.

State intervention in the Brazilian

Economy
A 2007 report which commented on the ease of doing business
in 175 countries placed Brazil 121st. The average rm in the countr!
ta"es 2#$00 hours to process its ta%es# a world record. The government
imposes a considerable amount of regulation on the countr!&s rms.
The ta% burden is also high with most ta% revenue coming from sales
ta%. 'n 200$# Brazilian ta% revenue was e(uivalent to )5* of +,-. This
compared with 22 in Argentina and 1.* in /e%ico. The high level of
ta%ation and regulation is thought to be discouraging investment.
The Brazilian government spends the ta% revenue on three main
items. 0ne is generous pensions for Brazilian government wor"ers
and state pensions which are paid to ever!one who has
contributed to the s!stem for )5 !ears regardless of their age.
Another is public sector wor"ers1 pa! and the third is on
transfers to the regional authorities of the countr!1s 27 states
which spend the mone! mainl! on health# education and
administration.
-ublic sector wor"ers# on average# earn more than twice as
much as wor"ers in the private sector and have better wor"ing
conditions. /ost of those receiving the countr!1s minimum wage
are private sector wor"ers.
a. ,oes Brazil receive most of its ta% revenue from direct or
indirect ta%es2
3%plain !our answer. 425
b. ,escribe two wa!s in which ta%es place a burden on Brazilian
rms. 465
c. 3%plain one advantage and one disadvantage of regulations.
465
d. 'dentif! from the passage three reasons wh! a Brazilian
would probabl! prefer to wor" for the government than a private
sector rm. 4)5
e. 7ou are a Brazilian government minister. ,iscuss
whether !ou would recommend that the government
should cut ta%es. 475
8tructured
(uestions
1. a. 3%plain the
di9erence
between income ta% and a sales ta%.
465
b
.
c.
:hat are the
(ualities
3%plain the
of a good ta%2 4$5
between a progressive and a
regressive ;.
4)
5
IS
d. ,i
.
scuss whether
a government should shift the burden of
ta%ation from direct ta%es to indirect ta%es. 475
2. a.
:hat
.
the
di9
erence
between a minimum price and a
ma%imum price2 4)5
b. 3%plai
.
n w
h
! a gov
ernment ma! impose price controls.
465
:h! does the government produce some products2 455
..
c. ld assess whether an industr! should
be privatised. ,iscuss how !ou wou
4.5