Folha de S. Paulo joins the Fair Price movement.
In an editorial, Otávio Frias Filho's newspaper defends a new agenda for Brazil, which includes reducing taxes. This agenda has already been launched here, in 247.
Nothing, besides the inefficiency and wasteful spending of the public sector, better explains the fact that the cost of living here exceeds that of developed nations.
What mysterious mechanism allows a person living in the United States—where the per capita income of $48 annually is four times that of Brazil—to pay 40% less than a Brazilian for a basket of 30 products?
Do the low dollar and high real explain such a difference? After all, the more valued the national currency, the more expensive goods bought here become compared to the same goods purchased abroad – for this reason, when the real is stronger, imports are stimulated.
The answer, however, is no. A study by the Efficient Brazil Movement (MBE), a civil association focused on boosting the productivity agenda in our economy, showed that even with the dollar more valued, quoted at R$ 1,85, Brazilians spend, on average, 30% more to acquire the same set of goods compared to seven other nations.
Brazil, it is argued, has a social welfare structure—universal health, education, and social security—of unusual size for a middle-income nation, which increases the cost of living here. This is a partial explanation, since in fact the cost of these benefits is reflected in the prices of products and services, in the form of taxes transferred to the government.
This may explain some of the difference with China, for example. But why is Brazil more expensive than France and the United Kingdom, where the social welfare network, in addition to being universal, offers public services of much higher quality and volume? The answer lies in the inefficiency of our economy – located primarily in the public sector.
The federal government, states, and municipalities take approximately R$40 out of every R$100 produced annually from society through taxes and loans. In addition to a lack of concern for maximizing the return on investment of these resources, the government invests little in infrastructure such as roads, ports, railways, and airports.
In short, high taxes and interest rates—a direct consequence of excessive government spending—increase the cost of products and services in the country; and the precarious and insufficient infrastructure reinforces this phenomenon. A very clear example will come when the airport boarding fees to be privatized by Dilma Rousseff's administration are made explicit. Decades of low investment and inefficiency at Infraero will once again burden the budgets of families and businesses.
MBE proposes that the tax share be reduced, over the course of ten years, to R$30 out of every R$100 produced. This would be a considerable effort, although it would not mean cuts in public spending – which would continue to grow, but at a much more modest rate than the exorbitant rates of today.
If Brazil doesn't want to become a cheap country, in the pejorative and definitive sense of the term, it will have to confront this kind of agenda. Let it at least start soon.