Source: Tribuna do Norte - RN - 14/08/2009

Less taxes, more jobs and more productivity. The formula has been repeated as a mantra by Brazilian businessmen for more than two decades, without significant changes in the tax area having been made by post-democratization governments. There is not even a consensus project that brings together support from the economic area of ​​the Union, States, political class and entrepreneurs for the much debated and desired “tax reform”.

The proposal in progress in Congress, in the evaluation of the lawyer and former national secretary of the Federal Revenue, Lina Vieira, is likely to end up run over by the “electoral climate of the presidential succession”. In this interview, she addresses the main points of the subject that will be one of the central themes in the seminar “Industry”, of the Engines of Development of Rio Grande do Norte project, scheduled for next Monday (17), starting at 8 am in the auditorium of the House of Industry.

The project is a realization of Tribuna do Norte, Fiern, Fecomércio and RG Salamanca. The sponsorship is from the State Government, Legislative Assembly, Eletrobras and Grupo Riachuelo.

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Lina Vieira, former National Secretary of Federal Revenue

What is your assessment of the Tax Reform project that is being discussed in Congress?

The project is concerned with improving the business environment in the country, but does not address the brutal regressiveness of the tax system. The federative conflict is still far from being resolved. The logic of taxation, based on consumption (circulation of goods and services), remains the Achilles heel of the proposal, as it generates cumulativity, it is not neutral, among other problems. The indirect tax costs (everything that does not correspond to the payment of taxes) that in Brazil are among the highest in the world have not been faced. It was also not a question of reducing the tax burden, nor changing the taxation of income and equity. However, there is no redemptive reform. Taxation is the result of a major political agreement. In my view, the seriousness of the crisis severely restricts the possibilities for the replacement of deputy Sandro Mabel. It seems to me that there is no political climate to modify the tax system in the anteroom of the presidential race.

What would be the so-called “ideal reform” within the current scenario?

There is no ideal reform. The reform will always be the result of the correlation between the governing forces of the economic domain, vis-à-vis the urgent needs of the Treasury. However, I recall the teachings of Adam Smith, who in his work “The Wealth of Nations”, from 1776, mentioned five characteristics that tax systems must respect: 1) Be adequate to the contributory capacity of citizens (Principle of equity - who has more pays more); 2) Have clear operating rules (transparency - accurate and open information about who pays, how much pays and the use of the funds raised); 3) Make it easy for taxpayers to collect; 4) Have a low-cost collection system and 5) Do not decrease economic efficiency, that is, economic activity should not be negatively affected by taxation, as with taxes that discourage work. Thus, the ideal tax system needs to respect the contributory capacity, eliminate excess bureaucracy, reduce the number of taxes, making them easier, simpler, more transparent and intelligible to the taxpayer and the consumer; unlock economic growth, increase the productivity of the country's economy and protect and harmonize fiscal federalism.

What would be more urgent for Brazil than a tax reform?

I often say that tax reform is tax administration reform. There is no tax reform capable of improving the conditions of tax justice and fair market competition without the cooperation and integration of the tax administrations of States and Municipalities, plus the articulation of the State apparatus aimed at inspection and combating tax evasion, fraud, smuggling and piracy, all of this combined with the Tax Education of our people. For this reason, the improvement of information systems, with investment in the operating conditions of tax management, including radical simplification of ancillary obligations, is more important than the reform of the system itself. In addition, Brazil urgently needs to discuss the weight of the tax burden on society, the exemption from capital goods necessary to leverage industrial development, the federative pact and the distribution of collected revenues. In this context, political reform is essential for discussing the size of the state and its cost to society, as well as the complete restructuring of regional development policies, replacing the state policies that generate the fiscal war and nullify the gains of federated entities (game loses x loses).

What is your opinion about the change in the collection of ICMS from source to destination? Why?

This is an endless discussion. There are advantages for most states, for some others, no. The most important issue is participation in the tax pie. Anyway, for example, for our Rio Grande do Norte, the collection at the destination would be better. There are always advantages and disadvantages. That is why I insist that the issue is not technical, but essentially political.

Does the reform that is about to be voted really foresee the exemption from investment and the imposition to increase the tax burden? Why?

There is a systemic rationality that would organize the set of taxation on consumption, with a view to relieving investment. However, if that were the only reason, it would be enough to restrict the reform to the sector of capital goods and infrastructure. Nor would a tax reform be necessary. The loophole for lifting the load lies precisely in the fact that there is no guarantee that would prevent future government officials from adjusting the rates upwards. This is because, if the tax system is the skeleton of the work, the rates are the nerve and soul of the tax burden.

How do you assess the industry incentive programs in Rio Grande do Norte?

In Brazil, and in RN it is no different, when you think about incentive policy for any economic activity, you only think about incentives via tax reduction, and then there are all states with the same policy, so that none of them has a differential . I am in favor of granting incentives, including tax incentives, but not only those; it is necessary to have creativity in the formulation of an incentive policy, involving the areas of infrastructure, labor, labor costs, raw materials, red tape, costs of ports and airports, of transport, etc.

From a tax perspective, what assessment can you make of the industry in Rio Grande do Sul?

The industrial sector in RN has grown a lot and today represents 20% of the collection of ICMS. It is necessary to have the perfect and transparent control of the return in terms of employment and income that these enterprises offer to society in Rio Grande do Sul. The incentive policy in the State is no different from the others. But we can improve a lot, depending on the behavior of our neighbors and the actions that the State takes to attract new investments. Although objectionable, sometimes the fiscal war ends up being the last resort that States have, due to the lack of a regional policy that honors and strengthens local wealth. Exactly because we abandoned the wise teachings of master Celso de Alencar Furtado, who defended an uncompromising and systematic regional development policy. The Northeast lost the furtadian perspective of a strong political pact. We would be unbeatable if the Senate, with a Northeastern bench, closed a supraparty issue in defense of the regional issue.

Also regarding the tax issue, what are the main bottlenecks that the industry faces?

The bottleneck is not only in the tax issue. It is in credit and interest, the lack of road and airport infrastructure and excessive bureaucracy. The period for payment of taxes, yes, could be better sized. But, here among us, the consumers pay the bill of taxes, since all costs are included in the final price of the goods or services. Companies are responsible to pass on to the Treasury what is withheld from the citizen and, many times, this obligation is not fulfilled and the collection does not even reach the coffers of the States and when it is not collected, the opportunity arises to pay the tax without a fine, interest, in deadlines as far as the eye can see. There are many white sharks in the rough sea of ​​the economy posing as harmless seahorses.

And on the part of the government: what is the weight of granting so many incentives?

The Federal Government has been doing its best to protect income and the level of employment. He chose the collection to pay the bill for these exemptions and, as most of them refer to the IPI, States and Municipalities are also paying this bill. Of course, it can always be said that the exemption could be made more selectively, but that depends on many circumstances. In general, although in my opinion it is better to give the tax waiver check in the hands of the citizen, I believe that the Government's policy has been getting it right. Let's pray that you keep getting it right.

For ordinary people, in practice, will the reform that is underway be good or bad? Why?

For the citizen, in terms of paying taxes it is neutral, that is, society will pay the same size of the bill. As a whole, it promises to simplify some procedures and legislation and increase GDP growth in a decade. These are the benefits sought by the tax reform project.