Author: Celso Ming

Source: O Estado de S. Paulo, 12/05/2007

The Integrated Tax and Contribution Payment System, known as Simples, was created to try to reduce informality among Brazilian micro and small companies. But what would be a solution is becoming more of a serious distortion. It is immobilizing an important segment of the productive sector in the Peter Pan Syndrome. Whoever is in Simples seems doomed to be eternally runt.

Created in 1996, Simples facilitates collection, as it simplifies the calculation and collection of six federal taxes: IRPJ, IPI, CSLL, Cofins, PIS / Pasep and INSS.

But it is scheduled to disappear on July 1, when it will be replaced by Supersimples, instituted by the General Law on Micro and Small Companies, sanctioned at the end of last year. Supersimples is a more comprehensive version, which also incorporates ICMS (state tax) and ISS (city tax). And it will allow companies prevented from integrating Simples to participate in the system. Among them, service providers.

The idea is to simplify and reduce tax charges in percentages that vary according to the companies' billing. Supersimples will consider as micro-companies those with annual revenues of up to R $ 240 thousand and as small companies those with revenues between this value and R $ 2,4 million per year.

Statistics from Sebrae show that, in 2005, there were about 10 million informal companies in the country and 5 million formal companies. With the entry into force of Supersimples, the federal government expects an additional 1 million companies to be created or formalized, which could generate between 2 million and 3 million formal jobs.

It is this definition of the billing bands that blocks the growth of companies. In order not to lose the tax benefits, the owners prefer to open another or several companies, in their own name or that of third parties (foreheads) so as not to exceed the limit. They don't grow, they don't gain scale, nor synergy, nor economic density.

“The entrepreneur has no incentive to grow and this is an effect contrary to what was intended”, warns Clóvis Panzarini, former tax coordinator of the São Paulo Finance Department. A similar opinion is reinforced by the specialist in Tax Law Paulo Ayres Barreto, from FGV.

The billing limit does not please industrialists either. The director of Fiesp's Micro, Small and Medium Industry Department, Milton Bogus, asks that, for this segment, the Mercosur bands be adopted: revenues of US $ 3,5 million (about R $ 7 million).

The fundamental problem is not the size of the company, but the enormous tax burden that suffocates the producer. Simples and Supersimples are just a trick of a government that does not want to solve the main problem.

“There is no way out except for a thorough reform that cuts the tax burden. The problem is that in a tax reform there are always losers and nobody wants to lose. And the reform is being postponed forever ”, laments Panzarini.