Author: MERVAL PEREIRA

Source: O Globo - Rio de Janeiro / RJ - 18/07/2010

Tomorrow, at the Getulio Vargas Foundation in São Paulo, the Movimento Brasil Eficiente will be launched, which, coordinated by Instituto Atlântico, by economist Paulo Rabelo de Castro, intends to outline an action roadmap for a “general, courageous and intelligent adjustment of public accounts”, with the objective of reducing the tax burden to 30% of GDP, within ten years, and creating an economic environment that provides sustained growth of 6% per year, with an increase in investments in infrastructure to 25% of GDP.

The tax burden, which today approaches 40% of GDP when added to the public deficit, “reached the politically tolerable limit”, in the definition of the Movement, which brings together confederations of the national productive sector, business and worker federations, companies from various sectors and of all sizes, entities representing civil society, the so-called third sector, as well as universities and research institutes.

According to studies highlighted by the movement's organizers, the tax burden at levels above 30% of GDP "is not only harmful to private sector investments, but creates efficiency problems within the government management itself".

The increase in our total investment rate, which remains “stubbornly tied to a level well below 20%, while the country's need is to reach 25%”, would come from two sources.

The document proposes that the difference of around seven percentage points in investments comes from an extra contribution from the private sector (of four percentage points), which would commit to investing the share of savings that it will make by reducing the tax burden on legal entities and while the government is expected to collaborate with 3 percentage points, increasing public investment from 2% to 5% of GDP.

“It is a planable and achievable challenge”, guarantee the authors of the project, who intend to take it to candidates for the Presidency of the Republic.

According to the document, in the period from 1987 to 2009, the implementation of the “high public expenditure model” has exploded certain items of expenditure, with the General Budget of the Union becoming “a large payroll”.

In 2005, there were around 40 million paychecks in welfare and social security benefits, in addition to active employees, consuming almost 80% of federal spending.

The Efficient Brazil Movement proposes a “very simple, but radical” change to the challenge of social security balance.

The proposal is that the income tax, of individuals and legal entities, becomes the exclusive source of social security coverage, added to the employer's contribution to the INSS, "this may have its base redefined to be neutral in relation to the payroll".

The sum of these three sources, including and merging the current Contribution on Net Profit, adds up to about 10% of GDP, “the equivalent of the maximum allowed, in a good family, as a contribution from those who work for those (with all rights) in your paid leisure ”.

With this fundamental change, it would be possible, think the authors of the proposal, to negotiate in the Congress the pensioners' budget "in function of the efforts expended by those who work and pay the tax".

The problem is that the weight of spending on inactive and pensioners in the Union has increased twice, from 6,2% in 1987 to 12,2% of total expenditure in 2009, therefore being above the 10% that the authors consider the ceiling.

Regarding the tax burden, the authors of the project point out that, in Brazil, in addition to direct taxes, which are charged to the taxpayer, such as IR, IPTU and IPVA, there are indirect or hidden taxes, which are embedded in product prices, “such as ICMS, ISS, the infamous Cofins and PIS, and so on, in a brutal load of contributions and fees that affect virtually all economic activities, throughout the production chain, transferring prices from industry for commerce and, finally, for consumers ”.

In addition, because it is a “tremendously complicated tax system, with different rates between states, between municipalities”, it requires an expensive bureaucracy for its operation, to the point that recent international research has attributed to our country “the dubious merit of being the world champion. triggered in hours spent by the taxpayer (2.600 annual hours) in meeting tax obligations ”.

Compared to our South American neighbors, Brazil has the highest ratio between tax burden and GDP: 37,4%. In Argentina, this ratio is 26,8%; in Uruguay, 25%.

In order to achieve a reduction in the tax burden, the Efficient Brazil Movement proposes the following measures: - Simplification and rationalization of the Brazilian tax structure, through a combination of taxes and various contributions, thus reducing its amount and the costs of its administration by the taxpayer.

- Total transparency in the collection of taxes levied on economic circulation, through the adoption of a “Value Added Tax” (VAT) that brings together all taxes currently levied on federal collection (such as Cofins, PIS, etc.) and federative (such as ICMS and ISS), so that the taxpayer pays only once and knows what the final rate is, in fact, paying.

The authors of the project promise that this change from a “high public spending” model to a “high public investment” model will bring GDP growth and job creation to a level never seen before in previous generations, and will double per capita income. in ten years.