Three questions for Luiz Fernando Furlan

By ETCO
04/11/2011

 

A member of the ETCO Advisory Council since July 2008, former Minister of Development, Industry and Foreign Trade, Luiz Fernando Furlan, talks about the challenges and obstacles to changing bureaucratic and tax structures.

 

1) In a recent event on competitiveness in the Brazilian economy, the current Minister of Development, Industry and Foreign Trade, Fernando Pimentel, stated that the Brazilian tax system is absolutely dysfunctional for the XNUMXst century. As a former minister of the portfolio, what do you think can be done to change this reality?

Modifying a reality that has existed for many decades is not a task that can or should be carried out all at once. For this reason, the best solution is to look for ways to simplify in stages, starting with the most critical aspects in a minimally logical order, such as, for example, (1) zeroing all taxes on investments; (2) zero all taxes on exports and (3) drastically reduce the bureaucracy linked to business development and which burdens the entire production chain.

2) Is it possible to believe that the changes will occur in time not to harm the economic development and the institutional modernization process underway in Brazil? How can we quickly change such an old and ingrained system in Brazilian tax and bureaucratic culture?

First of all, one must be aware that changes change the avenues of power and that, therefore, there will always be obstacles for those in power who are opposed to change. It is also clear that in the government bureaucratic system, the strategic and the important always lose to the urgent, which makes any punctual, palliative and very short-term action, without the efficiency of long-term actions, planned to last. Just a tsunami to speed things up.

3) Does reducing the tax burden without organizing the tax system have any positive effects?

When it comes to reforms, the sector that collects wants guarantees against losses. This means that the risk is always with the taxpayer who ends up losing.