Criticism of the Lula Government’s Tax Reform

A Greater Burden on the Taxpayer

eyesonbrasil

Amsterdam, December 22, 2024 – Doctor Érica Gorga, from the University of São Paulo (USP), has been critical of the tax reform proposed by the Lula government. Her analysis points to several misconceptions which, according to her, result in an even greater tax burden for Brazilian taxpayers. This article explores these criticisms and the potential impacts of the reform.

Increased Tax Burden

One of the main points raised by Érica Gorga is the increase in the tax burden. The reform proposes the unification of several taxes into a single Value Added Tax (VAT), with an estimated rate of 25%, one of the highest in the world. Gorga argues that this unification, instead of simplifying, could result in a significant increase in taxes paid by sectors such as services, education, health and transportation.

Loss of Autonomy for the Federated Entities

Another important criticism is the loss of autonomy for states and municipalities. The reform provides for VAT to be administered by a national management committee, made up of representatives from the Union, the states and the municipalities. Gorga warns that this centralization could reduce the ability of federal entities to exercise their tax powers, leading to an unequal distribution of revenue and greater dependence on the central government.

Impact on the Economy and the Final Consumer

Gorga also points out that the reform could have a negative impact on the economy and the end consumer. The transition to the new tax system, which is expected to last until 2033, could generate instability and economic uncertainty. In addition, the various exceptions and rate reductions granted to certain sectors could result in a higher general rate for other taxpayers, increasing the cost of products and services for the end consumer.

International Criticism

Criticism of the Lula government’s tax reform is not limited to the national scene. Internationally, Brazil is already known for having one of the highest tax burdens in the world, with tax collection representing 32.95% of GDP. Studies show that, despite the high tax collection, the return on taxes in favor of social welfare is extremely low, placing Brazil in the last position among the 30 countries with the highest tax burden. This situation raises concerns about the effectiveness of the reform in improving the population’s quality of life.

Conclusion

Érica Gorga’s criticisms of the Lula government’s tax reform reflect legitimate concerns about the increase in the tax burden, the loss of autonomy for the federal entities and the negative impacts on the economy and the end consumer. With Brazil already being criticized internationally for its high tax burden and low social return, it is crucial that the reform is re-evaluated to ensure that it does not further exacerbate these problems. The search for a fairer and more efficient tax system must be a priority for the government, with a view to economic development and the well-being of the population.

Sources:

1 –wradiobrasil.com
2 –www.migalhas.com.br
3 –g1.globo.com
4 –www.revistavarejobrasil.com.br

What do you think about this issue?