Author: Merheg Cachum

Source: Gazeta Mercantil, 15/04/2009

São Paulo, April 15, 2009 - The exceptional results of car sales in the first quarter of 2009, in the midst of one of the most serious economic crises in the history of capitalism, shows how important it is to reduce the tax burden in Brazil. The numbers are irrefutable, attesting the correctness of the IPI reduction and its extension for another three months, as well as the relevance of the zero rate of this tax for the main items of construction material and the suspension of Cofins for motorcycles.

In practice - and in the midst of turbulence - the thesis defended by the productive sectors, that excessive taxes is one of the main obstacles to Brazilian economic growth, is confirmed in practice. Thus, it is expected that the government will make the deferral and / or rate reduction process more comprehensive, favoring as many segments as possible, so that the country can accelerate its recovery and enshrine victory over the crisis born in the first World.

More than that, it would be important - given the inexorable proof from the automotive market that lower taxation results in increased sales - that the government definitively revise the national tax structure, relieving production, regardless of crises or cyclical issues. . The much talked about and never carried out tax reform could be preceded by practical, objective and effective action to reduce taxes in general. It would be an immense advance, while the National Congress continues to discuss the tax nomenclature, the division of the cake and the tangled complex that embodies this bureaucratic and deficient collection system.

This measure is totally feasible, as can be seen by means of a simple subtraction operation: the total taxes collected by the government in 2008 increased from R $ 1 trillion, with an increase of 14,43% in relation to 2007 (data from the Institute Brazilian Tax Planning - IBPT); official inflation measured by the Broad Consumer Price Index (IPCA) closed 2008 at 5,9% (IBGE number). In other words, the tax burden grew 8,53 percentage points above inflation (14,43% minus 5,9%).

In this way, updating the public sector budget for 2009 only due to inflation (this, without considering the immense amount of “fat” that the State could still eliminate) would already be a viable tax exemption of the order of 8,53%. It is a significant index to stimulate the economy, promote sustained growth and improve the competitiveness of Brazilian products in the foreign market. Imagine a decrease in taxes of this magnitude in sectors, such as the plastics processing industry, present in all supply chains. The impact in terms of price, sales and exports would be significant.

There is no doubt that everyone would benefit from the lowest tax burden, including the government, as common sense indicates that default and tax defaults could even be reduced. The IBPT demonstrates that the evasion of Brazilian companies has been decreasing, but still corresponds to 25% of its turnover. In 2000, the index was 32% and in 2004, 39%. Undeclared revenue is R $ 1,32 trillion and taxes withheld amount to R $ 200 billion per year. In addition to taxes evaded by individuals, the volume reaches 9% of GDP. Thus, by reducing tax rates, which proportionally would make it even more stimulating to be even with the tax authorities, a nominal increase in tax collection would be very likely.

In the face of so much and so logical evidence, it seems strange that the government continues to insist on maintaining in the country one of the highest tax burdens in the world. Crises, in spite of all the negative aspects, always result in opportunities. Well, in the present adverse situation, perhaps the greatest opportunity for Brazil is the sensitization of the authorities regarding the pointlessness of a tax system that conspires against production and consumption.

(Merheg Cachum is president of the Brazilian Plastic Industry Association (Abiplast).)