Author: Leonardo Humberto Bucher

Source: Gazeta Mercantil, 04/02/2009

February 4, 2009 - Since before the Fernando Henrique Cardoso government, there has been talk, in exhaustion, of tax reform that would reduce taxes in quantity and value, as well as bureaucracy, and even eliminate the fiscal war, redistributing, with justice, collection between federative entities. And that, finally, provide conditions for the economy to really take off. FHC did not do it. President Lula, mounted on his popularity obtained at the polls in his first election, tried to do something similar to what was dreamed, but there was a very small advance, despite all the efforts of the rapporteur of the proposal at the time, Deputy Virgílio Guimarães. It was promised, at the time, that something more complete would be done later.

The Lula government thought that now is the time. Based on Virgílio's own Constitutional Amendment Proposal, a special commission was created, chaired by Deputy Antônio Palocci, to give an opinion on this long-awaited Tax Reform. The fight for the rapporteur ended up turning deputy-businessman Sandro Mabel into the rapporteur. With a former finance minister in the presidency and a heavyweight businessman on the rapporteurship, we came to believe that something big could finally come out of there. Ledo mistake.

In general, the reform initially seemed dangerous. More precisely, a leap in the dark, since almost all important definitions were being concealed for future decision, in different instances. Even the exemption of 6% of the 20% of employers' payroll charges (the bait to get businessmen to join) had no date to come into force and was left for further regulation. The new taxes, including contributions, gave a great relief to the states and municipalities (bait for the other federal entities), but they also sinned by serious vagueness in the text that is to be approved.

Aside from these factors, we are still sure that the fiscal war, in fact, does not end and the ICMS, as much decanted as anachronistic tax and that would be the main victim of a real tax reform, now gains survival with the report of Mr. Sandro Mabel. Add to this the effects of the global crisis in the country and we will have to give reason to a significant group of parliamentarians who say that it is irresponsible to want to do something like this, at the moment, by destabilizing, for example, economies such as the State of Holy Spirit. Not only do deputies think this: the governors of the states in the southeast region unanimously decided to ask their deputies not to let the reform go at this time. Two oppositionists and two government officials united against the reform. Against this reform! Furthermore, Finance Secretaries from 20 federation units asked that the matter be postponed.

But the problems do not end there. The software (computer programs) and Internet sectors could be hit hard. The rapporteur, in his rejuvenating touch with the ICMS, decided to tax software and Internet transfers by this anachronistic tax, a measure we had already managed to get rid of since the 1988 Constitution. In simple words: he decided that informatics and its clients, partners of the damage caused by the states' tax collector, can pay something between 17% and 35% of tax in exchange for the 2% to 5% they pay ISS today. Something terrifying!

There is, in good conscience, no justification for taxing a service sector, which has a short production chain, which does not generate credit to compensate because its main input is labor, with a high tax rate created to record long chains and products, goods and non-services. Software is not a commodity. There is no sale of the software, but the right to use. In addition, a software company must pay one, two or at most three times the ISS rate, cumulative, is reasonable, acceptable and is within its tax planning. But paying 25% non-cumulative, that is, in one, two or three steps, will make that, in each step, it leaves something between 8% and 25% of its revenue in the hands of the government. There is no way not to pass this increase on.

And this is where the damage is not only in the software sector. As software is one of the main, if not the main, input for the productivity and competitiveness of companies, the sudden, brutal and insane increase in the tax burden on it will cause the whole economy to suffer. And that is why we can say that this reform, as proposed by the rapporteur, in addition to a beautiful and irresponsible leap into the dark, is a fantastic advance towards the past and backward!

kicker: Software companies are at risk of collecting 17% to 35% of ICMS replacing the 2% to 5% that pay ISS today

(Gazeta Mercantil / Caderno C - Page 5) (Leonardo Humberto Bucher - Executive Secretary of the Mixed Parliamentary Front of Informatics of the National Congress)