Red Tape Addiction

Written by Elma Lia Nascimento    Luís Carlos Ewald, a professor of Economics at PUC-Rio (Pontifícia Universidade Católica -- Pontifical Catholic University, wrote recently in Rio's daily Jornal do Brasil: "How many opportunities of generating new jobs were lost due to the discouragement of heroic entrepreneurs who gave up due to the unnecessary documents, negative or positive certificates, marriage and death certificates, medical and dental certificates, police clearance, vaccinations, pedigrees, CGCs (Cadastro Geral de Contribuintes -- Taxpayers' General Register), IPTUs (Imposto Predial e Territorial Urbano -- Urban Building and Land Tax), alvarás (licenses), permits, authorizations, collateral signatures, cadasters, criminal records, X-rays, insurance, paternity DNA, certified signatures, certificate of occupancy, proof of residence, IPVA (Imposto sobre Propriedade de Veículos Automotores -- Tax on Ownership of Automotive Vehicles), blood group, Rh factor, and so many more, all with certified photocopies." To start a sole ownership company, the individual faces a via Dolorosa of different places and assorted lines. He has to present a $35 Registro de Declaração de Firma (Business Declaration Record) obtained at the Junta Comercial (Board of Trade), a Fire Department Approval Certificate ($37), and a $208 Alvará de Localização (Localization License) issued by City Hall. For a business corporation, these documents must be accompanied by a certificate showing that the specific business name is not in use, as well as a Registro do Contrato Social (Certificate of Incorporation Registration). In 1995 alone, IOB, a publication of business tax information, published 3,800 pages related to changes made during the year in the rules for payment of taxes to the Union, the state, and the municipalities. This amounts to 15 changes per day! And while in the U.S. or Europe a person is able to start a business in as little as two days, in Brazil this process takes at least 40 days. Up to 96% of small businesses are not able to deal with the company's accounting without hiring an accountant. And business people spend 26% of their time dealing with official bureaucracy, according to a study conducted by CNI (Confederação Nacional da Indústria -- National Confederation of the Industry). With globalization, the Brazilian bureaucracy has become a turnoff for foreign companies looking to invest in the country. A just-released World Bank's comparative study between Chile, Peru and Brazil shows that in Chile a private firm's worker spends 0.5% of his time dealing with governmental bureaucracy, in Peru 4%, and in Brazil 5%. http://www.brazzil.com/content/view/9242/0/