ETCO Magazine Archives November

The new enemy No. 1 of hard-hitting tax debtors

Senator Ana Amélia talks about her Bill to fight companies that use tax defaults to win the market

They act this way in a systematic way, differentiating themselves, therefore, from that taxpayer who, in a difficult moment, fails to collect taxes, but shows an intention to regularize his situation.

Tax evasion in Brazil is a crime. The guilty can even go to prison. There is, however, a practice that causes practically the same losses as tax evasion, but it is not considered a crime and its fight has been very difficult in the country. This is the usual tax default, which occurs when the company informs its sales to the tax authorities , but simply does not pay taxes.

The consumptive debtor benefits from the lack of specific legal instruments to combat it and from the slowness of Justice to drag collection proceedings for years - often by working through oranges that, when the shares are definitively lost, have no equity to settle debts that millionaires. Meanwhile, it uses the advantage of unpaid tax to lower its prices and conquer the market at the expense of honest competitors, destabilizing the market.

The good news is that this practice may have its days numbered. In August, Senator Gaúcha Ana Amélia Lemos (PP-RS) presented a Bill to the Senate (PLS 284/2017) that regulates Article 146-A of the Constitution, allowing the creation of special taxation and inspection regimes. The initiative creates conditions for a much faster combat and effect of this type of company and has the support of ETCO.

A journalist with almost 40 years of professional experience, 31 of which covering Brasília's affairs for Rio Grande do Sul's RBS network, Ana Amélia entered politics in 2010. In her first race, she was elected senator with more than 3,4 million votes. Since then, she has stood out in Congress: she was chosen four times as one of the ten best senators in the Congress in Focus award, in 2013 she was appointed by the Inter-Union Department of Parliamentary Advisory (Diap) as the most influential woman parliamentarian in the National Congress and currently occupies second place in the Political Ranking, a survey that evaluates the legislative production of the 594 congressmen (senators and deputies).

On November 10, Senator Ana Amélia spoke about the purposes of PLS 284/2017 in an exclusive interview with ETCO Magazine.

Senator, your project seeks to regulate article 146-A of the Constitution. What is the main purpose of this constitutional article?

Senator Ana Amélia: Article 146-A of the Federal Constitution was formulated to prevent the use of tax as an instrument of competitive imbalance. The complementary bill (PL 284/2017) will allow not only the Union - which has always had the competence to deal with the issue - but also the States, the Federal District and the Municipalities to establish special differentiated taxation and inspection regimes, to neutralize the effects of taxes on competition.

In recent years, several business segments have been suffering unfair competition from companies that resort to illicit advantages, such as persistent tax defaults, to gain market share. Is the objective of the project to combat them?

Senator Ana Amélia: The bill establishes special taxation criteria, with the objective of preventing competition imbalances, without prejudice to the Union's competence, by law, to establish rules with the same objective. The intention is to avoid fraud, tax evasion, or even the use of persistent bad debt as a means for unscrupulous companies to increase their revenue and profit, gaining the market unfairly and harming competition. The project, therefore, has a broad spectrum, enabling the prevention of competitive imbalances regardless of how the tax is used to harm the Treasury and competition, including recurrent tax defaults.

How do you see the losses that the regular tax debtors cause to society?

Senator Ana Amélia: The Movimento Combustível Legal website informed, based on a study by the Getúlio Vargas Foundation, that tax evasion in the fuel sector today is R $ 4,8 billion. It is money that could be raised and invested in investments in health, education, security and infrastructure. Whoever commits this crime takes advantage of loopholes in the legislation that allow the habitual debtor to continue exercising the activity even if he has debts with the State. The persistent debtor obtains disproportionate advantages in relation to that competitor who works legally, since he has a much greater margin to work. Tax evasion impacts directly and negatively on citizens' lives. The money that would be paid in tax related to the sale of fuels could be reverted to services aimed at the population, since more than half of the amount charged to the driver, at the pump, is a tax. Tax evasion creates an environment of unfair competition, harming legally working dealers and distributors. Another crime that needs to be fought and that harms the consumer is adulteration in the fuel, as it pollutes the environment, and fraud at the pump weighs on consumers' pockets.

How can the creation of special taxation regimes help to combat these unfair practices?

Senator Ana Amélia: The special regimes consist of differentiated ways of complying with tax obligations in order to make it possible to collect the taxes legally provided for. When traditional means of collection do not work, due to practices adopted by debtors with a view to circumventing them, there is a need to provide the Tax Administrations with adequate tools to combat them efficiently. That is the objective of PL 284/2017.

Has the Supreme Court maintained the same jurisprudence?

