Tag: Underground Economy Index

Underground Economy Index dramatically slows down in 2014

Underground Economy Index 2014Disclosed on November 12, the share of the underground economy in GDP, measured by the ETCO's Underground Economy Index (IES) in conjunction with the Brazilian Institute of Economics of the Getúlio Vargas Foundation (FGV / IBRE), should reach 16,2% in 2014. The result represents a decrease of 0,1 percentage point in comparison with 2013 and indicates a tendency towards a slower pace in reducing informality.

In absolute values, the estimate is that the underground economy - the production of goods and services not reported to the government, which is outside the national GDP - exceeds the R $ 830 billion mark in 2014.

In the evaluation of FGV / IBRE researcher, Fernando de Holanda Barbosa Filho, the result was directly impacted by the low growth of the economy in the year. “The economy is slowing down, as well as credit, and employment has grown little. This has a direct impact on formal work, which naturally falls, giving way to informality ”, he explains. According to him, not even the tax exemption policy applied in 2013, which now becomes definitive, was sufficient to face the low economic performance and maintain the downward pace of the underground economy. "However, were it not for the exemptions, we could have an even more severe picture", analyzes the researcher.

For him, even the implementation of MP 615/13, which extends exemptions for new activities, should not change the scenario much from now on, “because the relief of the tax burden has already reached most sectors and its effects have already been captured” .

For ETCO's Executive President, Evandro Guimarães, “there is no denying the importance of exemptions for the economy as a whole, but, as far as we can see, their effectiveness with regard to formalization, tends to stabilize”. According to him, these measures should be analyzed from a more lasting perspective. "It is the moment to carry out the long-awaited tax simplification, so that the tax relief reaches more broadly the productive sectors of the economy".

What is certain is that informality brings direct losses to society, creates an environment of transgression, stimulates opportunistic economic behavior, with a drop in the quality of investment and a reduction in the growth potential of the Brazilian economy. In addition, it causes a reduction in government resources for social programs and investments in infrastructure.

FGV: underground economy has the lowest drop since 2003

The size of the underground economy - the production of goods and services not reported to the government - has shrunk this year at the lowest pace since 2003, according to a study released by the Brazilian Institute of Economics of the Getulio Vargas Foundation (FGV / Ibre) and by the Brazilian Institute of Ethics in Competition (Etco). In 2014, this sector should represent 16,2% of GDP, from 16,3% in 2013 - that is, a reduction of only 0,1 percentage point, the lowest since 2003. In developed countries, the index revolves around 10% of GDP.

Source: R7 Notícias | 12/11

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Informal economy in Brazil should move more than Israel's GDP

IESEconomic activities that are not reported to the government are expected to generate R $ 830 billion in 2014, more than Israel's GDP (Gross Domestic Product) last year, which was equivalent to about R $ 742 billion.

The Underground Economy Index was released this Tuesday (12th) by the Brazilian Institute of Competition Ethics (ETCO) and by the Brazilian Institute of Economics of the Getulio Vargas Foundation (FGV-Ibre).

In addition to the informal market, the indicator calculates everything that moves in the country, but is not officially reported to the government. For example, a factory that produces 100 pairs of shoes and declares only 90 to the government collaborates with 10 pairs for the so-called “underground” economy.

This R $ 830 billion represents 16,2% of the Brazilian GDP, a deceleration of 0,1 percentage point in relation to the proportion of last year (16,3%).

Source: Uol (economy) - 12/11/2014

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Underground Economy Index confirms downward movement

The Underground Economy Index (IES), released at the end of May by ETCO together with the Brazilian Institute of Economics of the Getúlio Vargas Foundation (FGV / IBRE), reached the mark of 16,2%, a reduction of 0,6 point percentage over the previous year. This percentage resulted from the introduction of PNAD Continuous data in the calculation of the index and which were also applied to correct the 2012 index.

In absolute values, the estimate is that the underground economy - the production of goods and services not reported to the government, which is outside the national GDP - exceeds the R $ 782 billion mark in 2013.

“The use of Continuous PNAD confirms the fall of the underground economy in the country, which we have been pointing out since the beginning of the historical series of the IES, in 2003”, comments the researcher from FGV / IBRE, Fernando de Holanda Barbosa Filho. This is because, according to him, the fall is even more relevant when the data from more than 5 small municipalities of the Continuous PNAD is incorporated, compared to the 3,5 of the previous PNAD. “Historically, formality is stronger in large centers, and this result shows that it is also spreading to small municipalities, even though the economy is no longer as vigorous. It is what I usually call the country's institutional improvement ”, explains Barbosa Filho.

Driven by access to credit, both for employers and for employees, who are forced to formalize their activities in order to obtain financing, the drop in informality may also be rooted in tax breaks for some sectors of the economy.

