IT'S ALL ABOUT TAXES

#1 23 April 2012 18:12:53

wjwoodward
wjwoodward
Macaé

IT'S ALL ABOUT TAXES

It’s all about tax revenues..... in a country like Brazil where the average individual is taxed to the hilt one would think there isn’t much room to increase taxes any further. That, however, does not impede the government from jacking up the taxes wherever and whenever the whim strikes them.

Income taxes presently range up to 28% depending on one’s earnings, the food you buy (on an overall average) has a 22.5% tax built-in, cars, electronics, medicines and just about everything else you can think of including water is taxed. That’s right, WATER is taxed. If you look at any of your utility bills here in Brazil, be it electricity, telephone, gas or water they all have various taxes applied. Only rarely is a tax ever reduced, rarer still are the cases where a tax once imposed is subsequently abolished. The only time that I can recall this happening in my ten years in Brazil was when the extremely unpopular CPMF, a tax on all financial transactions, the revenues from which were supposed to be used to help support the universal health system, was abolished after many years. This was done because the public refused to accept the fact that not one centavo of the taxes collected ever did find their way into the SUS coffers. The Brazilian citizens only narrowly escaped re-imposition of the CPMF recently.

All over Brazil people struggling to earn a living for themselves and their families are forced to create their own sources of income, working for themselves at anything that they can do. Job creation in this country is a joke. The jobs that the government creates are in the public sector and are all subject to very strict regulations, one of which is the process known here as a “concurso” essentially a test applied to the hundreds or thousands of applicants for each vacancy. One must first pass the test and then hope that there has been no fraud involved and the successful applicants haven’t simply “bought” their way into the job vacancy.

Rather than fight for unemployment insurance many opt to become street vendors, selling cheap merchandise such as clothing, small electronics, candy, etc., in order to survive. One would think that the government at all levels would be thrilled… “Ah, one less person being a drain on the public funds.” Not so! The government, in fact, goes after these individuals with a force that should be devoted to the war on drugs, but isn’t. Why? Because the things they sell are not generating tax revenues for… you know who.

Recently in the Pirituba neighborhood, where I live, a street bazaar that had operated unmolested in one of the main commercial areas for over ten years was dismantled. The operation involved some 75 police officers, 25 police vehicles, still other city workers and vehicles. Why only now? Everyone in the city government, every police officer knew of its existence. It was a very popular site and business was conducted openly, nobody bothered them before. Even public officials and police made purchases there, if the truth be known. The answer again is TAXES. Wherever you go in the city of São Paulo you will find street venders congregated on high movement areas. If you are at all observant you will also see the many times that they quickly pack up their merchandise and run off, simply vanish into thin air. This is because somebody has tipped them off to one of the frequent sweeps made either by police or city officials who confiscate anything they find, all in the name of more taxes. It’s shameful and it’s a scene that is repeated tens of times every day.

There are very highly publicized “raids” conducted on shops and malls selling pirated merchandise. Everything gets bundled up and carted off by the city. What gets done with it all is hard to say, but I guarantee it is not all destroyed. My bet is that a lot of it finds its way into the hands of city workers and police. This is not done so much because of the fact that they are defending the copyright and intellectual property laws that large multinational, and already rich, companies are constantly crying about, but rather only because it is not generating tax revenues for the city, state and union.

Yet, at the same time all police agencies are well aware the location of almost all of the clandestine bingos and electronic slot (gaming) machines in any city. One can find the machines in almost any small corner store or bar, the bingos operate in secret, but their locations are widely known. They do not get the same kind of oppressive treatment that the poor street vendors are subjected to, simply because they are operated by organized crime factions with the wherewithal to pay bribes and buy police protection that the street vendors cannot.

The government constantly complains about the increasing amount of smuggling of cigarettes into Brazil, mostly from surrounding countries like Paraguay. We see on news reports every day seizures of large loads of cigarettes made by the Polícia Federal and the Polícia Rodoviára Federal. The cargos are seized, again their ultimate disposition is dubious and the individuals involved are arrested. Do we see the same effort going into stopping drug smuggling, not really. So, what has the government done about the problem? In their WISDOM they have just increased the tax on domestic cigarettes. I get the mental image of a large flock of ostriches with their heads buried in the ground in Brasilia. Do the Brazilian politicians not understand that the increase in taxes will only make the problem of smuggling that much worse? Sure they do… they just don’t care.

I’m not saying that tax evasion is OK, neither am I saying that the street vendors, feirantes, camelos and small scale cigarette smugglers are not doing something wrong – they are. But, what I am saying is that their actions are quite understandable and for the most part they are not harming anybody in any significant way. If there was no demand for what they were selling they wouldn’t be selling it. If taxes weren’t so high in the first place then the average Brazilian would not have to look for cheaper, often illegal, alternatives and the “jeitinho brasileiro” would not be as necessary as it really is.

Maybe, just maybe, it is time for the powers that be to start thinking about making the richest Brazilians start paying a greater share of the taxes rather than exempting them from almost every tax that applies to the poorer members of society. Give the little guy some of the same tax breaks the rich Brazilians have long enjoyed. Radical idea, eh? So...... call me a radical.

Last edited by wjwoodward (23 April 2012 18:16:03)

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