Senator Ana Amélia: The Federal Supreme Court has precedents (70, 323 and 547) that prevent the adoption of indirect coercive means to compel the taxpayer to collect taxes, such as, for example, the imposition of special serious regimes that prevent the regular exercise of economic activity. However, in RE 550.769 and in ADI 173, the Supreme Court noted that the guidance contained in such overviews does not apply when the taxpayer uses the default of the tax as a means to explore his activity and gain market, because, in this case, the exercise of economic activity becomes illegal and, as such, does not deserve judicial protection. In this scenario, the principle of free competition must be respected.

Does the Supreme Court's new understanding seek to protect the market balance?

Senator Ana Amélia: Yes, in a weighting of values, the Supreme Federal Court understands that free competition should prevail over free initiative, when the abusive exercise of economic activity is verified, with systematic and unjustified default of taxes. In this way, the protection of the market is sought, considered national heritage by the Constitution (art. 219).

Today, because of the legal confusion, the collection processes of persistent debtors last more than ten years - and in that period the company causes great competitive damage. If your project is approved, will the solution be faster?

Senator Ana Amélia: This is also one of the purposes. The definition of clear taxation and inspection rules can speed up solutions and this will be beneficial not only to prevent unfair competition, but to prevent other irregularities that harm consumers and the environment. The project will separate the eventual debtor, who sometimes faces a problem and does not pay the tax for a specific period, but then makes an agreement and settles the debt, from that debtor who never pays the tax. Thus, the judiciary will be able to identify more accurately to make its decision. In addition, the Tax Administration may, in extreme situations, suspend or cancel the debtor's registration in the taxpayer register, which will allow the problem to be solved at its birthplace, avoiding the prolongation of its harmful effects on the market and society as a whole.

Could you summarize the main points of the project?

Senator Ana Amélia: The project foresees that the Union, states and municipalities can establish criteria for the fulfillment of tax obligations, such as, for example, special control over tax collection, maintenance of uninterrupted inspection in the establishment of a taxable person, anticipation or postponement of the taxable event and concentration of tax liability. incidence of the tax at a certain stage of the economic cycle, among other measures. It also provides for the alteration of the taxable person's situation in the taxpayer register to the suspended or canceled modalities. If the infractions persist, or if there is evidence that the company was constituted for the practice of structured tax fraud and for the production or commercialization of a stolen product or in non-compliance with the standards established by current legislation, this will be the treatment. The intention is to guarantee transparency and due process, without prejudice to the consumer and the owners of the establishments that work in compliance with the rules and ethical principles of the activity. The initiative also targets highly taxed sectors, such as beverages and cigarettes.

What are the types of punishment foreseen in the project?

Senator Ana Amélia: The bill determines that the administrative authority can change the status of the taxpayer in the taxpayer register to the suspended or canceled modalities. The suspension takes place when the infractions that motivated the application of a special regime persist, or the company does not have authorization from the regulatory agent or the competent supervisory body. The cancellation would be justified by reasons such as evidence that the company was constituted for the practice of structured tax fraud and for the production, commercialization or storage of stolen, stolen, falsified, adulterated goods or in non-compliance with the standards established by the regulatory agent or agency competent inspector.

Does the project preserve taxpayers' rights of defense?

Senator Ana Amélia: Yes, it provides for the prior summons of the taxpayer to exercise the right of defense, within a period of not less than fifteen days, and ensures the lodging of an appeal, without suspensive effect, which must be heard in up to ninety days, under penalty of immediate cancellation. differentiated regime, in addition to the individual application of the administrative authority, for up to twelve months, extension allowed by reasoned decision.

The project seeks to serve a noble and important cause, which is the fight against unfair competition. But can't it be used by states, municipalities or the Union in a distorted way just to increase revenue? Does the project make the limits clear to prevent this from happening?

Senator Ana Amélia: It cannot be used in a distorted way to increase tax collection because the special taxation criteria, foreseen in the project, are not apt to generate an increase in taxes. They only make it possible to collect the taxes already provided. In addition, its application must be preceded by a motivation that demonstrates the need, adequacy and calibration of the measures taken to protect free competition.

Can the differentiated regime be used in any sector and for any tax or does the project limit its application?

Senator Ana Amélia: The bill provides that the law is valid for any sector of economic activity in which there is a need to use differentiated tax instruments to ensure the smooth functioning of the market, with an emphasis on those in which tax is a relevant component in the composition of product prices or services and in which the structure of the production or marketing chain undermines the efficiency of controlling different forms of tax evasion. Only taxes levied on income, profit, financial transactions or equity are out of the reach of the project, given the characteristics of these taxes, which make them less likely to influence competition.

