Simplify, simplify, simplify


Source: Folha de S. Paulo, 23/02/2005

By Emerson Kapaz

Sociologist Domenico de Masi, one of the most respected critics of the contradictions of modern life, reports, in a recent article, a curious consultancy work he has been doing for a European company. Every month, he meets with senior management with the sole purpose of eliminating rules in order to untie the knot, that is, the straitjacket of bureaucratic obstacles. The challenge is to make competitiveness grow, the work environment to become more flexible and the company to gain competitiveness, being able to offer real value to the customer.

In Brazil, the State urgently needs to embrace similar practices. The difference is that unserviceable rules and rules need to be swept away by the thousands and at a weekly or daily pace. Gone are the days when the anomalies of colonial culture, based on mistrust towards the citizen, could live with the idea of ​​modernity without stifling investments, without striking exports and without confusing inspection effectiveness with blocking the necessary agility of business. Today, in a highly competitive market, there is no longer any place for this type of conflict.

Let's look at some basic information. Brazil has 61 different taxes, 55 different ICMS rates, also differentiated. It is a unique example of this type of practice across the planet. Instead of simplifying the legislation, new ordinances, new rules, so many and so different appear every time that companies are forced to maintain authentic armies of employees to try to stay up to date. The cost is colossal. You pay something like 1,5% of turnover to follow the steps of this jurassic structure.

It is not alone. The World Bank has developed a criterion for examining the issue of bureaucracy and comparing it between countries. Consider simple things, such as the time needed to open a business. Based on this criterion, Brazil, among 145 countries analyzed, occupies the 141st position, taking an average of 150 days to start a company, when in the USA only 15 days are needed. This is because, to open a company here, the process goes through 27 agencies, between federal, state and municipal. In that time, money, time and business are lost.

If childbirth is difficult, it is no less complex to obtain a death certificate. It doesn't matter if the company went bankrupt. A mountain of documents is required to cancel registration with the Board of Trade. The result is that the excess of bureaucracy translates into a loss of capacity to inspect those companies that, in fact, are constituted to act outside the law.

According to the calculations of the Minister of Development, Industry and Foreign Trade, Luiz Fernando Furlan, 5% of the Gross Domestic Product is wasted on bureaucracy, which represents US $ 25 billion per year. It is, at the tip of the pencil, the money left to raise the investment rate from 18% to 23% of GDP. When the curtains of bureaucracy are lifted, incentives for corruption, tax evasion and, above all, informality among medium and small companies will also recede.

The moment the curtains of bureaucracy are released,
will also pull back the incentives for corruption

Simplifying bureaucracy is a viable path. Keeping it is a destructive attitude. This was demonstrated by the late Hélio Beltrão in the early 80s. As Extraordinary Minister for Debureaucratization, he coined, at the time, a phrase that should be repeated as a mantra: "The government needs to govern less so that the entrepreneur can undertake more". Right now the beer sector is showing that reducing bureaucracy does not mean a loss for the state.

On the contrary. With the flow meters, which started operating in January, the invoices will practically disappear, but the control tends to be stricter. By computer, all information will be forwarded to the tax authorities, inhibiting the possibilities of evasion.

During the year, the same will happen with the soft drink sector. These are initiatives that can be applied to different sectors of the economy. It is enough for the reduction of bureaucracy to be seen as a concrete and priority strategy for valuing business, citizenship and strengthening companies. This is the truth. Either Brazil ends the bureaucracy's evils or the bureaucracy's evils end Brazil.

Emerson Kapaz, 49, is president of the Brazilian Institute of Ethics in Competition. He was secretary of Science, Technology and Economic Development of the State of São Paulo (Covas government).