Renowned experts met this Thursday (28) to debate the distortions of the tax system and the role of workers’ unions and popular movements in the dispute over the ongoing reform, where income from work is taxed more than income from capital.
“Capital dominates and affects the tax system more”, summarized the president of Sindifisco Nacional, Isac Moreno. He points out that precisely those who have the greatest distributive potential are calling the shots because they are over-represented in the National Congress in a very disproportionate way to those who are affected by the immense inequalities enhanced by the current rules of the Tax System.
“Tax justice is a fundamental instrument of struggle and should definitely be incorporated as a priority agenda for popular movements”, emphasized the president of the Fiscal Justice Institute (IJF), Dão Real Pereira dos Santos, at the opening of the seminar “Tax Reform for a Socially Brazil Fair: Development, Social Policies, Decent Employment and Income Distribution”.
The tax auditor was emphatic in stating that taxes are a radical instrument to reduce the concentration of income and wealth, strongly generated by the tax rules of recent decades. “The tax system was not appropriated by the world of work and cannot remain exclusive to business federations and offices”, he warned.
Pochmann: Brazil can change its position in world GDP with a progressive system
“Fighting to change the Tax System is an important part of changing Brazil’s position in the world”, emphasized the president of IBGE, Márcio Pochmann.
Four decades ago the country accounted for 3.2% of the world’s GDP while today it has fallen to 1.6%. Distortions in taxes contribute to this scenario. He highlighted that there was a neoliberal tax reform in the 1990s, “without debate to alleviate and soften taxes for those who earn more”.
:: Currently in the Senate, Tax Reform still requires arrangements and maintains hopes in the fight against inequalities ::
The cut in higher rates on higher incomes, the exemption of profits and dividends that has been in force since 1996, the approval of the Kandir Law for the most favored segment in exports are among the examples.
“The concentration of income is a privilege of exemptions and financial gains. There is a concentration of monopolized private power, with economic activities controlled by foreign capital. The importance of this fight in taxation could be a fundamental element in removing the country from extremely low economic dynamism,” he indicated. The unions and the social movement have the historic task of taking this agenda to President Lula in an organized way. It is our historic role to face these difficulties”, he concluded.
Nobel Prize in Economics demands taxation of the super-rich
“The super-rich do not pay proportionally to their income in Brazil. Taxing this segment is essential to create jobs, improve wages and make the economy grow. The progressiveness of the tax system is necessary and fundamental and fiscal policy is crucial for well-being”, declared Nobel Prize winner in Economics, Joseph Stiglitz, in a video recorded message.
Greater government role
“Putting the poor into the budget is not as difficult as putting the super-rich into Income Tax”, compared economist Paulo Nogueira Batista. Former director of the IMF and Brics, he demanded more offensiveness from the Lula government and considers it important that the third administration of his government carries out changes that can be made administratively, without depending on the will of the Legislature, such as renewing the staff in the area tax.
:: Taxing the super-rich affects 0.001% of Brazilians and would finance around 30% of Minha Casa Minha Vida ::
Progressive rates on income, regulating the collection of the Wealth Tax (IGF), increasing taxation on wealth, focusing on the Rural Territorial Tax, expanding taxation on inheritances and donations are some measures highlighted by the economist. He praised the government’s projects that propose taxing exclusive funds and income abroad, but stressed that the left needs to be more critical of the government.
Race and gender must be considered
Researcher Marilane Teixeira demonstrated the greater impact of tax distortions on gender and race, mistreating the incidence of charges on products most consumed by vulnerable populations, especially black women, than any other segment. There are numerous studies on this topic that need to be considered to do justice, emphasized the economist from the Center for Union Studies and Labor Economics at Unicamp.
“Privileged groups are organized and have representation in the National Congress while workers are underrepresented and the playing field is unbalanced”, stated the professor.
Without fair taxation, social deficit increases
“It’s workers and the middle class who pay. The richest pay the least. The big debate is now: how the public fund is constituted and how it is divided. This is the fight for a fair and supportive country”, summarized Dieese’s technical director, Fausto Augusto Júnior, after presenting the social demands and the deficit in basic social rights.
Currently, rates are reduced for those earning above 40 minimum wages. Above 320 sm, the rate is the same as those who earn seven.
For him, the challenge of the second phase of the Reform is to guarantee progressive rates on income. You have to face this.
Furthermore, there are distortions such as tax incentives that defund Social Security, such as pejotization to exempt profits and dividends or even low taxation of MEIs. Half of the workers are outside the social security system, which will worsen the condition of the poorest in the face of population aging.
Among the deficits presented are:
• 33.1 million people are suffering from hunger in Brazil (25.7% of families in the North and 21% in the Northeast.
• 58.7% of the Brazilian population (125.2 million Brazilians) is food insecure at some level. In the North and Northeast, the numbers reach, respectively, 71.6% and 68%
• 10 million people living in risk areas
• 100 million people without sewage collection
• 6 million housing deficit
• Deficit of 5 million places in daycare centers
• 1.2 million children aged 4 and 5 out of school Employment and Social Protection (Pnad-IBGE – 2022): • Around 9 million unemployed
• 4 million discouraged
• 5 million people underemployed due to insufficient hours (they would like and need to work more)
• More than 35 million workers without social protection and without retirement prospects in old age State Structure
• Deficit of at least 160 thousand public servants who retired in recent years and were not replaced.
“Without an organized and active movement it will be impossible to change. Our biggest problem is not the number of taxes – around 20 – it is the number of exceptions, incentives and misrepresentations of tax legislation”, points out Fausto.
The activity continued during the afternoon with debates on The Super-Rich on Income Tax: limits and challenges and Risks and uncertainties in payroll tax relief.
The seminar is promoted by the Federal Revenue Tax Auditors Union (Sindifisco Nacional), the Inter-Union Department of Statistics and Economic Studies (Dieese), the State University of Campinas (Unicamp) and the Fiscal Justice Institute (IJF). The hybrid and free event was broadcast on the promoters’ platforms.
Source: BdF Rio Grande do Sul
Editing: Katia Marko