Fiscontal The accounting as a source of resistance to the economic crisis SS Tap Arq Fisco

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The cost of labor in the Brazilian industry is still one of the highest in comparison to other countries.

While in Brazil this cost rose 6% in the period 2004-2011, the average of six world economies fell 14.6% in the same period. The data take into account the information which is available at the BLS (Bureau of Labour Statistics), the Department of Labor Statistics of the United States, and the OECD (Organization for Economic Cooperation and Development).

Comparisons were not made with Latin American countries or BRICs (Russia, India, China and South Africa, besides Brazil) due the lack of reliable information, according to the study of FIRJAN (Federation of Industries of Rio de Janeiro). "Reducing the cost of labor is directly related to investments in research and development, and reforms in the labor and social security legislation", says Mercês.

"With the outbreak of the global crisis, the U.S. and Europe have realized the need to cut costs to compete in the international market", he adds. While Brazil invests 1.16% of GDP in Research and Development (R & D) in Europe and the U.S. the investment is 3%.


In fact, the country is on the opposite of competition. The investments made by Brazilian companies in R & D had a decrease of 18.3%, according to a study by the international consulting firm Booz & Company. Expenditures increased from U.S.$ 3.7 billion (in 2012) to U.S.$ 3 billion this year. In the world average, investments in this area rose by 5.5% over last year and reached U.S.$ 638 billion, a thousand public companies took part in the survey.

Carlos Pastoriza, director of Abimaq association of manufacturers of machines, says the growth of wages in the sector grew 30% in the past decade, while the productivity has not reached 15%. The segment of machines is one of the most affected by the combination of sharp decline in production activity with increased spending on payroll, according to the analysis done in 15 segments of the manufacturing industry.

"If you pluck up a plant in Germany and installed it in Brazil, held jobs, technology and other characteristics, the final product here would cost 37 percentage points higher. Only the weight of the supplies and paper correspond to 20 percentage points", he says.

Of the total amount of machinery "consumed" in the country, 65% are imported and 35% are national". We are facing a silent and masked deindustrialization. Industries are becoming assemblers of products, which leads to the destruction of jobs and the supply chain, since our product is unable to compete with imported ones", Pastoriza says.

The industry maintains a system of differential taxation, as occurred in the automotive, decreasing IPI and other tax incentives. "It takes an Innovate - machines (in allusion to Innovate - Auto) to recover productivity", says the director of the association.

In construction, despite technological advances that allowed, for example, companies in the sector doubling its manufacturing capacity of housing to meet programs like “My House, My Life”, productivity is still in balance with the cost of labor.

"Although there are advances in productivity, wages grow at uneven pace, mainly because of the shortage of skilled manpower in the industry", says Paulo Safady Simão, President of the Brazilian Chamber of Construction Industry.

"It used to be even worse in the past, but this is still a reality that industries face".

Text: Claudia Rolli
Version: Grazielle Segeti

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Article produced under the research developed at the Center for Fiscal Studies (NEF) from the Law Department of FGV. The opinions expressed are solely the responsibility of the authors.

With the challenge of encouraging and inducing good fiscal transparency practices in administrative courts of Brazilian states, the NEF/GV Law created the Transparency Index of the Administrative Litigation (iCAT). The iCAT is produced based on the information portals of transparency of the courts by analyzing 10 criteria, among them the availability of digital: objected judicial offense, procedural updating, Judgment dockets, decisions at first and second instances, time of stay, processes stock.

The result of the survey, conducted in the first half of 2013, pointed to a troubling scenario because, on a scale of 0 to 100, 27 of the 29 bodies of collection were evaluated under 40 points, which shows the difficulty of access to information in Brazil obstacle to good governance and efficiency of tax administration. The state of São Paulo took first place with 53 points total result of the measurements, followed by Santa Catarina with 52 points. It is noteworthy that these are the only two states that allow citizen access to court decisions. I wish all the administrative courts made them available on their portals.

In a country with over 100 million users of the internet, such as Brazil , the creation of digital databases opens the way to overcome practical problems of taxation law, contributes to the increased fiscal transparency and provides a greater legal certainty. Moreover, it enables the efficient performance and facilitates the social and institutional management control, embodying the fundamental right to information prescribed at the Article number 5, paragraph XXXIII of the Federal Constitution, regulated by the Law number 12.527/2012.

The digital technology, despite have been part of the taxpayer everyday for a few years, due to the increasing automation of tax obligations, has not reflected a high degree of transparency of the Brazilian tax authorities, so it is worth to checking the transforming experience of the Court TIT/SP for the last 4 years.

After the Law number 13.457/2009, regulated by the Decree number 54.486/2009 which regulates the computerization of the tax administration process in the state, the Court TIT / SP allowed the digital access to citizen information on the website www.fazenda.sp.gov.br/tit. At first, there were approximately 10,000 registered decisions of first and second instance. Currently, there is already more than 80,000 trial decisions, published since 2005, with a continuous database updating. The objective is to gradually include the prior decisions to 2005.

Before the modernization, given the absence of registration of the processes by subject, the access to court decisions could only be entered in the case number. Although the distribution of "Digest" with some decisions of the Boards of TIT/SP, the material was insufficient to make the Jurisprudence and enable the general knowledge. This situation favored lawyers with greater activity in the tax administrative litigation, because the volume of defended cases enabled them to deeply understand the interpretations of the court. The use of digital technology gave rise to a significant change, seen it enabled the fair competition among professionals.

According to José Paulo Neves, president of TIT/SP, the creation of the digital system was late since it depended on building a foundation, otherwise it would be just "computerize chaos". Therefore, in 2008, the court went through a restructuring, revamping their cameras to give the procedural acts quickly and meeting the demands of the electronic process. Internal cultural changes have also been introduced, such as the implementation of inflation targeting regime, and defined the operational routine digital litigation.

The TIT/SP is an organ of the Coordination of Tax Administration of the Department of Finance with adjudicative function under administrative proceedings. It consists on 16 chambers of judging ordinary appeal and request for administrative reform judged. Its upper chamber, considered as the largest organ, is composed of 16 different judges that comprise the judging chambers; its main task is to harmonize the case law of the court.

Today, at the TIT/SP, the process is electronic from start to finish (portal ePAT). The next step is making the integration between digital systems of the Department of Finance, as well as those with external agencies, especially the TJ/SP, to accelerate the deployment of answers to formulated questions and facilitate the electronic tax lien.

It is effervescent the society's demand for transparency in Brazil. The iCAT encourages the institutional improvement of the Brazilian tax authorities, making them rethink and refine the used model, not only to meet the demands and regulatory requirements, but also to assist its achievement. "iCAT is a motivator of behavior change and the search of mechanisms to improve the efficiency of the courts", said Neves.

The NEF/GV Law seeks to find original solutions to overcome the problems of the Brazilian society, seeking strategies, such as the iCAT, which enables the application of law in Brazil's development, encouraging the transparency in taxation and inducing good practice of law.

Text by Andreia Scapin
Source: Conjur
Version: Grazielle Segeti

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