Representatives of that organization affirm that Brazilian taxes are among the highest in the world and quote Australia and Canada as examples

The director of the Center for the Administration and Tax Politics of the Organization for Co-operation and Development (OCDE), Jens Lundsgaard, said that Brazil is “testing the world limits” with the current tax rates. He also said that they are among the highest in the world, although that does not result in a larger collection – since the collection basis is smaller than in other countries. For him, the challenge of tax reform, in addition to simplification, is to increase the collection basis, so that the rates can be reduced.

Therefore, he affirmed, it is necessary that taxpayers believe that the taxes they pay are fair, which should attract them to work inside the formal market. “It is currently very complex to administer taxes in Brazil, since they are high, and to make so that the undertakers do not lose time by thinking in taxes, but by having ideas on how to become more competitive”, he said.

Those statements were made on Thursday (5), during a debate promoted by the rapporteur on the tax reform, Deputy Sandro Mabel (PR-GO).

Examples
Technicians of OCDE suggested that Brazil regard with care the examples of tax reforms implemented by Australia and Canada. Among the 30 member-countries of that organization, those are the ones which are the most similar to Brazil, in which taxes are split among a central government and states’ governments.

At OCDE, only the United States do not adopt the value added tax, and therefore, that issue was only reinforced: the adoption of a single tax on value added tax would be better for Brazilian, as is the trend in the whole world. Despite the fact that they have stressed that no model can be taken from one country to the other, Brazil can take advantage of the international experiences.

At the opinion of the chief of the Taxation Unity on Consume of OCDE, David Holmes, the Australian model would suit best. In 2000, Australia substituted the states taxes for a single national system, but in which the resources are collected by the government and destined to the states. Thus, the Australians solved their version of fiscal war which exists in Brazil, in which the states compete for the presence of companies by giving tax incentives. “But I think that you are not going to convince many governors to give up on their own public coffers, and therefore, that model can make the reform in Brazil difficult”, he evaluated.

The second best opinion, for Holmes, is the Canadian model. In Canada, a single federal tax was implemented, with the rate of 5% on value-added tax, and each county can implement supplementary taxes. There are two options at the sub-federal part of Canada that adopt an added value tax. At the county of Quebec, for example, there are two collection systems, the federal and the local one. “The simpler, the better. I guarantee that the Canadian undertakers would like to unify their states’ collections”, he said.

Goals
According to the representatives of OCDE, it was difficult in nearly all countries to implement a collection system by added value. That is a requisite for the entry in the European Union, and the European countries made it together, but the rest of the world is still in search of their own formulas.

The main difficulty, according to Lundsgaard, is that one cannot cut taxes suddenly, since the risk that the country cannot finance itself would result in the loss of confidence in Brazil by the international financial markets.

For him, it is necessary to improve the Tax on State Sales and Services (ICMS), which is already a value-added tax in the practice, but in which the credits for the collection at the production chain take long to return to the companies. The technicians defended the system of collection at the destiny, which would reach the final consume, and not the one of corporations. This is the reform proposal currently defended by the government. “Whatever a company buys does not matter, it receives credits so that tax is not a burden”, stressed Lundsgaard.

The chief of the Cooperation Unit with Economies of Non-Member Countries of OCDE, Richard Parry, said that although Brazil has worked with the organization in many opportunities, it has had little interest in the tax sector, and therefore, the opportunity of working with the committee on the tax reform of the Chamber was welcome. Sandro Mabel explained that he asked OCDE for the participation of some of their specialists, so that the deputies know the experiences to which he can have access in trips to France to study those models.

Report - Marcello Larcher
Editing - Wilson Silveira
Translation - Positive Idiomas Ltda