The resumption of growth and the confidence of the national market


photo-growth-image-postWhen he definitively assumed the Government, President Michel Temer brought new impetus to the Brazilian businessman by stating that he will not increase taxes. This decision retraces the path of trust by generating predictability and security for those who generate wealth in the country.

The measure is so important that Fiesp itself (Federation of Industries of São Paulo) followed by other Federations, took on the campaign of not raising taxes with the duck symbol.

In this sense, the decision has to be for real, applied to everyone, differently from what was done in the not too distant past. Today, all productive sectors are heavily taxed; however, some sectors that have experienced frequent and disproportionate increases to any inflation indicators and consumer purchasing power are noteworthy.

These decisions have caused imbalances in the ethical sphere of competition, which includes having to compete with companies that evade, counterfeit or practice contraband. Take the case of the tobacco production chain, made up of 150 thousand small rural producers, 400 thousand retailers, manufacturers and millions of consumers.

With the IPI increase of 140% in the last five years, smuggling increased by 50%; revenue fell 20% in 2015 alone; legal production decreased 13% in the same year and tax evasion was absurd R $ 10 billion in the same period.

In addition to the indisputable economic effects, other effects of illegality, promoted by successive and disproportionate increases, are equally perverse: the products in question do not suffer any health control from Anvisa; they have no warnings on their packaging; and are sold freely to minors, in addition to causing additional losses, related to the increase in violence rates. When taxes increase, all of these negative effects worsen as a result.

It so happens that, in the current Brazilian reality, in which 35% of the cigarette market is dominated by smuggled products, the increase in taxation is no longer able to reduce consumption - there is only a migration to illegal and cheaper brands - and not even to increase tax collection. On the contrary, they lose the government, the population and the production chain.

It is essential that the federal government does not increase taxes any more, especially that of cigarettes - the sector most affected - in view of the desired growth of the economy and social development of the country.

Only with a balanced, fair, transparent and reliable business environment will we adjust the country's new directions.

  • Edson Vismona is president of ETCO - Brazilian Institute of Competition Ethics and president of FNCP - National Forum against Piracy and Illegality