Author: Marcos Magalhães / Agência Senado

Source: Federal Senate - COMMISSIONS - 27/05/2009

[Photo: Commission for Education, Culture and Sport (CE)]

The establishment of tax immunity for CDs and DVDs, as a way to combat counterfeit products sold at lower prices, was one of the suggestions presented on Wednesday (27) during the seminar “Taxation and the Practice of Piracy in Brazil”. The event was promoted by the Education, Culture and Sport Commission (CE), in partnership with the American Chamber of Commerce (Amcham) in Rio de Janeiro.

The proposal to establish immunity was presented by lawyer Eduardo Jardim, professor of Tax Law at Mackenzie University, in São Paulo. He noted that immunity already applies to books, newspapers, periodicals and the paper intended for printing, as determined by article 150 of the Constitution. In the opinion of the lawyer, a proposal to amend the Constitution could be presented, including in the same article the CD and DVD, two examples of audiovisual cultural products.

- The CD and DVD also appear as cultural products and could deserve a PEC. There we would already have a considerable advance in the attempt to reduce the pirate trade - predicted Jardim.

CDs and DVDs are, in fact, among the most pirated products in Brazil, as indicated by the president of the Intellectual Property Committee of Amcham, Steve Solot. One of the main reasons for this consumer preference would be the low price of fake products, in relation to the original ones. The higher prices of the original products, in turn, would have to do with the taxes paid by the producing companies. According to Solot, the tax burden on CDs and DVDs reaches 43,25% in Rio and 42,25% in São Paulo.

However, tax exemption or reduction does not always lead to cheaper products, as demonstrated by the executive secretary of the National Council for Combating Piracy (CNPC) of the Ministry of Justice, André Luiz Barcellos. A successful case, as he noted, was the reduction of taxes on computers, through the so-called MP do Bem, in 2005. Since then, the sale of branded computers has grown 20% per year. On the other hand, he mentioned, tax immunity on books did not reduce prices or help popularize reading in the country.

- Two different public policies revealed different impacts of reducing the tax exemption. We need to see if it is possible to guarantee that the reduction translates into benefits for the consumer or if it would increase profit margins in companies - he said.

The representative of the United States Patent and Trademark Office, Dorian Mazurkevich, highlighted the negative consequences of piracy on the level of employment, the rise in crime rates and the environment. In turn, the representative of the Brazilian Association of Intellectual Property at CNCP, José Henrique Werner, recalled the difficulty of combating the entry of illegal products in Brazil.

Werner also attributed the growth of piracy to impunity, and defended the approval by the National Congress of the bill 333/99, which has been in progress for 10 years and extends the penalties for crimes against intellectual property. The bill, which has already passed through the Senate, has returned to the Chamber and is ready for voting.

The committee's president, Senator Flávio Arns (PT-PR), asked that the seminar serve as a “moment of reflection” including on the possibility of elaborating a new regulatory framework for the sector. Senator Roberto Cavalcanti (PRB-PB) attributed the increase in piracy to a cultural issue. For him, Brazilians must be “less complicit” in piracy. In turn, Senator Cristovam Buarque (PDT-DF) noted that measures to repress illicit practices should be accompanied by consumer awareness, through education, and a review of prices charged by producers.