Senator Ricardo Ferraço had been chosen to be the project's rapporteur, but he excused himself at the end of October. How is the project now? What will be the next steps and what is your forecast regarding when it can be voted on?

Senator Ana Amélia: Senator Ricardo Ferraço's name is still listed as a rapporteur on the Senate portal. However, I imagine that, due to the 120-day leave, a new rapporteur may be appointed in the Economic Affairs Committee. From there, we will wait for the presentation and vote of the text in the committee. After that, the bill will still need to pass the Senate Plenary. Then he goes to the Chamber of Deputies. Being approved without modifications, it proceeds to presidential sanction. The commissions you will have to pass through the Chamber will be defined only after the project arrives at the House. There is no way to predict the approximate or exact time for processing, but I hope it can become law by the end of 2018.

The bad idea of creating a new tax on juices, soft drinks and soft drinks

Intention to reduce obesity by taxing sugary drinks is not supported by science and may contribute to increasing illegality in this market

A proposal under discussion in the Federal Government and in the National Congress tries to solve an extremely complex problem through a simplistic measure. It is the idea of combating obesity with the creation of a new tax on non-alcoholic drinks that contain sugar in their composition, such as soft drinks, juices and soft drinks.

Proponents of the proposal believe it would force consumption to drop and help stem the population's weight gain. But there are no studies in the world to confirm this theory and it finds resistance even among doctors and nutritionists. And it also counts on the opposition of business entities that see it as another attempt to increase the tax burden on the productive sector. ETCO is part of this group for an additional reason: the risk that the measure will benefit dishonest companies that make tax evasion the basis of their business. “In sectors that are already highly taxed, such as beverages, the higher the tax, the greater the risk of attracting illegality”, says the Institute's executive president, Edson Vismona. "The result is the deterioration of the competitive environment."

The concern has precedent. Until the early 2000s, the beverage market was one of the hardest hit by tax evaders. Factories that hid their sales from the tax authorities used this illicit advantage to practice artificially low prices and gain market share at the expense of serious companies. "At the time, tax evasion in the soft drink segment reached 30%," recalls Vismona.

In the following years, a more rigorous inspection of the sector, which included the installation of equipment for counting the packages filled in the beverage production lines, managed to reduce the problem. But the IRS abandoned this system at the end of 2016 to reduce expenses and the risk of tax evasion has returned. “Today, taxes are equivalent to 40% of the price the consumer pays for non-alcoholic beverages. Raising taxation even further, keeping inspection loose as it is, is folly ”, warns Vismona.

SERIOUS AND COMPLEX PROBLEM

The advance of obesity is a very serious disease that affects the whole world. According to the World Health Organization (WHO), since 1975, the rate of obese people on the planet has tripled. In Brazil, it rose from 11,8% to 18,9% only in the last ten years. Not to mention overweight Brazilians, who represent another 35% of the population. This epidemic causes enormous damage to people's health and public coffers. Diabetes, hypertension, stroke, degenerative diseases and cancer are some of the diseases related to being overweight. It is estimated that, each year, SUS (Unified Health System) spends R $ 488 million on the treatment of pathologies related to obesity.

But the problem is extremely complex. According to WHO, its roots are related to profound transformations that have occurred in the last decades. The population left the countryside for the cities; began to use means of transport and machines that reduced physical effort; many jobs today require spending the day sitting in front of the computer; sedentary lifestyle grew; the pace of life accelerated; stress and anxiety increased; more women went to work outside; it became more difficult to prepare food at home; the eating pattern has changed; and more and more people are putting on weight by consuming more calories than they spend.

To address the multiple causes of obesity, WHO has been making a series of recommendations to governments for years. There are dozens of actions that include programs to encourage sports (60 minutes a day for children and 150 minutes a week for adults); encouraging the consumption of fruits, vegetables, legumes and whole grains; educational campaigns in schools; preventive treatment in health institutions; reduced consumption of fat and sugar; changes in food labels to make their nutritional properties clearer; and other initiatives that require effort on the part of public agencies.

Last year, the organization added to this long list the suggestion to overcharge sugary drinks, a controversial idea that divides opinions around the world. This way, it became a priority. In June, the National Health Council, an agency linked to the Ministry of Health, recommended the creation of this new tax in Brazil. And a project along the same lines, authored by federal deputy Sérgio Vidigal, reached the National Congress, which held a public hearing on the theme on October 31.

