Everardo Maciel explains why he doesn't believe in projects that suggest refounding our tax system



by Everardo Maciel *CLICK HERE 3

Tax systems are living models that portray the complexity of economic and social relations in a society. There are many reasons against overly ambitious tax reform claims


The imperfection and complexity of the Brazilian tax system, which are, moreover, characteristics common to all tax systems, stimulate a profusion of plastically elegant and disruptive solutions, but which ignore the risks and costs inherent to any change.

Tax systems result from clashes that involve conflicts of reason and interest in parliaments. They are not models, applications or, in the past, works by copyist monks. On the contrary, they are living models that portray the complexity of economic and social relations in a society. They are therefore inevitably imperfect and complex.

This complexity, in turn, is increasing, because tax systems will, over time, incorporate changes - some legitimate, others not - that distort the original conception.Caption Everardo Maciel

Imperfection and complexity stimulate new conceptions aimed at refounding tax systems, in the context of an improbable and little useful idealization.

Peremptory statements are frequent that denounce the complexity, inefficiency and regressiveness of the Brazilian tax system, without there being a minimally consistent debate on the matter.

There are many possibilities for qualifying complexity. What makes a tax system truly complex is the overload of bureaucratic requirements, the profusion of special regimes and the indeterminacy of concepts and procedural delays that lead to legal uncertainty.

Issues such as number of rates or taxes and overlapping incidences are easily overcome by using good computer applications.

Problems exist and will always exist, which is an excuse for continuous action focused on strategic matters, aiming at eliminating or mitigating them.

The problems of ICMS and PIS / Cofins are remedied with surgical changes.

There are many reasons against overly ambitious tax reform claims.

Changes have costs and risks. Normative stability, in the tax sphere, is a relevant asset for deciding on private investments.

In an interview with Veja (27/09/2017), Eldar Saetre, president of Statoil (Norwegian state oil company), stressed that his major concern in relation to Brazilian taxation was unpredictability. He added that, in Norway, the taxation of oil activity was high (78%), but stable.

In an interview with the Financial Times, published in Valor (28/04/2017), Warren Buffet, one of the largest investors in the world, said: “People invest when they think they can make money, and not because of taxation”.

In addition, there are risks to the treasury and the taxpayer. Any change has repercussions on tax rates and tax bases, in an unpredictable way and differently on taxpayers.

Ultimately, major changes can take on an adventurous character. Anyway, systems, like the tributary, are only well known with real mass.

In everything, we cannot forget our undying vocation to copy models from other countries, built under peculiar circumstances and different from ours. It is cultural servility, opposite and equally mediocre of xenophobia in the field of ideas.

The most serious thing is that we seek to copy models in frank obsolescence, such as the Value Added Tax (VAT), which is complex, vulnerable to evasion (the carousel or banknote ride is a well-known evasion modality in Europe) and unable to assimilate properly the digital economy.

It is good to pay attention to what is being discussed at the border of tax policy. With a solid academic basis, the United States is already discussing the formulation of a model for taxing consumed income, which aggregates VAT and Income Tax characteristics, innovating them.

Meanwhile, in Brazil, little or no attention is paid to our most severe tax illnesses: bureaucracy, conceptual indeterminacy and the tax process.

Bureaucracy reigns triumphantly in the tax system. Its pearls are multiple registration, negative certificate requirements, tax refunds, obstacles to compensation, etc.

It is certain that conceptual indeterminacy will always exist, demanding the clarifying intervention of Justice. After all, there is no closed concept system. What is reprehensible is exaggeration.

We have not yet pacified concepts such as billing, gross revenue, indemnity for tax purposes, irregular dissolution of companies, joint liability of partners, tax substitution, abusive tax planning, etc. It's an absurd.

The process, from launch to execution, is exquisite in its slowness and inefficiency.

In the Union, the amounts under administrative and judicial discussion added to the credits recorded in active debt correspond to more than double the annual tax collection.

A report produced by the National Council of Justice (CNJ) shows that of the impressive 80 million cases pending in court, approximately 30 million are related to tax enforcement.

Although it contradicts the bureaucracy and the litigation industry, the real reform is to eliminate these tax illnesses. However, it lacks the charm of designing a new, unpredictable and unnecessary tax model.

Ambitious claims, by exacerbating tax conflicts, including in the context of fiscal federalism, always end in impasses, in addition to removing the focus of Brazilian tax illnesses. It is worth remembering Einstein's teaching: “it is insanity to keep doing the same thing and expect different results”.


"Brazil is in danger of going backwards"

Everardo Maciel is the new chairman of the ETCO Advisory Board
Everardo Maciel is the new chairman of the ETCO Advisory Board

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.

