Source: Jornal do Comércio - RS - 09/11/2009

The deduction in the Personal Income Tax (IRPF) of expenses with health plans for domestic workers can be another incentive to bring about 4,5 million workers who do not have a formal contract to formality. A bill on the subject is expected to be voted on today, the 10th, by the Senate Economic Affairs Committee (CAE). But we continue with excessive bureaucracy and taxes. Obviously, no municipality, state or country can give up revenue. What happens, however, in Brazil, is a superposition of governmental bodies, be they Executive, Legislative or Judiciary, often performing the same service or doing something very close. The issue came up, once again, when accusations were published in the press and that affected the political environment in Rio Grande do Sul. We have a State Audit Court, a Public Prosecutor's Office, the State Prosecutor's Office, the State Justice, in addition to various ombudsmen and instances. However, malpractice is published, accusations with or without foundation, and everyone is left wondering who the legal obligation is to investigate and punish. Competencies, instances and endless resources and resources, such as giving the wrong addresses of witnesses, make processes and judgments drag on for years. In the same way, it is called against so many secretariats and similar bodies to inspect activities. What bothers us most is that even though there are so many servants, the frauds are perpetuated and the culprits do not appear to be punished “exemplarily” after “rigorous” investigations, to use two recurring words whenever something scandalizes public opinion. So it is not surprising that the high tax burden has led to a real flight of companies in the formal market. Thus, it is now known that the so-called underground economy went unscathed by the worsening of the global crisis and grew 27,6% from December 2007 to December 2008, according to a survey by the Brazilian Institute of Economics of the Getulio Vargas Foundation (Ibre / FGV). The Underground Economy Index measures the development of companies and activities involved in the informal market, or in tax evasion practices. It was the strongest advance in a period from December to December of the historical series of the index, which is quarterly and started in 2003.

The survey revealed a worrying finding, that the two economies, formal and underground, are growing in parallel. One feeds the other. Income earned in the formal economy is spent in the shadow economy, and vice versa. The survey also shows that dozens of companies or small business owners chose to leave the formal market in order not to pay taxes. Of the total growth rate of 27,6% of the index, 55,7% are related to the increase in the tax burden, which rose between 10% to 11% last year, according to Ibre / FGV. That is why it is insisted that the reduction of the tax burden is one of the official policies that could be taken to include the underground economy in the formal one. Today, the shadow economy represents 20% to 30% of Brazil's GDP. As it hardly uses credit, the informal economy suffered much less than regular companies, formalized before the financial system and, even more, with municipal, state and federal tax authorities. In the last quarter of last year, a period in which the global crisis worsened, the underground economy grew 9,5%, compared to the previous quarter - while the country's GDP fell 3,6% compared to the third quarter of 2008. think, no?