INDUSTRY CONTRIBUTIONS

Leaders representing the beverage industry recognize the importance of participating in the movement to fight obesity and remember that this is already being done in the country. talked about it at the public hearing. He said that in the last six years manufacturers have reduced the amount of sugar in their products by 11% and that this reduction should reach 21% in the next four years. He also emphasized that the industry has been expanding its range of products, with the launch of drinks with different nutritional standards, including fruit juices without added sugar. And he recalled the fact that the industry as a whole decided in 2016 to stop advertising to children under 12 and that major brands, such as Coca-Cola, Ambev and Pepsico, made an additional commitment to stop selling soft drinks in schools with children that age - all through voluntary initiatives.

ABIR's president stated, however, that the industry does not accept being treated as “the main villain of obesity”, receiving discriminatory tax treatment. "A study by the research company Nielsen shows that, on average, sugary drinks represent only 4% of the daily calorie consumption of Brazilians," said Jobim. "Table sugar, the one that people add to coffee and other foods, accounts for 72% of sugar intake in the country - and is Brazil going to overcharge soft drinks?", He asked.

Data from the Federal Government itself question the relationship between the consumption of sugary drinks and the increase in obesity. According to Vigitel, a research service from the Ministry of Health that monitors lifestyle habits related to chronic diseases, in the same decade in which the obesity rate rose from 11,8% to 18,9%, regular soft drink consumption dropped from 30,9 , 16,5% for XNUMX% of the population.

The idea that increasing the tax on caloric foods may have an impact on reducing obesity also lacks scientific evidence. There are few international experiences in this regard - and the results are controversial. Proponents of the tax cite the case of Mexico, which introduced the surcharge in 2013 and recorded a 6% reduction in soft drink consumption the following year.

But the reality between the two countries in relation to this market segment is quite different. Mexico is the largest per capita consumer of soft drinks in the world. According to a study by the consultancy PwC, each Mexican drinks an average of 163 liters per year - more than double the 70 liters per capita registered in Brazil. And there, after the creation of the tax on sugary drinks, the total taxes on the product reached 28% - against the 40% that are already practiced here

REPLACEMENT BY BEER

In addition, the reduction in consumption was not accompanied by any evidence of improvement in obesity levels, which raises the hypothesis that people may have exchanged the drink for other equally caloric foods. Nutritionist Márcia Terra, director of the Brazilian Society of Food and Nutrition (SBAN), says that this possibility cannot be ruled out. She cites a study by Professor Brian Wansink, director of Cornell University's Food and Brand Laboratory (USA), which compared the behavior of two groups of American families over several months: one subject to an additional 10% fee on sugary drinks and the other is not. "In this study, there was a migration from the consumption of soft drinks to beer," says the nutritionist. In her opinion, it is necessary to better study consumer behavior to find out if such a tax has a positive, neutral or even negative effect on people's health.

MORE EFFECTIVE WAYS

Cardiologist and nutrologist Carlos Daniel Magnoni, from the Dante Pazzanese Institute, in São Paulo, agrees. Studious of the subject and active in campaigns to fight obesity, he mentions the conclusions of the research Overcoming Obesity: An Economic Analysis, carried out by the consulting firm McKinsey. The work compared several experiences of coping with the problem and concluded that there is no scientific evidence that overcharging sugary drinks reduces people's weight.

In Magnoni's opinion, there are much more effective ways that are little explored in Brazil. An example, according to him, is a project that Dante Pazzanese applies in São Paulo and intends to spread across the country called Obesity Zero. The goal is to direct more people to the nutritional guidance service and part of a simple action: measure the weight and height of all patients who arrive at the hospital, regardless of the reason. "Today, 60% of SUS patients are not heavy," he laments. "If they were, perhaps they could be better evaluated and guided from the point of view of nutrition."

Another doctor who does not believe in the effectiveness of the surcharge is professor of pediatrics Hugo da Costa Ribeiro Júnior, from the Faculty of Medicine of the Federal University of Bahia (UFBA), a specialist in childhood obesity. According to him, scientific studies confirm that being overweight is related to multiple factors, including the type of delivery, breastfeeding, food in the first thousand days, the habit of having breakfast. "All measures that disregard this complexity and seek the simplest solutions do not work and are not sustainable in the medium and long term," he says. "It is a mistake to focus on the management of specific foods: this does not educate and does not benefit from the point of view of setting up an adequate diet."

If there is no evidence that overcharging sugary drinks reduces obesity, the same cannot be said about its effects on the competitive environment. The example comes from Denmark, one of the most developed nations in the world that was also one of the first to institute a specific tax on sugary drinks, in 1930. The tax was in force for 83 years. During this period, the Danes paid the equivalent of R $ 0,85 in additional tax per liter of soft drink. In 2013, the surcharge was abolished - among other reasons, by stimulating the illegal beverage trade from neighboring Sweden and Germany, exempt from the tax. There, research shows that more than eight decades of tax to discourage soft drink consumption has only favored smuggling.