Piracy becomes state matter

Source: Jornal do Brasil, March 28, 2004

The government will create an interministerial group to combat evasion, piracy and smuggling. The promise was made by President Luiz Inácio Lula da Silva to the president of the Brazilian Institute of Competition Ethics (Etco), Emerson Kapaz, who handed over this week a document on these types of crime in the country.
According to the report, irregular trade causes an annual loss of R $ 160
billion in total tax collection in the country. Based on figures collected by the CPIs on Fuels and Piracy and associations, the study presented the losses with illegal trade in the most affected sectors, such as beer, tobacco, fuel and audiovisual.

The document was made from a seminar held in October by the Workers' Party and by Etco and presents suggestions for the government to combat illegal trade. Among the main proposals are the launch of campaigns
to raise society's awareness to avoid the purchase of counterfeit and smuggled goods, by demanding invoices, and the expansion of coordinated actions to combat illegal trade at the federal level.

According to Kapaz, five ministries should participate in the group: Finance, Justice, Labor and Welfare, Civil and Mines and Energy. The group's coordination has not yet been defined, but, according to Kapaz, in 60 days, the institute should deepen its studies on the subject and will meet again with government representatives to decide the initial actions.

For Kapaz, greater integration of government agencies is needed to combat piracy. As an example, Kapaz reminded the Secretariat of Economic Law (SDE), which is responsible for fighting predatory competition, but which fails to act in cases of tax evasion due to the lack of data from the Federal Revenue Service.

Kapaz also recalls that the tax reform will help to reduce illegal trade, which affects all sectors, according to him.

- The high tax burden increases the premium to the tax evader, but we must take some measures soon. We cannot wait for tax reform.

The head of the Economic Research Advisory of the Federation of Industries of Rio de Janeiro (Firjan), Luciana Sá, recalls that, in addition to the tax burden, the
bureaucracy to open and close companies and the flattening of income also
contribute to the growth of illegal trade.

- Because of low purchasing power, some consumers choose counterfeit or smuggled products to pay less.

A recent study by Firjan showed that 91% of companies in the state of Rio de Janeiro say they are harmed by unfair competition.