Brazil loses ‘a pension reform’ a year in unpaid taxes by millionaires and companies

The data are part of the first edition of the report “Current state of tax justice”, which will be published annually.

The study was possible because, for the first time, in July of this year, the OECD (Organization for Economic Cooperation and Development) made the data from the so-called country-by-country reports, compiled by the entity in recent years, available to the public. five years as part of the Beps initiative. (Erosion of the tax base and transfer of taxable profits).

In these reports, all multinationals based in OECD countries and with a profit of more than 750 million euros (R $ 4.7 billion) per year are required to report their financial records, with data from each country in which the company operates.

“It is evident that there is a problem with the imbalance of public accounts in Brazil and it is necessary to make a fiscal adjustment, but the proposals always focus on the side of reducing expenses”, says Gabriel Casnati, ISP’s international project coordinator (International Public Services). ), a partner entity of the Tax Justice Network in carrying out the study.

“What the data shows is that there is room to think about adjustment through collection improvements,” says Casnati.

“The two main axes for this are the progressive tax reforms at the national level – because today, in Brazil, the poorest pay more taxes and the tax benefits for large companies could be revised – and the fight against tax evasion and avoidance, which are global problems, the solution of which requires international coordination. “

According to the ISP coordinator, the effort to increase tax collection is even more relevant in the post-pandemic world, where countries face a sharp increase in their debts and fiscal deficits, due to expenses in response to the coronavirus.

In Brazil, the Ministry of Economy estimates that the primary deficit (difference between tax collection and public spending, not including interest on public debt) should reach 12.7% of GDP (Gross Domestic Product) or R $ 905.4 billion in 2020. Gross debt is expected to reach 96% of GDP this year, surpassing 100% of GDP by 2026.

“Several countries in Latin America, and also Brazil, already had a very serious fiscal problem before,” says Casnati. “The pandemic has accelerated the crisis by forcing states to spend more. Governments on the left and right have had to urgently increase public spending, while revenues have plummeted.”

“The big debate for all countries in the coming years will be how to pay this bill,” he says.

In that sense, it is essential to put on the agenda of the day that large corporations and the richest 0.1% use legal and illegal mechanisms to transfer money abroad and drain resources from the country. Regardless of the ideology, politicians should worry about rescuing that money, as a way for the population to pay less for the crisis. “

By way of comparison, the study estimates that the loss of income in Brazil from unpaid taxes by multinationals and millionaires is equivalent to 20% of the country’s health budget or the annual salary of more than 2 million nurses.

Thus, the Tax Justice Network and its partners in the preparation of the report make some recommendations so that this situation of loss of income can be mitigated.

The first is that governments should introduce a tax on multinationals that are making profits deemed “excessive” during the pandemic, such as the global digital giants.

A second recommendation is the introduction of a wealth tax to fund the fight against COVID-19 and address long-term inequalities exacerbated by the pandemic.

Finally, the entities defend that the discussion on an international standard for the taxation of companies, in addition to measures of cooperation and fiscal transparency, should be carried out within the scope of the UN (United Nations) and not the OECD, since this entity it brings together only the richest countries.

Casnati also argues that the Beps project to combat the erosion of the tax base should be expanded, so that multinationals report their tax data not only to their host countries, but also to the countries where their branches operate.

For him, the declaration of financial records should include more companies, and not just those with profits of more than 750 million euros per year. Multinationals should also, in his opinion, be taxed as single entities, as many currently have their international operations considered as independent entities.

And, finally, to end the international tax war, the analyst believes that it would be desirable to create a minimum tax for companies globally. “This would avoid what happens today, an auction in contrast to those that give less [exige menos impostos] it wins and all countries lose income ”, says Casnati.

In June of this year, the ICRICT (Independent Commission for the Reform of International Business Taxation, in free translation) – a group formed by important names in the economy such as the American Joseph Stiglitz, the Frenchman Thomas Piketty and Gabriel Zucman, the Indian Jayati Ghosh and the Colombian José Antonio Ocampo – issued a document that proposes, among other measures, a minimum global tax of 25% on companies to prevent them from looking for countries with lower taxation.

At that time, some tax experts questioned the viability of the proposal, given the great multilateral effort that would be necessary to put this measure into practice.

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