Decrease the weight of taxes

Author: Revista Época - Internet

Source: Agência Senado - Brasília / DF - 08/11/2010

José Fucs, with Aline Ribeiro, Humberto Maia Junior and Marcos Coronato

Few issues arouse as many passions in the economic area as taxes. Among the emerging countries, Brazil today has the highest tax burden. It should reach 37% of the Gross Domestic Product (GDP) in 2010, according to the Brazilian Institute of Tax Planning (IBPT). Each Brazilian has to work, on average, 148 days a year just to pay taxes. This makes products and services more expensive, limiting consumption, and decreases the competitiveness of Brazilian companies abroad. “You can't compete with China with a tax burden that, on average, is double that of them,” says economist Paulo Leme, from investment bank Goldman Sachs.

Taxes are not only high, they are complicated. According to a survey by consultancy Ernst & Young and the World Bank, Brazil is the country where companies spend the most time with tax bureaucracy: 2.600 hours a year. In Mexico, it is 517 hours. In Argentina, 453.

With the government increasing its spending instead of saving, it is unlikely to agree to discuss tax cuts. Instead. President Lula declared that the government needs high taxes to strengthen the state. However, there is growing resistance in society to the tax base. The Efficient Brazil Movement and the Brazilian Bar Association (OAB) plan to collect 1 million signatures in support of a project to reduce the tax burden and provide greater transparency to taxes. The movement also articulates a bench to support the cause in Congress. The idea is to approve a device whereby government spending will have to grow 1 percentage point less than GDP each year. The goal is to reduce the tax burden to 30% of GDP by 2030. By charging a lower percentage, the collection may even increase. says Carlos Schneider, organizer of Brasil Eficiente. "Otherwise, it will be R $ 9 trillion."



Why is it a problem
The tax burden of 37% of GDP drains resources from the private sector, makes products more expensive and compromises the country's competitiveness

How to solve

Set a limit for the expansion of public spending below GDP growth

The difficulties

There is in the government the notion that the State must be strong ”and, for that, it needs to charge high taxes

Dilma's position

Dilma says she is in favor of tax reform and reduced rates for micro and small companies

Human rights and taxation

Source: The State of São Paulo, 01/11/2010

Author: Everardo Maciel *

In a previous article, I commented on the inclusion of the tax on large fortunes in the bizarre III National Human Rights Plan, conveniently forgotten during the election campaign. I tried to emphasize the extravagance of inclusion and the insubstance of the tax.

I recently discovered something that amplifies the eccentricity of that proposal. “Law 002” intended to tax any equity whose value was equal to or greater than the equivalent of 10 million US dollars at a rate of 1%. The penalty for non-compliance with the obligation implied kidnapping the holders of the property. The "law" was enacted by Raúl Reyes, a FARC activist killed in 2008 in Ecuador. If the tax on great fortunes was previously supposed to be an oddity among French socialists, we come to know that it is also the preferred tribute for the Colombian narco-guerrilla.

In fact, the connection between human rights and taxation is expressed in sparse constitutional and infraconstitutional rules, having, moreover, been the object of doctrinal incursions, such as the remarkable work of Ricardo Lobo Torres (“Treaty on Constitutional Financial and Tax Law), and research works, such as the one carried out by the Instituto Brasiliense de Direito Público in collaboration with FGV.
The theme can be explored from different perspectives, such as the use of taxation to make human rights effective, the limitations on the power to tax, the observance of the principle of contributory capacity, the prevention of unfounded discrimination and tax privileges or, simpler and perhaps more objective, the enforcement of taxpayers' rights.

Taxpayers' rights are only incidentally included in tax reform proposals, because the initiative of the proposals is almost always the Executive Branch, which takes care to focus them mainly on matters of interest to the State. All of this is easily explained in a context of a marked deficit of citizenship.
Many countries have issued taxpayer rights codes. I understand that, in Brazil, it would be preferable to include it as a chapter of the National Tax Code, to make it clear that general tax rules must be accompanied by those rights. Without intending to draw the theme, there are some questions related to taxpayers' rights, which deserve reflection.

Normative instability is a factor that preserves transparency and takes advantage of the practice of tax surprises. Take, for example, the institution or increase of taxes. Today, the nineties prevail, sometimes combined with annuality.

