Several analysts believe that the fiscal debate is off limits. That the ideology of the market economists, or of “Faria Lima”, or even the liberals, imposes itself and forbids the discussion.
There is no such ban. It’s useful to look at the numbers a bit first. I consulted the IMF’s Governance Finance Statistics. The figures for the consolidated public sector’s tax burden, always as a proportion of GDP, in 2020 are as follows: Brazil, 39%; South Africa, 39%; United Kingdom; 37%; South Korea, 34%; Turkey, 31%; USA, 31%; Colombia, 29%; Costa Rica, 25%; Mexico, 22%; Ireland, 22%; Chile, 22%; Thailand, 21%; Peru, 20%; Paraguay, 18%; Philippines, 16%; and Indonesia, 13%.
In other words, to find tax burdens higher than ours, we have to look at the economies of continental Europe. For example, we have: France, 52%; Croatia, 48%; Italy, 47%; Germany, 46%; Czech Republic, 41%, among others. It is therefore possible to increase the tax burden. There is no ideology forbidding this debate. It is our political economy that prevents this debate.
The problem is that, since 2004 —when the National Congress rejected MP 232, which increased taxation on service providers—, society has refused to hand over more resources to the public sector.
The last chapter of this telenovela was the way in which Congress disfigured the PL (bill) sent by Paulo Guedes for tax reform. The PL had good measures that increased the progressivity of income taxes and increased revenue. The monster that was approved in the Chamber generates load reduction. No economist supported this monster. It is the fruit of our political economy.
According to the IMF database, out of a sample of 46 emerging and low-income economies, only five countries spent more than us on Covid-related measures: Indonesia, Peru, Serbia, Chile and Thailand. The other 40 countries spent less than Brazil. Where’s the ban?
On the other hand, it seems to me that there is a closed debate. An example. There is a demand for the public sector to play a more active role in stimulating research and development (R&D) activities. Popular Italian economist and London professor Mariana Mazzucato has championed this position. There is not the slightest doubt of its importance. And there is no doubt that this is a key field of action for the public sector. But no one wonders what we have done with what we already have.
We have an extensive network of public universities; public banks, such as BNDES and BNB; financial development agencies, such as Finep; direct development agencies such as Embrapa and Emprapii; numerous stimulus agencies, such as state research support foundations; etc.
Additionally, in the 2000s, we passed the Lei do Bem and the Lei da Inovação. During the PT period, there was no lack of resources for these and other institutions. What was the impact of this whole structure on the production of patents?
The interdicted debate is not about the size of the State, but about the effectiveness of this State in meeting its public objectives.
The expenditure ceiling was the technical way found to address the inconsistencies of our political economy.
If the left wants to increase public spending, it needs to convince society to hand over more taxes to the state. And, please, when Congress votes on a measure that raises the threshold for a company to be included in the Simples regime, vote against it.
I have over 8 years of experience in the news industry. I have worked for various news websites and have also written for a few news agencies. I mostly cover healthcare news, but I am also interested in other topics such as politics, business, and entertainment. In my free time, I enjoy writing fiction and spending time with my family and friends.
