Formalization pulled tax revenue, says FGV


The formalization of the economy registered in recent years has caused tax revenue to grow at a faster rate than that of productive activity, according to a researcher from the Brazilian Institute of Economics of the Getulio Vargas Foundation (Ibre / FGV) and responsible for the Underground Economy Index (IES) , Samuel Pessôa. "My interpretation is that this increase in tax revenue was higher than the GDP growth because of the formalization."

Despite this increase, Pessôa points out that this revenue gain was not used to reduce the tax burden as a whole. “We use this gain in tax revenue to increase public spending on various programs that society has decided should exist. It was a society decision. ”

Anyway, the Ibre / FGV researcher says that, if the informality in the Brazilian economy were lower, the tax burden could also fall. This means that, in their accounts, the tax burden in relation to the Gross Domestic Product (GDP), today around 40%, could be reduced by two or three percentage points, to something between 37% and 38% of GDP, only due to the drop in informality.


The underground economy indicator, calculated by Ibre / FGV and the Brazilian Institute of Ethics in Competition (ETCO), which is an attempt to measure the informality of economic activity, takes into account the behavior of the market of labor and demand for currency in the economy, since a large part of informal activities are handled using cash.

Pessoa explains that the HEI is calculated from an average between the currency demand indicator and the market of work. "IES is a flag, it is not an exact number", he stresses, considering the difficulties of measuring the informal economy. The information is from the newspaper The State of S. Paulo.

Source: Site Last Instance (25/06)