For the Executive Vice President of Sindicom - National Union of Fuel and Lubricant Distribution Companies, Alísio Jacques Mendes Vaz, the Institute's performance contributed to the end of injunctions that favored tax evasion in the fuel sector and also to the adoption of instruments essential to combat adulteration and unfair competition.

ETCO completed three years of existence in April. What are the positive impacts of your performance for the fuel sector?

Alísio Vaz: We evolved in two aspects. First, thanks to ETCO, an important awareness environment was created to combat tax evasion and, consequently, to improve the sector. In its various events, the Institute was able to consolidate its institutional vision and demonstrate the damage caused by informality and irregular trade to other sectors of the economy. In addition, the knowledge of the sector's problems by the Judiciary is a great merit of ETCO. There was a major impasse with regard to injunctions granted to companies with tax liabilities. The engagement of the Institute convinced some judges about the mistake, with a retreat in the granting of tax benefits, which generated competitive imbalance in the market. The few injunctions that have been given these past two years have not had a practical effect. Once contacted, the judge quickly reversed his decision.

Three years ago, what was the annual average of injunctions issued?

Alísio Vaz: At the height of the problem, in 2000/2001, hundreds of injunctions were issued per year, many with economic effects. Today, although not all judges are fully convinced, we are calm, because the perception of the whole society has changed completely. There was an aspect of legality in the decision, despite the distortion generated in the market. Business owners who obtained preliminary injunctions claimed that they intended to pay taxes, classifying themselves as defaulting, and not criminal. In other words, there was a normal environment, now completely reversed, even in other sectors. ETCO not only stopped the granting of injunctions, but managed to reverse the view that the informal economy was positive for the country. Many defended its existence as a generator of jobs. This view is absurd. The informal economy does not save anyone. It obscures the perception of reality, of efficiency, distorts the meaning of what economic health is.

But informality is still great ...

Alísio Vaz: The issue is not only to combat informality, but to promote development and economic growth. The reality is that informal companies are created in the country, forming a huge gray mass of illegality that coexists with large companies and small companies. Large companies are better able to protect themselves from predatory competition. But there is no point in having an environment in which the medium is unable to compete and where microenterprises receive facilities when they are born but cannot grow. If informality becomes a standard, if it becomes the keynote of competition, then we really have an impasse.

Would the responsible for the impasse be inadequate taxation?

Alísio Vaz: In addition to the tax burden, we have a high interest rate, and we live in a moment of tolerance with informality. And with several other problems. Take, for example, the way in which the housing issue is treated, the favelas, which is the degradation of the social condition. There are even places without water and sewage. Informality is also there, in this absence of the State, in tolerance with this coexistence. It has everything to do with the impasse that we live in the big cities of Brazil.

ETCO has tried to show that informality is not only harmful, but also illegal. How do you see this issue?

Alísio Vaz: The relationship is essential. Informality is the absence of established rules, where the law of the strongest prevails, of those who speak more loudly, of those who attack more voraciously. There is no protection of property. That means going back to the stone age. The informal product is not only harmful by the taxes it fails to collect or by the volume it steals from the formal market. It also affects the price of competitors who pay tax. They end up sacrificing their earnings to compete, even at the risk of not surviving. In other words, informality does not only lose volume, but also margin. It has a devastating chain effect on the market.

Fuel adulteration is also a form of tax evasion. Has the fight against the problem progressed in the last three years?

Alísio Vaz: Yes. When someone withholds tax, the reaction is extremely slow. Now, if the quality of the product falls and harms the consumer, pressure from the press and society ends up making the authorities react promptly. According to ANP, the National Petroleum Agency, adulteration of gasoline reached an average of 12,5% ​​in 2000. In 2003, when Etco was created, it was around 6,8%. It is currently 3.6%. The reduction - significant - was possible thanks to the joint action that involved the ANP, the Federal Public Ministry, the Federal Police, the State Police of São Paulo and the Secretariats of Finance, especially also that of São Paulo. The São Paulo government created a law associating adulteration with tax evasion. Thus, the state registration of companies involved with such irregularities - be they gas stations, distributors or transporters - were canceled. All of this contributed. Society should demand the same measures regarding the violence of our tax burden. The consumer and the taxpayer are one. But strangely, the taxpayer attacks do not generate the same reactions as those related to the consumer.

How is the alcohol situation in this scenario?

Alísio Vaz: It's more serious. In 2005, about 35% of hydrated alcohol passed through the informal market. It is a very high number. One of the mitigating factors is that it must have been stimulated by the growth of the flex car market, and the consumer's option for cheaper fuel. But it is worrying. The product situation had registered an improvement in 2004 shortly after the law that reduced the ICMS in São Paulo from 25% to 12%. The result was an increase in revenue, released by the state government, around 5%. From then on, however, the forms of evasion were improved, giving rise to the “wet alcohol” fraud. The distributors started to buy anhydrous alcohol - which does not pay ICMS - and mix it with water, to be sold as hydrated alcohol. “Wet alcohol” was quickly incorporated into the illegal market, making it difficult to measure the size of tax evasion. There are those who estimate that it reached 50%. The collection, obviously, did not grow the equivalent. At the end of 2005, the ANP reacted, forcing the addition of a dye to the anhydrous alcohol leaving the plant. This made it difficult for fraudsters to act. At the same time, the Government of the State of São Paulo started to have greater control over anhydrous alcohol exempt from ICMS, allowing the purchase only in volume proportional to the purchase of gasoline at the refinery. This had a double effect on the market, preventing not only the “wet alcohol” fraud, but also the adulteration of gasoline, by the use of anhydrous alcohol above the proportion established by the ANP, which is 20% anhydrous to 80% gasoline .

Has any evolution been felt after the measurement?

Alísio Vaz: I believe so. There was a 39% increase in alcohol sales in the period between January and February, an index above the percentage of increase in the fleet of flex vehicles, vehicles that also consume alcohol. It is difficult to measure, but part of that volume of alcohol probably went from informality to legality. Sindicom won the market. March was an atypical difficult month, as alcohol consumption fell due to the off-season, which should force a price increase.

What is the balance in terms of reducing informality and adulteration in the sector in the last three years for companies associated with Sindicom?

Alísio Vaz: Sindicom companies' market share has been more or less stable over the past two years. We face different problems with products. It is easier to detect the volume of alcohol informality. The ANP can measure the production of hydrated alcohol by the plants and the sales by distributors. What disappears along the way is the informal product. In gasoline, the problem is quality due to adulteration. The difficult account is more complex, because when gasoline receives the solvent, part of it is legal, another part is not. In any case, unsatisfactory gasoline rates fell from 12% to 9% last year. The conditions of competition in the market, as I pointed out, are better, mainly by eliminating the problem of injunctions. There may not have been large volume gains with the creation of many new companies, but margins have increased. There was a stratification of the market, with emerging companies offering the lowest possible price to the consumer, without offering services and, on the other hand, the large traditional brands investing in service, differentiated treatment and in the perception of quality of the consumer.

What is your perspective on ETCO's work for the future of the sector?

Alísio Vaz: ETCO's work is in the right direction, focused on raising awareness and mobilizing society around the problems of informality, tax evasion and unfair competition. The problems have been presented in a structured manner, based on technical studies and research, which is fundamental for communication with the highest levels of government. The mobilization has already produced some effects, from the adoption of instruments such as flow meters in the beer industry, to the reassessment by the states of the weight of the tax burden on fuels. The expectation is that the movement will also encourage the federal government to take effective initiatives and break this traditional absence of the state on issues relevant to the country.