"Brazil is in danger of going backwards"
New President of the ETCO Advisory Council talks about smuggling, evasion, fiscal war and the country's bad time
Tax attorney Everardo Maciel is the new chairman of the Advisory Board of ETCO-Brazilian Institute of Ethics in Competition. He took up the post on September 1, replacing Ambassador Marcílio Marques Moreira, who has held the position since 2006. The Advisory Board is made up of prominent names from various segments of society, such as lawyers, diplomats, politicians and businessmen, and has the role of guiding the direction of the Institute.
Federal Revenue Secretary under President Fernando Henrique Cardoso and currently working as a professor and consultant, Everardo has been on the Advisory Council since it was created in 2004. “It is a huge responsibility to succeed someone with the intellectual value and importance of Ambassador Marcílio Marques Moreira, ”he says.
Below are excerpts from the interview he gave ETCO in Action.
How did you receive the mission to chair the ETCO Advisory Council?
Everardo Maciel: ETCO is a rare initiative by the business community to develop fair competition in Brazil. I have been a member of the Advisory Board since the foundation and have followed all the Institute's initiatives. My intention is to continue the work that Ambassador Marcílio has been doing brilliantly. I just want to increase the internal discussion to form or strengthen ETCO's convictions regarding the themes in which it operates. What is our view on combating smuggling? How should the Institute position itself in relation to the fiscal war? I intend to deepen the understanding of these issues within the Advisory Council, including contributions from outside experts, to help guide the direction of the Institute.
What is your view on the current moment?
Everardo Maciel: Brazil is experiencing a deep crisis, which has an important economic dimension, inserted, however, in a bigger crisis, that of values. This situation has a negative impact on the materials that are the subject of ETCO. Tax evasion, piracy and smuggling, for example, tend to increase, due to the recession. Brazil is in danger of falling back on the ETCO's interest topics.
Support for anti-corruption movements is one of ETCO's themes. How do you see the new laws that were created to combat this evil?
Everardo Maciel: I have many questions. In Brazil, there is a tendency to create laws of occasion. A problem arises, a new law is enacted, the effectiveness of which is never assessed. It is necessary to assess whether this new legislation is in fact able to reduce corruption. There is a risk of not achieving the objective and still causing uncertainties that harm the economy. The name 'Anticorruption Law' also makes this type of reflection difficult. If you ask questions, you risk being labeled in favor of corruption. We need to discuss this matter further in the Advisory Council, in order to reach a conclusion.
Why can't Brazil reduce smuggling?
Everardo Maciel: Because insisting only on the path of repression does not work. Today, I understand that there is no way to tackle smuggling without a powerful international cooperation program. I am not talking about just signing agreements of intent, shaking hands and saying that we are going to act together, but about more consistent work, which takes into account mutual interests, acts on the reasons across the border.
Are you referring to Paraguay?
Everardo Maciel: Namely, Paraguay. We will never resolve smuggling without a program that considers Paraguay's development. There are similarities to the migration crisis that we are seeing in Europe. There is no use trying to close the borders, build walls, put an electric fence. People at risk of being hit by bombs or starving to death in their countries will do anything to break through the blockade. Anyone who believes that smuggling can be solved only through repression should spend a few days on the Brazilian border with Paraguay, seeing the number of small planes that fly over the region.
Has Brazil tried to follow this path?
Everardo Maciel: When I was Secretary of Revenue, President Fernando Henrique charged me with negotiating a broad agreement with Paraguay. In a few months, we signed an agreement. Unfortunately, diplomacy follows a very slow pace and the agreement only came to be ratified by Congress already under President Lula, when circumstances were different. The Paraguayan Senate ended up rejecting the agreement.
How to reduce tax evasion?
Everardo Maciel: The solution requires simple rules and tax burden at reasonable levels. From the point of view of technology, Brazil already has one of the most modern collection systems in the world. I am proud to have participated, in ETCO, in the implementation of electronic invoices. One of our biggest problems today is not the evasion of the grocery store, but that practiced by large economic groups through illicit avoidance, abusive tax planning. Billions of reais flow through these mechanisms that the country continues to neglect.
Will we be able to carry out tax reform?
Everardo Maciel: We will not have tax reform. People dream of creating another tax system, but there are no paradigms to follow. If you put together the top ten Brazilian tax experts and ask them to create a new system, in the end we will have at least eleven different models. Tax systems are cultural models, which evolve continuously. In Brazil, there is the illusion of reformism, on the assumption that reforms are a panacea for all ills. Tax reform is not an event, it is a process.
How to solve the fiscal war?
Everardo Maciel: Fiscal war is harmful competition, violation of law. We cannot, however, confuse it with lawful tax competition, which has existed in the world since taxes were created. Brazil needs to decide to what extent it accepts tax competition. Today, we live in chaos. There are no laws, and the ones that do exist do not contain sanctions, which is the same as not existing. Unfortunately, I believe that we are far from resolving this issue, because we have not even taken the first step, which is to understand the problem. It is like the dilemma of Alice [from the book Alice in Wonderland], who asks the cat to help her find the way out, but cannot say where she wants to go. And the cat says: "In that case, it doesn't matter which way". To resolve the fiscal war, we must first be clear about what our objectives are.
Article: The precariousness of the rule of law
Stability and clarity are minimum requirements for law enforcement. This is not what you see in Brazil. Standards are changed frequently, often with deplorable technical quality. The interpretation given to the norms also changes continuously, without plausible justification.