“As well as the tax exemption, other factors, such as the expansion of the use of the Electronic Invoice, the de-bureaucracy of tax processes and the policies directed at small entrepreneurs (MEI, Simples Nacional), show the importance of public policies to contain informality” , says ETCO's executive president, Evandro Guimarães. "Measures like these certainly have a lot of value in balancing the economy, and should always be analyzed from the perspective of reflexes in the short, medium and long term."

What is certain is that informality brings direct losses to society, creates an environment of transgression, stimulates opportunistic economic behavior, with a drop in the quality of investment and a reduction in the growth potential of the Brazilian economy. In addition, it causes a reduction in government resources for social programs and investments in infrastructure.

ETCO and FGV / IBRE: updated with data from the Continuous PNAD, Underground Economy Index confirms downward movement

Institutional improvement of the business environment and tax exemptions are pointed out, among other factors, as responsible for the continuous increase in formalization in the country.

São Paulo, May 27, 2014 - The Underground Economy Index (IES), released today by the Brazilian Institute of Ethics in Competition (ETCO) in conjunction with the Brazilian Institute of Economics of the Getulio Vargas Foundation (FGV / IBRE), presented the brand 16,2%, which represents a reduction of 0,6 percentage point in relation to the previous year. This percentage results from the introduction of data from the new Continuous PNAD in the calculations used to obtain the estimate and also applied to correct the 2012 index.

In absolute values, the estimate is that the underground economy - the production of goods and services not reported to the government, which is outside the national GDP - exceeds the R $ 782 billion mark in 2013.

“The use of Continuous PNAD confirms the fall of the underground economy in the country, which we have been pointing out since the beginning of the historical series of the IES, in 2003”, comments the researcher from FGV / IBRE, Fernando de Holanda Barbosa Filho. This is because, according to him, the fall is even more relevant when the data from more than 5.000 small municipalities of the Continuous PNAD is incorporated, compared to the 3.500 of the previous PNAD. “Historically, formality is stronger in large centers, and this result shows that it is also spreading to small municipalities, even though the economy is no longer as vigorous. It is what I usually call the country's institutional improvement ”, explains Barbosa Filho.

Driven by access to credit, both for employers and for employees, who are forced to formalize their activities in order to obtain financing, the drop in informality may also be rooted in tax breaks for some sectors of the economy.

“As well as the tax exemption, other factors, such as the expansion of the use of the Electronic Invoice, the reduction of tax bureaucracy and policies aimed at small business owners (MEI, Simples Nacional), show the importance of public policies to contain informality” , says ETCO's executive president, Evandro Guimarães. For him, "measures like these certainly have a lot of value in balancing the economy, and should always be analyzed from the perspective of reflexes in the short, medium and long term".

What is certain is that informality brings direct damage to society, creates an environment of transgression, stimulates opportunistic economic behavior, with a drop in the quality of investment and a reduction in the growth potential of the Brazilian economy. In addition, it causes a reduction in government resources for social programs and investments in infrastructure.

About the Shadow Economy Index
ETCO believes that knowing the size of the problem is critical to tackling it. Much is said, but little is known, about informality, piracy and evasion, as, as illegal activities, they are difficult to measure. The ETCO, in conjunction with the Brazilian Institute of Economics of the Getúlio Vargas Foundation (FGV / IBRE), has been publishing since 2007 the Underground Economy Index, a study that estimates the values ​​of activities deliberately not declared to public authorities, with the objective of evading taxes, and those of those who find themselves in the informal sector due to excessive taxation and bureaucracy.

Underground Economy Index falls 0,6 percentage points and reaches 16,2%

For Evandro Guimarães, ETCO's Executive President, it is necessary to simplify tax payments to avoid tax evasion and reduce the indicator.

Interview with the Chief Executive of ETCO, granted to Journalist MILTON JUNG in the Jornal da CBN, on May 27.

If you are unable to view the CBN audio player, access the interview here (mp3 audio)

Underground Economy Index remains in decline, point ETCO and IBRE / FGV

Impacted by the acceleration of formalization indicated by the Monthly Employment Survey (PME), an estimated index for 2013 is 15,9% of GDP

The Underground Economy Index (IES) released at the end of November by ETCO, together with the Brazilian Institute of Economics of the Getulio Vargas Foundation (IBRE / FGV), reached the 15,9% mark in 2013, which represents a reduction of 0,8 percentage point in relation to the previous year.

This means that, in absolute values, the estimate is that the underground economy - the production of goods and services not reported to the government, which is outside the national GDP - exceeds the R $ 760 billion mark in 2013.

“The process of formalizing employment in the country is here to stay. Factors such as the ever smaller demographic growth, with the consequent reduction of people in the labor market, influence the fall in unemployment and a low unemployment rate favors the reduction of informality ”, comments IBRE / FGV researcher Fernando de Holanda Barbosa Filho . He recalls the influence of the increase in the general level of education of Brazilians in the fall of informality. “Between 2001 and 2011 there was an increase of 22 million people with formal education”, says Barbosa Filho.

