Three questions for Tercio Sampaio Ferraz Jr.

By ETCO
17/05/2012

ETCO advisory adviser Tercio Sampaio Ferraz Junior talks about the consequences of unfair competition and high tax burden for society. Doctor in Law from USP, and in Philosophy from Johannes Gutenberg University in Mainz (Germany), Tércio is a lawyer and professor at USP and PUC-SP.

 

1) Unfair competition harms the legal industry, devalues ​​brand investments and weakens the regimes that regulate the industry. What are the consequences of this practice for society in the short and long term?

Agents that use this instrument as a means to compete affect, in the short term, the regular functioning of competition, economic efficiency, the regular generation of jobs and the collection of taxes. A known consequence is the proliferation of an inconvenient informal economy. In the long run, evasion, loss of revenue, smuggling, embezzlement, product counterfeiting, money laundering, etc. They hamper the country's economic development and planning, both in meeting the social needs efficiently, and in the way in which full employment and an adequate working relationship are implemented.

 

2) How would the regulation of Article 146-A, created with the objective of establishing special taxation criteria to prevent imbalances in competition, hinder this unfair practice in the market?

 

This article shows the concern of the constituent with taxation and distortions in competitive markets, attributing competence to the complementary law to institute tax criteria capable of dealing with the distortions already mentioned. In this way, it would be possible to minimize the existence of unreliable tax evading companies that, with the use of injunctions or other subterfuges, continue to operate normally, even after repeated assessments, thus burdening the tax authorities, other companies in the sector and the consumer.  

 

3) How has the country advanced in relation to the high tax burden? What is your assessment of the current scenario in search of fairer competition and, thus, increasingly stimulating competitiveness and economic growth?

The problem of the size of the tax burden arises in two distinct, but integrated, correlations: one related to the agents' ability to support it; another, in the efficiency of the collection. As for the first, internally, there is a generation of encouragement to informality and, externally, to the difficulty of competitiveness in international trade. As for the second, the high burden generates, paradoxically, a precariousness in actions aimed at identifying tax evasion, contraband, counterfeiting, piracy, etc. As a result, the sense of injustice and even an improper “legitimation” of illicit conduct proliferates.