The 2008 budget and the increase in the tax burden


Author: Nilson Mello

Source: O Globo, 20/09/2007

Data from the Brazilian Institute of Geography and Statistics (IBGE) reveal that Brazilian companies paid an extraordinary amount of R $ 2007 million in taxes in the first half of the year in the first quarter of 953,5. That's right: practically 1 billion a day!

The heavy tax burden has strong side effects. Calculations by the Competition Ethics Institute (ETCO) indicate that tax evasion in the country already reaches 30% of the Gross Domestic Product-GDP, according to the newspaper O Estado de São Paulo in its September 9 edition.

The study gave academic clothing to something that is widely and well known: in certain sectors of the economy, especially commerce, the survival of the entrepreneur - the one who generates jobs, income and economic growth - is conditioned to some degree of informality, a pitiful deviation and which is a direct result of the voracity of a wasteful state.

The 2008 Budget proposal, sent by the government to Congress at the beginning of September, foresees an increase in the tax burden by 0,55% of GDP, equivalent to 15,1 billion, to face an increase of 10,9% expenses (attention: expenses, not investments).

According to the proposal, 56.348 employees will be hired for the federal public service. Of these, 28.979 will occupy new positions in the Union, that is, functions that did not exist and were created within what the government calls "career restructuring" of the federal machine.

Since 2003, 94 thousand civil servants have been hired, not counting those from the 2007/2008 harvest, and without considering commissioned positions. The new hires provided for in the budget will cost, annually, R $ 3,4 billion. The staff of the Três Poderes, at the federal level, will reach R $ 130 billion as of next year. In 1995, it was R $ 35 billion, according to the newspaper O Globo on September 4th.

The payment for servers already consumes 40% of the total taxes collected in the country, according to some estimates. Government of the Union, States and municipalities disburse R $ 308 billion annually with personnel, according to the National Treasury Secretariat. It is known that Brazilians work four and a half months a year to pay taxes.

There is a perverse logic in Brazil: the private sector improves its productivity while the public sector dedicates itself to opulence. What would happen if all of us, businessmen and workers in the private sector, transferred the means of production to the State and became public or state employees? (Incidentally, this is possibly the undisputed desire of ideologues in this government). The result would certainly be the country's economic unfeasibility.

The assumption of economic development, which brings social development in tow, is efficiency in production, which is associated with market rules - capitalist rules.

The State that truly works for development is the State that, in addition to simplifying the entrepreneur's life, uses the tax revenue resulting from economic activity to generate more work and income, through investments in strategic sectors.

By creating more and more public jobs, increasing more and more the tax burden and not looking after its revenues, the government uses market efficiency, expressed by the productive sector, against this same sector and against the Brazilian economy itself.

As the contributory capacity is at its limit, there will soon be no place to hang the account. Simply because, as stated, companies that produce wealth are companies, not the state. And so it will be, even if a future PT Congress decides to declare the opposite.

The good performance of the Brazilian economy, reported in the last week, is mainly due to the stability started in the era of the real and the persistent growth of the global economy. The government should take advantage of this good performance, which helps to boost its tax revenues, to expand investments, instead of multiplying job hangers.

Nilson Mello is a journalist and lawyer