Tebet: tax system generates “unsustainable cost” and takes away competitiveness from the industry
Tebet recalled that Brazil has more than 400,000 current tax rules, as pointed out by the Brazilian Institute of Planning and Taxation (IBPT). This “tax madhouse”, according to the former MDB senator, means that national companies have to spend much more time and money than competitors from other countries, which makes their products uncompetitive in the foreign and domestic markets.
“We have a system that is difficult to understand. This makes the productive sector, mainly industry, spend a lot just to understand the tax framework. It is said that, while you only need one accountant for every 500 workers in the common European market , in Brazil we need an accountant for every 200 workers. This Brazil Cost ends up becoming unsustainable. Brazilian industries cannot become competitive and so we have to import products more and more and close factories in Brazil.”
Federal deputy Vitor Lippi (PSDB-SP) stated that the Brazilian tax system is primarily responsible for the deindustrialization process that the country has been facing over the last few decades.
“In the last ten years, we lost 30,000 industries. We had 330,000 industries in 2013 and today we have 300,000. That means something around 1.4 million direct jobs. As each job within the industry generates three outside, we’re talking about 4 million jobs lost. Quality jobs, people who had health insurance, who had important consumption, good working conditions and this is causing precariousness in Brazil”, he pointed out.
Coordinator of the WG, Federal Deputy Reginaldo Lopes (PT-MG) was emphatic in highlighting the importance of the reform for the industry to once again be a protagonist in the country’s economy. “The tax reform is the great instrument of the country’s reindustrialization, which is very important for a nation.”
What can’t be missing
Tebet did not take a position on whether he is in favor of a single value added tax (VAT), which would be divided between the federal government, states and municipalities, or whether he prefers a Dual VAT, in which the collection of the Union is separated from the collection of subnational entities , as foreseen in the Proposed Amendment to the Constitution (PEC) 110/2019, which is in the Senate.
The minister argued, however, that it is important to establish consensus on some points of the tax reform. In addition to the institution of VAT, which would replace at least five taxes on consumption (IPI, PIS, Cofins, ICMS and ISS), she defended a transition period of 20 years between the current model and the eventual one approved by Congress. Nacional, the reduction of tax incentives and the creation of a fund to support states and municipalities that, by chance, lose revenue with the tax reform at first.
“I believe that it is a good kickoff for a fair tax reform, which can effectively make Brazil grow again in a sustainable, lasting way, with the generation of jobs and, mainly, income, because we know that the industry sector, although It’s not the one that employs the most, it’s the one that generates the most quality jobs, because it manages to pay a salary above the average minimum wage.”
Simplification should be a priority of tax reform
Tax reform should be voted by May, according to rapporteur
Cumulativeness and federal warfare
When recalling that the tax reform will end the Tax on Services (ISS), federal deputy Newton Cardoso Jr. (MDB-MG) said that the approval of Dual IVA, as proposed in PEC 110/2019, is the best alternative to calm the spirits of city halls of medium and large cities, the main opponents of the extinction of the ISS.
“We are extinguishing here the ISSQN, a tribute that concerns especially the mayors of medium and larger cities, because they (believe that) are going to lose a little control and autonomy over taxation. commission will certainly promote the Dual VAT, where the power of management, of taxation of the parcel, is of the municipality and the state.”
Federal deputy Aguinaldo Ribeiro (PP-PB), rapporteur for PEC 45/2019, which is being discussed in the Chamber of Deputies, said that the reform will have the role of ending the accumulation of taxes along the production chain. “The tax itself is part of the calculation basis of the tax that is calculated. That is why it is so odd. It is a tax that has become a point of extreme cumulativeness and that brings this damage from the point of view of efficiency and production of our country so that we have, in fact, a competitive country, because this weight falls on the shoulders of all Brazilians”, he pointed out.
Procedure
The Chamber’s Tax Reform Working Group expects the hearings to last until the end of April. The group’s idea is to present a final report on the discussions in May, as well as the text to be considered by the National Congress.
By Brasil 61
