Battles for tax simplification


The State of S. Paulo - 08/11/2011

By Everardo Maciel

The functionality and diversity of nature, as fascinating as they are almost inscrutable, are associated with the existence of a complex structure, in which the parts are in a continuous process of interaction. In view of the disproportionate limitation of human intelligence, its understanding requires the construction of models that simplify reality, in order to understand and interact with it, despite the risks of a simplistic modeling, detached from reality and often founded on philosophical or religious apriorisms. .

As the civilizing process progresses, social relations, in a broad sense, tend to be complex, although on an infinitely smaller scale compared to natural systems.

Steve Jobs's praise for genius underscored his obsession with creative simplicity. Apple's first advertising leaflet proclaimed, welcoming Leonardo da Vinci's famous phrase, that “simplicity is the ultimate sophistication”. Jobs added: “The simple can be more difficult than the complex. You have to work hard to come up with a clear thought and make it simple ”.

Tax systems correspond to State interventions - in meritorious thesis - in social relations, hence because they are geared towards complexity, when uncritically limited to replicate, within the scope of their object, more elaborate social relations.

The tax complexity is costly, inefficient, controversial and produces the darkness in which bureaucratism, which often includes administrative corruption, and the various forms of tax alchemy, according to tax evasion and tax avoidance.

The iniquity of complex systems was denounced by eminent contemporary tax experts, such as Klaus Tipke, Casalta Nabais, Richard Musgrave and Vito Tanzi. There is a widespread belief that the demand for simplification has become universal and that tax chaos is not owned by any country.

The tax reform of 1965 was an extraordinary exercise in simplification, by repairing - at least partially - the imperfections in the taxation of consumption, centralizing taxes on foreign trade in the Union and codifying tax matters, without neglecting improvements in tax administration.

Another example of a simplifying initiative was the Income Tax reform, undertaken in the second half of the 90s.

The elimination of monetary correction, for tax purposes, purged an aberration that made the Brazilian Income Tax legislation, in addition to being complex, extremely unfair, because it rewarded large companies, on a progressive scale, with the acceleration of the inflationary process.

The realization of the presumed profit, by raising the billing limits for the taxpayers' option and exemption in the distribution of results, eliminating a virtual double taxation, produced, uniquely, an increase in options and collection, constituting a solution that reconciled the interests of the Tax Authorities and the taxpayers .

The institution of Simples, in 1996, represented the most significant wave of formalization of micro and small companies in Brazil, despite all the deplorable bureaucratic restrictions on the constitution and disposal of companies, which still persist today. It even motivated the adoption of similar state models, such as Simples Paulista and Simples Candango.

The simplifying effort, however, faces successive obstacles. Often, the tax authorities seem to abhor simplicity. The taxpayer is seen, in this case, as an opponent. The more complex and obscure the legislation, the greater the dependence on the interpretation of the tax administration, highlighting the corporate strength.

Thus, from time to time the demand for indexing tax tables resurfaces, forgetting that this institute was one of the main responsible for inflation, which made Brazil unhappy for a long period.

Since 2002, the presumed profit option limit has not been revised. It is argued with a virtual loss of revenue, which does not correspond to the truth. Not once has this limit been raised has there been a decrease in revenue.

Projects that intend to establish new limits are being processed in the National Congress, including one by the current vice-president Michel Temer. Parliamentarians should not dismiss the matter from themselves.

It was a good intention to unify, at the federative level, the different simplified taxation regimes for micro and small companies, with the creation of Simples Nacional.

The merits of the institution of the Individual Microentrepreneur and the increase in the maximum gross revenue limits for inclusion in the regime are opposed to the complete ineptitude in relation to the simplification of the procedures for enrolling and discharging optors, the disconcerting and contradictory complexity in calculating the tax due and profusion of rules issued by the management committee.

Simplification needs to be inscribed on the Brazilian tax agenda on a permanent basis. It must not be forgotten that complexity is opportunistic and difficult to eradicate.