Society demands urgent responses to the crisis, the pandemic, the technological-economic revolution, artificial intelligence. Big data, cryptocurrencies, robotics, 3D, internet of things, home office are making legal premises obsolete. "Everything that is solid is cut in the air".
Increasing challenges of the disruptive economy lead the tax principle of territoriality to mitigation, to the “knowledge economy” of geometric growth.
As Nietzsche said, "only as an aesthetic phenomenon does life seem justified." More scientific research, tourism, culture, art, education, sport, less hard and dirty jobs. The face of Rio.
Therefore, four principles for tax reform:
1) Simplification: today, we spend twice the world average in hours to collect taxes. We must reduce the load without losing revenue.
2) Decentralization: collection autonomy of each federated entity, at the address of the transaction.
3) Integration with the digital economy: it is not limited to the municipality, state, or nation; then, based on the corporate / tax / banking domicile of the buyer / seller. The distinction between goods and services is overcome by the transaction, a single taxable event.
4) The Negative Income Tax / Renda Cidadã: inspiration from Friedman and Eduardo Suplicy.
Where to find new features?
Let's see. Sin tax: alcohol, cigarettes, and gambling. Or hidden tax, taxation on the feeling of guilt.
Here the tax burden came from 7%, in 1920, to 35% today. The fight against piracy estimated illegal trade and smuggling at R$115 billion (U$20b), 67% of which were cigarettes alone. Tobacco appears in the 15th century in the Andes and in the 17th century it is a major export item. Today, it raises R$12 billion (US$2.1b) per year. In Paraguay, the rate is 18%, here it varies from 70% to 90%, but 60% of our consumption is contraband and finances organized crime.
Raul Zafaroni, of the Argentine Supreme Court, says: “The State becomes the regulatory agency for crime. Rate the legal and stimulate criminal system.” The “taxation of sin” leads 60% of consumption to pay zero tax. The best would be to reduce rates, make the legal product competitive, without increasing consumption, but increasing revenue.
Another "sin", gambling, makes R$ 11 bilhões (US$1.9b), basically in lotteries. Jogo do bicho, bingo halls, casinos, slots and sports betting are practiced without any counterpart to society, such as paying the Renda Cidadã aid program.
In difficulties, at the end of the Empire, the Vila Isabel Zoo made João Batista Viana Drummond create a lottery with 25 animals. Today, Zona Oeste and Baixada alone have 1,500 bet points that earn R$500 million (US$87m) per month.
There are 75 million fans of mobile games here, a global market of US$155 billion in 2024.
In 75% of countries gambling is legal; Brazil is among the 25% where it is not. Nevada raises US$ 1 billion, in Las Vegas we have 4 million tourists per month. The taxed gambling would compensate Rio for plundering royalties and help the Renda Cidadã aid program.
The world standard Federal Revenue would control individuals, paying taxes. There is Caixa Econômica Federal with 34 thousand terminals and 12 thousand lotteries, in 4.5 thousand municipalities; and the TSE counts 100 million votes in 5 hours.
After all, where there is demand, someone will provide the service.
“We invent our love” (Cazuza). But you don't even have to invent to find resources for Renda Cidadã.
Daniel Homem de Carvalho
Lawyer
Hélio Paulo Ferraz
Businessman
