Reflections on tax red tape


Source: The State of S. Paulo - 06/12/2010

By Everardo Maciel

The Brazilian tax administration has become an international reference in terms of the use of information and communication technologies. This fact stems from a process that began in the 1960s, with the adoption of several pioneering initiatives, such as the creation of the Federal Data Processing Service (Serpro), in 1964, and the use of the banking network to collect taxes . It continues, more strongly, in the 1990s, when intensive use was made of the web in the preparation and transmission of statements and sophisticated inspection systems were implemented. The implementation of the electronic invoice and the Public Digital Bookkeeping System (Sped) is already underway, which represent notable steps towards consecrating the Brazilian leadership in the matter.

In order to illustrate the level reached by the Brazilian tax administration, let us make a comparison with its counterpart in the USA. This year alone, the tax authorities of that country managed to receive, by electronic means, 70% of the income tax returns of individuals. In Brazil, for over 10 years more than 95% of individuals have transmitted their income tax returns over the internet. In the field of legal entities, this goal is fully universal.

Paradoxically, data from the Doing Business 2010 (survey conducted annually by the World Bank, in the scope of 183 countries, with the aim of assessing the ease of doing business) gives Brazil the 127th position, in general terms. Specifically in the tax field, the results are unfortunate: 2.600 hours are spent annually to fulfill tax obligations in Brazil, in contrast to an average of 384,7 hours in Latin American and Caribbean countries; and 199,3 hours in OECD countries. The positions reached regarding the opening and closing of companies are very modest (128th and 132nd, respectively).

I try to explore, in this article, some hypotheses that explain this paradox and some ideas focused on fiscal red tape.

The long and stormy life of Brazilian inflation forced the tax administration to establish short deadlines for the collection of taxes, aiming to prevent the so-called “Tanzi Effect” (concept introduced by the great Italian-American taxpayer Vito Tanzi to highlight the real loss of tax collection, in periods of significant inflation, due to the lag between the date of occurrence of the taxable event and the date of payment). This was the reason that led to the requirement for a large number of tax documents and tax information.

Since the Real Plan we have achieved levels of civilized inflation. Despite this, due to inertia or circumstantial revenue needs, a complete restructuring of those terms and obligations has not yet been achieved, producing a system more in line with a scenario of monetary stability.

The modernization of the tax administration, in turn, has stimulated the institution of a large number of declarations with the objective of providing confrontations of information for inspection purposes, which in a way is understandable in the context of work aimed at reducing tax evasion. . One way to face this problem, without weakening the inspection, would be to establish, within the scope of each federative entity, the single annual taxpayer declaration for all declaratory taxes, which would be facilitated with the implementation of Sped. Likewise, the monthly payment of each tax would take place through a single document, including in relation to withholding taxes.

The time spent opening a business is unacceptable. The registration of legal entities and the respective registration number should be unique, with a single entrance door (preferably commercial boards, as long as they are properly modernized). The cadastral multiplicity (Union, States and municipalities) borders on the ridiculous. Licenses and operating permits should never affect the registration process, without prejudice to the permanent inspection activities of the competent bodies.

Any company without tax pending should be granted automatic write off, when required by the same route used for opening. If, afterwards, some type of irregularity is found, the Treasury could ex officio reinstate the registration.

Normative instability, which afflicts tax professionals so much, can be countered by adopting some rules: establishing full precedence, with a view to ensuring that any tax, with the exception of the regulations, could only be required if instituted or increased by 30 June of the previous year, in full compliance with the terms of the budget law; and restrict the normative changes to those contained in the mandatory annual tax consolidation, except for acts of an interpretative nature.

As can be seen, the theme is vast and requires more reflection - perhaps within the scope of a national project to reduce tax bureaucracy.