This rule, apart from being continuously violated by the frequent revisions of the ICMS agenda, generates a clear incongruity. Public budgets, which must be based on relative certainty with regard to revenue estimates, are sent to legislative houses at the end of August or September, depending on the federative entity. The taxes, however, can be changed, depending on the case, until the end of the year. The solution to this inconsistency is to condition the institution or increase taxes to its approval by June of the previous year, except for those of a regulatory nature, under the terms of the Constitution.

Ortega y Gasset said that "clarity is the courtesy of the legislator". This could have been the reason that inspired the institution of the requirement, provided for in art. 212 of the National Tax Code, to consolidate, annually, until January 31, the legislation of each specific tax. This duty is solemnly unknown to the Public Power, which, however, complains that the taxpayer is unable to permanently monitor the legislation. The rule needs to leave the programmatic field for the tax, by establishing sanctions against the holder of the Executive Power of the taxing entity that disobeys the requirement.

Still on the path of transparency, there is a proposal to centralize consultation solutions, in effect erga omnes, through a parity body, made up of representatives of the tax authorities and taxpayers.

The imputation of fiscal responsibility has often been abusive, because it was made without prior notification, to the complete disregard of due process, out of mere suspicion and at any time after the launch. This truculence extends to the labor field. It is not uncommon for online attorneys to attach financial assets to lawyers, simply because, at some point, they have included a power of attorney to take care of clients' interests, not to mention the alleged joint and several liability of people who did not compete for tax violations. The matter deserves severe discipline to prevent the terror empire that is intended to be installed.

Finally, without less importance, I understand that the time has come to eliminate the procedural privileges conferred on the Public Treasury, in terms of double counting time for manifestation in processes and the unusual review necessary in sentences that favor the taxpayer.

* Everardo Maciel, tax consultant, was secretary of the Federal Revenue (1995-2002) / article published in O Estado de S. Paulo


PEC 233 does not simplify the system

Source: Diário do Nordeste - Fortaleza / CE - 17/10/2010

"IPVA, IPTU, CPMF forever / It is so much tax / I don't even know! ... / ISS, ICMS / PIS and COFINS, for nothing". The piece of music by Alagoan composer Djavan echoes the outburst of many Brazilians who cannot bear to pay so many taxes.

What to expect from the Constitutional Amendment Proposal (PEC) 233 authored by the Executive Branch, which has been under discussion in the National Congress since February 2008? Is it possible to cut taxes without reducing actions in search of social justice? What changes in Brazilian tax legislation could actually benefit the taxpayer?

The National Federation of State and District Tax Authorities (Fenafisco), which represents taxation, collection and state inspection workers, criticizes the proposal that has been in progress for over 30 months in the Chamber of Deputies.

"The tax reform should correct the errors of the current tax system, rationalizing it, simplifying it and making it more just and social, which is not perceived in the proposal approved by the special commission", says an excerpt from the Federation's technical opinion About the subject.

The entity considers that the PEC does not simplify or rationalize the tax system, nor would it achieve other objectives that it proposes.


According to the Federal Government's proposal, PEC wants to “simplify the national tax system, advance the tax exemption process”, in addition to “eliminating distortions that hinder the growth of the Brazilian economy and the competitiveness of companies, especially with regard to the so-called ´ fiscal war´ ”.

ICMS is the core

Harmonizing the legislation on the Tax on Circulation of Goods and Services (ICMS), which is a state responsibility, has been at the heart of the tax reform proposals sent to Congress since the Federal Constitution of 1988.

In PEC 233, a new ICMS is presented, which would be governed by national law and no longer by 27 laws of the states and the Federal District. For Fenafisco, however, this proposal has doubtful effectiveness and may generate legal uncertainty.

