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Don’t Expect Lighter Taxes Soon, Says Brazil

Brazil’s Minister of Finance, Antônio Palocci, told a meeting of the Council of Economic and Social Development, earlier this month, that “in the very short run,” there is no room for a decrease in the country’s tax burden.

Palocci reaffirmed, however, the government’s commitment to making a concerted effort to avoid increasing the tax burden, which has been growing over the past ten years.


According to the Minister, the limit on the tax burden is defined by society, which has already made it clear that this limit has been reached.


“Reducing the tax burden would be ideal for all of us, but in light of the government’s social programs and fiscal obligations, there is no room to reduce the burden in the very short run,” Palocci declared.


According to him, the tendency is for the tax burden in 2005 to be less than it was last year, as a result of measures that were taken to lower some taxes. “We continue to work to achieve, over time, a tax burden with less of an impact,” he said.


In his speech, Palocci also underscored the second phase of the tax reform, on which voting should begin in the National Congress on March 29.


According to the Minister, the reform is of great importance for the nation’s economy, because it will unify the ICMS – “the country’s most important, complex, and voluminous tax” – in a single value-added tax.


“This is a change in legislation that many countries have already enacted with positive results, and Brazil is in the final stage of this important change.”


In Palocci’s view, the ICMS is a complex tax archive that makes the job of tax examiners and the lives of businessmen more costly. He affirmed that the change in the ICMS should produce significant results for the nation’s economy by reducing bureaucratic and processing costs and effectively improving the quality of the taxes collected in the country.


Translation: David Silberstein
Agência Brasil

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