Despite the positive reading, it is necessary to consider that the unexpected acceleration of the drop in informality may be rooted in other specific factors, which should not be neglected, such as the temporary payroll exemption for some sectors of the economy. “The exemption from payroll, in theory, should have an impact on informality, but there is no way to affirm or make an analysis of the direct impact of the measure on informality, yet”, says the researcher.

For the Executive President of ETCO, Roberto Abdenur, "the current results reflect the desired structural changes in society, such as, for example, the increase in the educational level and the low unemployment rate, which is extremely positive for the country".

With regard to payroll relief measures, he highlights the government's effort to create incentive mechanisms for certain sectors of the economy. “We just cannot lose sight of the possible impact of this tax waiver on tax revenues and, consequently, on the provision of public services”, he evaluates. In 2012, the tax waiver was of the order of R $ 4 billion. For 2013, it is estimated to reach R $ 18 billion, while for 2014 the perspective is R $ 34 billion.

“Measures like this certainly have a lot of value in balancing the economy, but they should always be analyzed from the perspective of reflexes in the short, medium and long term. It is necessary to look at tax reform more broadly, so that it allows a more lasting and horizontal exemption ”, says Abdenur, recalling the need for other measures, such as the control of public spending.

For ETCO, informality brings direct damage to society, creates an environment of transgression and encourages opportunistic economic behavior, with a drop in investment quality and a reduction in the growth potential of the Brazilian economy. In addition, it causes a reduction in government resources for social programs and investments in infrastructure.

Underground Economy Index remains in decline, point ETCO and IBRE / FGV

Impacted by the acceleration of formalization indicated by the Monthly Employment Survey (PME), an estimated index for 2013 is 15,9% of GDP

São Paulo, November 26, 2013 - The Underground Economy Index (IES), released today by the Brazilian Institute of Competition Ethics (ETCO) in conjunction with the Brazilian Institute of Economics of the Getulio Vargas Foundation (IBRE / FGV), reached the mark 15,9% in 2013, which represents a 0,8 percentage point reduction compared to the previous year.

In absolute figures, the estimate is that the underground economy - the production of goods and services not reported to the government, which is outside the national GDP - exceeds the R $ 760 billion mark in 2013.

“The process of formalizing employment in the country is here to stay. Factors such as the ever smaller demographic growth, with the consequent reduction of people in the labor market, influence the fall in unemployment and a low unemployment rate favors the reduction of informality ”, comments IBRE / FGV researcher, Fernando de Holanda Barbosa Son. He also recalls the influence of the increase in the general level of education of Brazilians in the fall of informality. “Between 2001 and 2011 there was an increase of 22 million people with formal education”, comments Barbosa Filho.

Despite the positive reading, it must be considered that the unexpected acceleration in the fall in informality may be rooted in other specific factors, which should not be overlooked, such as the temporary payroll tax relief for some sectors of the economy. "The exemption from payroll, in theory, should have an impact on informality, but there is no way to affirm or carry out an analysis of the direct impact of the measure on informality," says the researcher.

For the executive president of ETCO, Roberto Abdenur, “the current results reflect the desired structural changes in society, such as, for example, the increase in educational level and the low unemployment rate, which is extremely positive for the country”.

With regard to payroll relief measures, he highlights the Government's effort to create incentive mechanisms for certain sectors of the economy. “We just cannot lose sight of the possible impact of this tax waiver on tax revenues and, consequently, on the provision of public services”, he evaluates. In 2012, the tax waiver was of the order of R $ 4 billion. For 2013, it is estimated to reach R $ 18 billion, while for 2014 the perspective is R $ 34 billion.

“Measures like this certainly have a lot of value in balancing the economy, but they should always be analyzed from the perspective of reflexes in the short, medium and long term. It is necessary to look at tax reform more broadly, so that it allows a more lasting and horizontal exemption ”, said Abdenur, also recalling the need for other measures, such as the control of public spending.

What is certain is that informality brings direct damage to society, creates an environment of transgression, stimulates opportunistic economic behavior, with a drop in the quality of investment and a reduction in the growth potential of the Brazilian economy. In addition, it causes a reduction in government resources for social programs and investments in infrastructure.

About the Shadow Economy Index
ETCO believes that knowing the size of the problem is critical to tackling it. Much is said, but little is known about informality, piracy and evasion, as, as illegal activities, they are difficult to measure. The ETCO, in conjunction with the Brazilian Institute of Economics of the Getulio Vargas Foundation (Ibre-FGV), has since 2007 released the Underground Economy Index, a study that estimates the values ​​of activities deliberately not declared to public authorities, with the objective of evading taxes, and those of those who find themselves in the informal sector due to excessive taxation and bureaucracy.