Author: Milton Carmo de Assis Júnior

Source: Todo Dia - SP, 18/06/2009

Recent studies published by the media have demonstrated the weight that taxes exert on Brazilian companies and citizens. According to the IBPT (Brazilian Institute of Tax Planning), the tax burden reached 36,56% of GDP (Gross Domestic Product) in 2008. Another study by the same institution showed that the Brazilian worked until May 27, just to pay taxes.

The tax burden in Brazil is the largest in Latin America, according to a survey released by ECLAC (Economic Commission for Latin America and the Caribbean). Argentina ranks second, with a tax burden equivalent to 29% of GDP. In Uruguay, this percentage is 24%, in Chile, 21%, in Peru, 17%, and in Mexico, 12%.

In addition to the high tax burden, the Brazilian tax system occupies a prominent place among the most complex in the world, generating strangulation for companies and curbing investments and economic growth.

According to a study prepared by the World Bank, division IFC - International Finance Corporation -, and by PricewaterhouseCoopers, in 2007, Brazil occupied 137th position among 178 countries surveyed regarding the complexity of the tax system.

In the analysis of this complexity, the tax burden, the number of exceptions and the time spent in the execution of ancillary obligations were considered. According to this study, Brazil was the world champion in spending time to comply with tax obligations: 2.6 thousand hours per year.

Our tax system contains more than 50 exemptions, taking into account taxes, contributions and fees at the three levels of competence: federal, state and municipal. In addition, we have tax legislative inflation, with rules published every day, poorly drafted, confusing, resulting in insecurity for taxpayers, giving rise to divergent interpretations and causing overload of questions in the administrative and judicial judging bodies.

Directly or indirectly, taxes are always borne by the final consumer. Thus, the increasing tax burden and the complexity of the Brazilian tax system are directly reflected in the budget of Brazilians, especially in the less favored classes.

In fact, most tax exemptions were created without taking into account the constitutional principle of contributory capacity, according to which “whenever possible, taxes will be personal and will be graduated according to the taxpayer's economic capacity…”

In view of this circumstance, it is not difficult to find products essential to human consumption, such as medicines, subject to a high tax burden, corresponding to 25% (twenty-five percent) of the value of the goods.

Brazil has the highest tax burden in the world for the manufacture of medicines, says Sindusfarma (Pharmaceutical Products Union of São Paulo).

The weight of taxes would be justified if essential public services were provided satisfactorily for the population, such as security, education, health and social security, but the state's deficiency in meeting its goals is notorious.

To reverse this scenario, it will be necessary to implement a serious and profound tax reform, including cutting public spending, reducing the tax burden and simplifying tax obligations.

The recent past has shown that our leaders responded to the call for reform with an increase in the tax burden, as witnessed in the case of changes in the calculation system for PIS and COFINS.

Milton Carmo de Assis Júnior is a tax lawyer