Source: Gazeta Mercantil (A-3), 22/12/2004

By Emerson Kapaz *

December 22, 2004 - Myths broke down that made informality a necessary evil. The year that is lagging behind marks an unprecedented advance in the strategic field of competitive ethics. In addition to the indicators that highlight the extent of the informal economy in the country and its losses, made public in partnership with the McKinsey consultancy, at the Brazil Parallel X Economic Growth Seminar, in June, progress has multiplied on all fronts.

Within the government, there was a defensive attitude towards the offensive with the creation of the National Council to Combat Piracy and Crimes Against Intellectual Property. By adding the participation of civil society, it broadens horizons for a policy to combat tax evasion, smuggling and adulteration of brands.

Businessmen came together around the cause. Coordinated actions paved the way for enthroning, already in January and February, flow meters in beer production. Soon after, they will become part of the daily production of soft drinks and, possibly, also in the cigarette industry, through cigarette meters. In the field of fuels, companies that have adulterated the product have been living under the fire of inspection.

And, what is very motivating, thanks to the support of the media, the citizen is aware of the evils of the informal economy, a source of inhibition of progress and development. If, on the one hand, the myths that translated informality as a necessary evil collapsed, on the other hand the certainty that the resumption of development requires the restoration of ethics in competition takes shape. Combating illegality has become, more than a priority, an imperative. For this and other reasons, Brazil is today a reference in Latin America, starting with Mercosur.

In 2005, evolution will gain new breadth. The Etco Institute will address, for example, the burning theme of tax reform, in defense of an imposing and tax system that is bearable, universal, that is, democratized, and continued. How it will work to intensify inspection and search for ways that allow small and medium-sized companies to return to legality. We will strengthen ties with universities and research institutions. However, tax reform is a decisive priority.

In The Wealth of Nations, Adam Smith, in the remote year of 1776, wrote: "To transform a state from the lowest barbarism to the highest degree of opulence, peace, light taxation and a tolerable administration of justice are needed". In Brazil at the beginning of the 21st century, we do not live, of course, in barbarism, but progress and sustained development depend essentially on taxation, at least reasonable, that everyone pays, and on an effective administration of justice. If that happens, there will naturally be peace because investments will increase and, as a result, poverty and social exclusion tend to regress. In fact, the action of justice combined with reasonable taxes leads to an additional aspect addressed by Smith: the organization of the market. That requires ethics in competition as an essential condition.

Despite the many impasses, a certainty is inescapable, right now. The year that now ends marked the victory of progress over delay. A victory won much earlier than could be expected.

Kicker: Resumption of development requires restoring competition ethics

* Emerson Kapaz - President of the Brazilian Institute of Competition Ethics - ETCO