Brazilian Supreme Court decided to exclude the ICMS (Tax on the Circulation of Goods and Services) of the base to calculate the Contributions for the PIS (Tax for the Social Integration Program) and COFINS (Social Financing Contribution).

Last month the Brazilian Supreme Court decided to exclude the ICMS (Tax on the Circulation of Goods and Services) of the base to calculate the Contributions for the PIS (Tax for the Social Integration Program) and COFINS (Social Financing Contribution).

The system to charge these contributions was this way:

The first impression about this judgement is the fact it is minoring the federal taxation, but if you take yourself to a next level, doing a little deep looking in the actual political scene in Brazil, the thing get some more complicated. It is not about the Supreme Court’s decision, in accordance with the Brazilian Federal Constitution, but total disrespect with the public finance.

The point is that, the government, is trying to change constitutional rights of retirement, forcing the people to work over uninterrupted 35 years. More than this, government takes the argument that the cost of retirement payments is an impossible expense to be paid by the INSS (National Institute of Social Security – or less it was to be). This is a thing to be considered, because every worker has the contributions to the social security sliced of their payments every month, also the employers. In Brazil, the people pay the employed personal quote and the employer corporate quote – corporates also contribute, and if it doesn’t, the owner can be imprisoned. 

The fact is everybody, no matter if you are a singular person or a corporate, shall pay all the 04 contributions to social security system. Is it fair? Brazilian people think “no, it is not fair”, but nobody has the power to go against the Brazilian Supreme Court, and it is because of this, we will now link these situations.

The Ministers of the Supreme Court in Brazil are indicated, not by the people, but by the President, with the support of the Congress. What? Exactly! So, if you want to reduce the tax charges, because they are being used totally in dispatch with the Federal Constitution, the “pretorium excelsum” always say “no, your claim must not be provided, government is right”. Foreigners could say “wait a moment, in this case, the Supreme Court did the opposite”. Yes, in this case the Constitution was granted, but only because the government still have the power to elevate this or other taxes.

When a new tax is created, the government uses to stablish large aliquots, but minors it by using a decree. When is convenient, it goes and re-stablish the aliquots. This mechanism grant that the tax can be freely used to increase the federal incoming. In fact, the Supreme Court gave something that can be took anytime by the government, because we are talking about money, and like Cesar said “pecunia non olet”. No matter from where the money is coming, the Brazilian government will always get all that it wants.

The Supreme Court gave Brazilians two relevant reductions on the tax charge, the “dismiss of the payroll” and the “exclusion of the ICMS from the base of PIS/COFINS”. But nowadays, Brazilian people are paying the cost, because the government is trying to eliminate the retirements, BUT WITHOUT eliminating the obligation to contribute for the Social Security System.

Sad but true, the government in Brazil is not by the people, not for the people and not to the people. The role thing gets worst, when you start thinking about the places where the role money goes. Well, if everybody is paying, why the security system does not have enough provisions to honor its obligations?

The answer is DRU! True, believe me, the answer is DRU, abbreviation of “Desvinculação de Receitas da União” (Federal Revenues Unlink). Allowed by this legal permission, the Brazilian government can catch any amount of money from the Social Security System, and use as it wishes! As well as it gets! Don’t need to be a genius to conclude that Brazilians Security Systems money is being used to health programs, education, security, and other benefits to the population. Is It not? Oh, my God! Maybe not? It is possible that we have a lot problems with corruption in Brazil, but I don’t think so… The deputies and senators, men of the people, never could do this thing…

And someone may say Brazilians don’t work as well, but let us tell you something. Let’s check the facts, and applicate some basic mathematical concepts, ok?

Most of Brazilian people, must work 8 hours a day, 40 hours a week, to own 300 dollars for the entire month. The government takes about 30 dollars, so the guy only has 270 dollars to survive until the next payment. And he must work 35 years, so could claim for retirement. It means in Brazil the people work nothing less of 35 years, being paid with less than US $ 1.80/hour.

Brazil is a great country, but is like a sheep farm managed by nasty wolves! Maybe someone should write about this metaphor… Hey! Someone did! Well, let me talk only about the Brazilian Federal Republic.