ETCO has new chairman on its Advisory Board

Dear ETCO partners,


ETCO's success is due to the effective integration between the ceaseless work of the team that is in charge of daily tasks, the commitment of the members of the Board of Directors and the commitment of the Advisory Board, whose contribution, through ideas, comments and suggestions, has been extremely valuable.
In recent conversations, the President of the Advisory Council, Minister Marcílio Marques Moreira, informed us that he would like to disengage himself from being a member of the Advisory Council and, consequently, from his Presidency, a position he has held since 2006, to be able, as Senior Consultant of the Management and Advisory Boards, as well as the Executive Presidency, contribute, in a more integrated and flexible way, to the Institute's multiple initiatives.
Minister Marcílio acted and will continue acting, now as a consultant, decisively for the successful trajectory of ETCO, in a manner consistent with his experience and outstanding performance, both in the public sector and in the private sector.
I am pleased to announce that, as per the Board of Directors' resolution, we invited Dr. Everardo Maciel to assume the Presidency of the Advisory Board, as of September 1, an invitation to which Dr. Everardo kindly acquiesced.
Dr. Everardo has been a member of the Institute's Advisory Board since its constitution in 2004, and, like Marcílio, has played a key role in ETCO's trajectory.
We want to take this opportunity to emphasize that the experience of each of the Advisory Counselors has added relevant value to the Institute, over the years, in its permanent struggle for a more attractive and more ethical business environment in the country.


Victor Carlos De Marchi
Chairman of the Board of Directors




Tax fabulations

Everardo Maciel, former Federal Revenue Secretary and ETCO Advisor
Everardo Maciel, former Federal Revenue Secretary and ETCO Advisor

The usual complexity of the tributes also contains an aura of mysteries, which, in turn, constitute a generous territory for fabulations.

Thomas Piketty, a French economist, soon became a media star, due to the resounding editorial success of “Capital in the XNUMXst Century”.

It is an analysis of income and inequality in contemporary society, full of opportune literary references and founded on a formidable collection of statistics and historical facts.

The deserved success will, ironically, contribute to the increase of inequalities, due to the fortune that the author will accumulate with conferences and book sales.

The fascination with media gestures is perhaps what explains the author's refusal to “Legion of Honor”, ​​a commendation granted by the French government, under the argument that honor cannot be bestowed by the State.

Less, Piketty. The title of the commendation reproduces only a consecrated Gallic tradition. Were it not for the State, who should deliver the commendation?

What is most impressive about Piketty, however, is his insistence on proposing, as a remedy for inequalities, a confiscatory taxation of capital rents and inheritances, on a world scale.

North Korea's and the Islamic State's comments on the proposal are not known, but among experts, except those linked to blind ideological commitments, there was a unanimous rejection, as it is an insubstantial and unviable thesis.

Regarding the proposal, the comment made by Wolfgang Pauli (1900-1958), an Austrian who was awarded the Nobel Prize in Physics, when compelling a work by a colleague: “it is not even wrong”.

To placate criticism, Piketty reacts by stating that the proposals are only intended to provoke debate. It could have been more parsimonious.

In Piketty's wake, from time to time, theses emerge that aim to mitigate the problem of inequality in Brazil through taxes.

The authors of these theses, in fact, overestimate the power of taxes and underestimate the imagination of tax planners, in a globalized world, with great mobility of people, companies and capital.

Taxes, at most, may have an incidental impact on inequalities, the understanding of which involves numerous other variables, such as education, health, social protection, level of economic activity, etc.

Furthermore, it is necessary to investigate the foundations of the theses, often based on clichés that result in naive (axiomatic) theories, which are essentially committed to premises and consistency, but not necessarily to reality.

A recurring cliché is the assumption that the tax systems in which consumption taxation prevails over income are regressive (unfair).

This hypothesis may be true in tax systems where consumption admits one or a few rates and the taxation of income is effectively progressive, considering its rates, calculation basis and exemptions.

Denied the premises, any assessment of the tax justice of a tax system can only be made with an analysis of the specific situation.

In Brazil, for example, consumption admits overlapping taxes (ICMS and IPI), each with very peculiar characteristics, not to mention CIDE-Combustíveis.

The ICMS that originally intended to be the second experience, at the international level, of value added tax ended up being a sui generis tax, in an identity crisis. Aside from that, it is presumed to have more than 40 effective rates.

The IPI is in no way comparable to excise taxes, generally levied on few products, such as beverages, tobacco and fuels.

There are, therefore, no reasons for, a priori, to conclude that consumption taxation in Brazil is regressive. In fact, progressive consumption taxation has long been discussed.

It is also common to include PIS and Cofins in the taxation of consumption. Such classification is an amazing eccentricity, since the basis for calculating these contributions, in the cumulative regime, is identical to that of income tax and, in the non-cumulative regime, it approximates income tax, in no way resembling the IPI or ICMS.

Strictly speaking, there has never been an assessment of tax justice in the Brazilian tax system, without clichés, let alone its repercussions on social inequities.


Everardo Maciel is a former Federal Revenue Secretary and ETCO Advisor