The impact of smuggling on the reality of Brazilians

In an article published in the newspaper A Tribuna, in Espírito Santo on 14/10, the President of ETCO, Edson Vismona, talks about the conclusions of the Datafolha survey on smuggling and what is needed to fight it.


The impact of smuggling on the reality of Brazilians

by Edson Vismona

An unprecedented survey commissioned by the Brazilian Institute of Competitive Ethics (ETCO) for Datafolha brings surprising data. The survey of more than 900 people in the Southeast of the country shows that the majority of respondents (75%) believe that the entry of smuggled products in the country favors the growth of violence and crime.

And even more alarming: even in the face of this information, most respondents recognize that they will continue to buy illegal goods.

But what makes the smuggled product so attractive? Another question asked in the research can elucidate this question: the high taxes practiced in Brazil. For 86% of respondents, the increase in taxes on Brazilian products favors the entry of contraband products. This is because due to taxation, the national product generally costs more. It is the question of price.

Take for example the most smuggled product to Brazil, cigarettes, in which the tax burden can exceed 80%. It is not difficult to conclude why, currently, 30% of the Brazilian mark is dominated by contraband brands, generating, in 2015 alone, tax evasion of R $ 4,9 billion to public coffers. Currently, 19% of the Espírito Santo cigarette market is dominated by illegal brands.

Between 2012 and 2015, the smuggled cigarette market jumped 6% in the state, while the formal market suffered a similar contraction. while brands like Gifty and Bill are sold for an average price of R $ 3,77 - below the minimum price of R $ 5,00 established by law - the state accounts for losses of R $ 75 million, just due to tax evasion between 2012 and 2015. Therefore, they lose the government and the population and the criminals, extremely successful in their business, carried out on the margins of any Law, win.

It is certain that a tax measure would be of great help and could have significant effects. In the case of cigarettes, specifically, such a measure should seek a balance that would allow the effectiveness of tax adjustments in terms of reducing consumers from the legal to the illegal market, as recommended by the WHO itself.

In addition to the tax issue, the fragility of borders also needs to be fought, as it represents one of the main opportunities to face this crime. Specifically in relation to this point, the federal government has already been sensitized and determined the creation of a working group formed by several ministries related to the subject. A recent report by the Federal Court of Accounts (TCU) pointed out several opportunities for efficiency and, mainly, governance for the resolution of the border problem, which is of public interest and national sovereignty.

In the fight against smuggling, it is necessary, however, that the authorities, both at the federal and state levels, understand what society has already understood: tax increases are no longer tolerable and the government has a fundamental role in the establishment of an environment of legality and fair competition in the Brazilian domestic market.