Brazil is very close to finalizing a reform that would simplify the tax system and that has been accused of historical and that it is a political triumph for the president Luiz Inacio Lula da Silva and it could set a boost for that country, which is a kind of South American locomotive, since it leads the regional economic drive.
The objective of the measure, as anticipated, is to simplify the life of the Government, companies and families by modifying a system that, until now, is extremely complex. Also, look for fight tax evasion and increase productivity by unifying consumption taxes, among other benefits.
The ambitious project in the South American giant seeks unify the Value Added Tax (VAT)which applies to the state merchandise circulation (ICMS) and the service tax.
According to the Brazilian Executive, the changes would give more transparency to citizens about the composition of prices they pay to buy goods and services. Likewise, relief is expected for the low-income classes thanks to tax exemption for a national basic basket, whose elements will be defined by law.
Tax reform: a model for Argentina?
Along the same lines, the creation a tax refund system to reduce social inequalities, for the benefit of mass consumption. According to different organizations, both governmental and privatethe industry would be another beneficiary of the tax reform thanks to the fact that the taxes collected in a cascade that are paid at each stage of production would end.
However, the changes would be implemented gradually and would have an adaptation period until 2032. In addition, the project could undergo modifications in the Senate, since it remains to be defined some topics about VAT.
However, Argentina could take note of some aspects of the discussed tax reform in the neighboring country, since it also has a tax system that often goes against investment, production, job creation and exports and that, furthermore, encourages tax evasion and avoidance.
Although the project in Brazil is designed to be implemented over the next decade, its outline could serve as a example for Argentina that faces a complex tax system and sometimes, counterproductive.
Source: Ambito
