A campaign by the National Confederation of Industry (CNI) highlights the main villains present in the Brazilian economy. The Brazilian cost brings together a set of structural, bureaucratic and economic factors that make production, investment and employment more expensive and complex in the country.
According to CNI estimates, this burden reaches 1.7 trillion reais per year and consumes approximately 20% of gross domestic product (GDP).
For the vice-president of the entity, Leo de Castro, this value cannot be considered as a statistic far removed from the reality of the population. “There is no point in talking only about macroeconomics, we must show that this cost eats away at competitiveness and employment within the factory,” he says.
Although this term seems technical, the effects are quite concrete. This is reflected in higher supermarket prices, difficulties in finding employment and slower economic growth.
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An “invisible tax”
According to the entity, Custo Brasil functions as a tax that no one sees on the label, but which is integrated into everything consumed. “This affects the end consumer, making essential products more expensive and eroding the purchasing power of families,” Castro emphasizes.
The impact also reaches the labor market. “Legal uncertainty and high labor costs create an obstacle to formal hiring. More than half of industries would employ more if we had rules similar to those in developed countries,” says the vice-president of the CNI.
Where are the biggest costs?
Although this affects the entire economy, it is industry that feels the impact most acutely. According to a survey carried out by Nexus/CNI, around 70% of industrial entrepreneurs consider the tax system to be the main obstacle.
In second place comes work, cited by 62%, highlighting both the cost of payroll costs and the scarcity of qualified labor. Access to credit, with high interest rates and strict requirements, rounds out the list: around 27% view financing as a critical factor for expansion.
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For the superintendent of industrial policy of the CNI, Fabrício Silveira, these figures have a direct impact on the competitive capacity of the country.
“We spend more than 1,500 hours a year just to fulfill our tax obligations. The electricity bill is higher than it should be and the poor state of the roads makes transport more expensive. All this comes from the company’s cash flow and reaches the consumer,” he emphasizes.
According to Silveira, this cost acts like a pulled handbrake. “This removes the competitiveness of the national product compared to imported products and punishes the final consumer, who pays this value embedded in the price of everything, from bread to medicines,” he reinforces.
Tax reform
The tax reform approved by Congress is considered a historic opportunity, but the CNI warns that the effects will depend on the current regulations of PLP nº 68/2024.
The entity defends non-compliance with taxes and the rapid return of tax credits to prevent taxes paid from becoming additional costs for businesses.
However, the productive sector believes that simplification does not guarantee, in itself, a reduction in the total burden. “Without control of public spending and without administrative reform, we will continue with an expensive state, even if it is more organized,” asks Leo de Castro.
Risk of closure and stagnation
The CNI’s assessment is that the current scenario is worrying. “Our research shows that if the cost of Brazil does not fall, 24% of entrepreneurs fear business closures and bankruptcies, and 19% predict a recession or economic collapse,” warns Leo de Castro. “This is not scaremongering. This is the reality of those competing with countries that do not bear this burden.”
In addition, Brazil runs the risk of losing strategic opportunities, such as attracting companies that seek to produce closer to consumer markets and investments linked to the energy transition.
“If we continue to stagnate, we will miss the window of opportunity for nearshoring and the green transition,” believes the vice-president.
Accessible communication
Faced with this scenario, the CNI invested in a campaign to bring the population closer to this issue which impacts people’s daily lives, by giving a more playful side to the characters who work directly in the country’s economy.
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“The idea was to give a name and a form to the invisible enemies. The ‘Tributácio’, for example, represents the madness of our current tax system, the ‘Infradonha’ exposes our deficient logistics and the ‘Burocratus’ is the legal uncertainty that hinders decisions,” explains Silveira.
The “Jurassic” materializes the archaic and costly credit system which prevents 77% of companies from investing more. And the “Circuit Cost” justifies the excesses in the electricity bill which make energy very expensive, even with a clean matrix.
Learn more about these bad guys in Custo Brasil’s X-ray
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