"In fact, there is a strengthening of the centralization of tax policies and revenues, as well as an increase in the tax entanglement that exists today, due to the multiple concessions that were made for the proposal to be approved", says the opinion of the entity. Another proposal is the creation of the Federal Value Added Tax (IVA-F), the largest revenue of which comes from the Contribution to the Social Integration Program (PIS) and the Contribution to the Financing of Social Security (Cofins). Fenafisco, on the other hand, considers that the VAT-F may provide an increase in the burden by using a tax base that exceeds the sum of the bases of the Tax on Circulation of Goods and Services (ICMS) and the Tax on Services (ISS). (CB)


Student has already received R $ 3 thousand

From invoice to invoice, student Janete Saraiva has been able to get back part of the tax amount she pays daily when consuming any product. From April 2006 to December 2009, she has already managed to receive around R $ 3 from participating in the Sua Nota vale Dinheiro campaign. Over the course of this year, she has already sent invoices to the Treasury Department twice, but is still awaiting receipt of new lots.

Meanwhile, it continues to collect other invoices in order to be partially reimbursed by taxes. “For every R $ 6 thousand in notes, I earn R $ 30. Worth almost anything (as long as it is higher than R $ 5)”, teaches the student. The campaign created by law No. 13.568, of December 30, 2004, became effective in 2005. Since then, Janete has started to collect tax documents. He asks for notes from family and friends and usually looks for them in supermarkets and other points of sale.

In addition, it encourages other people to do the same. In April 2006, he created a community on Orkut to guide and exchange tips with other campaign participants. The “Sua Nota Vale Dinheiro” community has 226 members.

According to Sefaz, the campaign intends, among other objectives, to motivate the issuance of tax documents, to make the population aware of the social function of the tax and to combat tax evasion. Despite some criticisms of public services, Janete praises certain government initiatives, such as cultural facilities, the Menezes Pimentel Library and the Dragão do Mar Cultural Center, and health, Albert Sabin Hospital, which she or her family have already used. "I see improvements, but there is no way to know exactly how taxes are applied," he says. (CB)

Haddad and Arida already advocate abandoning tax reform

Source: Monitor Mercantil - Rio de Janeiro / RJ - 11/10/2010

In the past 20 years, there has not been a day when the press and politicians did not talk about tax reform. Lula alone sent two projects to Congress. Every self-respecting economist calls for urgency in this reform and even in labor, because the burden on the payroll is enormous. The greatest evidence of tax inadequacy is the existence of an ICMS regulation for each state. The lawyer Condorcet Rezende goes so far as to say that, in certain cases, there is a legal conflict and, therefore, it is up to the entrepreneur to choose whether to run the risk of being fined by the state of origin or destination of the property. Another proof of the tax irrationality is in the creation of contributions - for which the money goes all to Brasília, without having to be distributed with states and municipalities.

However, two economists had the courage to admit that tax reform is an impossible dream. After all, the Union, states and municipalities want to maintain or expand their share of the pie - never reduce it, which makes the mission unattainable. Likewise, the politician who will take money from the South to the North or from the Southeast to the Northeast was not born. A president who wants to change the constitution to deal with taxes will fight with many, will have few adherences and many criticisms to respond. And he will lose a good tenure in these fights, in addition to winning opponents.

Pragmatically, Cláudio Haddad, from Insper, and Pérsio Arida, from BTG Pactual, saw - like the boy in the fable who detects that the king is naked - that no state will give up revenue. The president would spend political capital and, at most, make little change. In the State of Rio, an additional 5% is charged on energy and communications, under the pretext of combating poverty, and there is also the imbroglio of royalties. Certainly, Rio will be a government playing against the reform. São Paulo, the state that has the most revenue, should also not be enthusiastic about changes. Thus, Haddad and Arida propose to put aside the almost impossible task. They defend the thesis that it would be best to make small corrections and to address the problem.

There is no tax reform formula that will make everyone happy, since redistributing the pie is always a problem. The Kandir Law aimed only at stimulating exports and even today it generates insurmountable conflicts. Regarding the labor legislation, although it charges the payroll in 100%, they remember that no investment has been made in recent years. In return, they propose to impose strict limits on public spending, in all spheres - the opposite of what has just been done for the construction of stadiums, with increased indebtedness. They mention that, in the last eight years, the country grew by an average of 3,6% and public spending rose by 6,9%. And in 2009, only 6% of the federal government's expenditure went to investments.

Problems persist - in the 90s, 90 days of the year were lost to pay taxes and today there are 148 - but Haddad and Arida were able to see that only a superman could do tax reform.