The special committee which analyzes the economic crisis impact on the Financial and Market System area approved on Wednesday (15) the member of the chamber Antonio Palocci’s (PT-SP) report, which suggests more competition on the sector and less taxes on credit. “A series of measures must be adopted to improve the Brazilian market, with structuring actions, regardless the crisis”, remarked the rapporteur.

Palocci focuses on the document three sets of measures:
- the transfer of the competency to govern the competition among banks – nowadays assigned to Banco Central – for the Economic Defense Administrative Council (Cade- Conselho Administrativo de Defesa Econômica);
- the credit discharge, beginning by the 0,38% fix rate revocation of the Tax over Financial Operations (IOF- Imposto sobre Operações Financeiras);
- the credit card great services providers’ market power reduction, to make the sector more competitive and undercut the service for traders and customers.

The rapporteur affirmed that transferring to Cade the responsibility for the control of conditions to an effective competition among banks is the report’s most important topic. This supervision still would be in charge of Banco Central in situations where there can be systemic risk, that means, when the operation have an important impact to the banking system balance.”The competition issue is not a traditional Banco Central’s attribute, there is no at Banco Central for this, because of this we think that Cade should look to this question", affirmed.

The member of the chamber highlighted that the suggestion does not come to reverse the bank concentration tendency, but to assure that the sector is competitive." The banking concentration is not an evil itself, since it does not injure the competition principle”. It is possible to have great financial institutions competing among each other. One thing is the banking concentration and another is the inadequate competition. Usually you have the two things at the same time, but not necessarily”, affirmed.

Banking spread
Another aspect highlighted by the rapporteur was the credit discharge. Palocci suggested, for example, the 0,38% fix rate revocation of the Tax over Financial Operations (IOF- Imposto sobre Operações Financeiras).

He reproduced on the report World Bank’s study, with 2008 data, which puts Brazil as the Country with the largest banking spread in a ranking of 26 countries. The difference between the bank acquisition cost and what is transferred to the credit taker on the Brazilian market was of 36,9%, against 2,2% on Argentina and 1,6% on Switzerland. Paraguay, the country which comes after Brazil on the list, comes with a spread of 23,4%.

For the member of the chamber José Carlos Aleluia (DEM-BA), one of the causes for this distortion is the high national tax burden which accrues, direct or indirectly, on the credit. "It is a huge problem", affirmed.

On the report, it is suggest the expansion of positive registries and registration data portability. Palocci proposes, for example, that the banks’ charged tax for this last service be revoked.

Credit card
The approved report proposes a new sector regulation of the credit card sector, which includes, on the rapporteur words, the “prohibition of mandatory credit card brand logo; authorization for which accreditations work with more than credit card brand logo; and the sharing of machines that execute the credit card reading".

Palocci emphasized that the credit card is an important tool to boost the economy."The credit card increases tradesman security, mainly of the small business, because it withdraws the traditional current assets, cash and check, and informatizes the operation”, affirmed.

For the member of the chamber Ricardo Berzoini (PT-SP), the largest credit card service provider companies in the Country, Visanet and Redecard, make a real “blackmail” against the tradesmen. "The cost [for the service use] is absolutely disproportional", said.

The representative Miro Teixeira (PDT-RJ) highlighted that the credit card operation cost on Brazil is twice than the observed on the United States. According to him, this “abuse” has to end. “The Brazilian population pays much beyond what it should for this type of service”, said.

The committee president, member of the chamber Leonardo Quintão (PMDB-MG), affirmed that credit card costs can reach to 7% of products and services prices. "Either the system opens up and becomes competitive or it will be solved by the legislation", Palocci warned.

On essential issues, as it is the competition on the credit cards sector, he suggests to keep the committee’s job to follow the measures taken and propose through the time these measures improvement.

Works continuity
As Teixeira’s suggestion, a requirement will be referred to the Chamber’s president, Michel Temer, so that the special committee keeps working for about three months. With this, the committee’s members can follow the implementation of the suggested measures, mainly regarding credit cards, and suggest new proposals to the financial sector.

Reporting - Edvaldo Fernandes
Editing - Marcos Rossi
Translation – Grupo Solucion/Carolina P.C.M.