapt,” he says. She says the country must lose its fear of lowering taxes and widening the tax base. "Egypt and Mexico did this, without decreasing revenue," he says. The coordinator points out, as ways to improve the tax system, the standardization and simplification of tax laws. "The change in legislation must be made with an effective and profound measure, and not with frequent and superficial changes", he concludes.