The difficulty of carrying out reforms in the country, with the exception of some important advances in recent years, comes from two main factors: difficulty for Brazilian society to make choices and the defense of the status quo, interests, privileges, by groups, segments, regions. Everyone is in favor of reforms as long as they do not interfere with their “rights”, sometimes even transformed into constitutionally guaranteed “acquired rights”. This has slowed down changes, and led us to conform to what is politically possible, giving up what is necessary. Logically, in a democratic regime, changes must be negotiated, but we have been content with modest advances, which hinder the country’s growth.
By definition, the efficiency of public spending is lower than that of private spending, due to the necessary constraints and controls that need to be in place in the public sector, and due to the political variables frequently present in the allocation of resources. Therefore, the greater the transfers from society to the State, via taxes, the greater the inefficiency in the allocation of the country’s resources. As Brazil has the highest tax burden among developing countries, we increase inefficiency.
As the rating agency S&P highlighted in the last upgrade of Brazil’s sovereign rating, recognizing some advances such as tax reform: “the missing component has been the lack of progress in dealing with the government’s large, rigid and inefficient spending”. And we know that the new fiscal framework does not intend to take care of the growth in spending, on the contrary, it allows the expansion of expenses above inflation, which requires, on the other hand, a continuous growth in revenue. And the Minister of Finance, who should be concerned with the efficiency of spending and the sustainability of economic growth, has done nothing other than seek more taxes to cover the growth in public spending. So much so that the Ministry of Finance is now being called the Ministry of Revenue. With this, the increase in the tax burden is confirmed and the growth of the Brazil Cost is certain.
The State needs to learn to spend more efficiently the enormous volume of resources it already collects. We have to understand that progress comes from spending better and not from spending more. As in education, where we spend close to 6% of GDP, more than countries that are reference and have the best placements in the PISA test (International Student Assessment Program), where we are among the last placed. Spending more means consuming today, spending better means thinking about tomorrow. Countries only evolve when they invest in the future, when they manage to transform their potential into potential GDP.
