fiscal dependency



The fiscal regimes established in peripheral societies such as Brazil are the result of a restricted sovereignty

A less circumstantial analysis of the relations between peripheral national states and central capitalism, as well as the ability to assert their autonomy in strong aspects, such as technological, financial, geopolitical and even food security for their populations, constitutes, in our view, a vital point of appreciation in the current contemporaneity.

We can use the Mexican author Jaime Osório (2014) to state, albeit in a first approximation, that one of the structural characteristics of dependent or peripheral societies would be “the presence of restricted sovereignties”. The article that follows does not intend to review the aforementioned author, but to present the proposition that the so-called fiscal regimes established in peripheral societies such as Brazil are the result of the enunciated restricted sovereignty.

The capitalist world economy has the character of uneven and combined development, which materializes in an international pattern of division of labor in which the world economy is functionalized divided into three large zones of sovereignty and technological, geopolitical and financial control arrangements: the center, the semiperiphery and the periphery, and this division appears functional to guarantee the appropriation of surplus value by the centers of capital, allowing the development of regions of technological, military and financial leadership and underdevelopment (in conditions of dependence) in regions with less technological progress, with geopolitical and financial subordination, characteristically transferring value, through unequal exchange, to the capitalist center.

The world economy is established, therefore, as several overlapping and integrated reproductive circuits of capital, and this relationship is what constitutes the imperialist logic, on the one hand, and dependence on the other. What is called national sovereignty must be understood as the greater or lesser degree of national autonomy in relation to four central axes: technological, financial, geopolitical and social reproduction of populations.

Latin America, and especially Brazil, is in the peripheral spatial region of proximity to the USA, and as a result, the sovereignty of Latin American national states is extremely fragile in the four central points that constitute or determine national sovereignty as an order of power in the international division of labor:

(i) Regarding the capacity for technological mastery and control over the main segments of the technical reproduction of capital. In this regard, both the dependence on transplanted industrial plants and the fact that technology is non-neutral and its anthropocentric reason, a series of negative consequences for Latin American societies can be observed, including aspects of the formation of a gigantic relative overpopulation and the consequences of pockets of poverty, unemployment and informality.

(ii) The greater or lesser influence on the international financial circuit, and how the conditions of national control over its credit system and monetary base are established (TRINDADE, 2017), a component of financial sovereignty. this factor implies the ability, in terms of national currency, to manage both international commercial exchanges based on its national currency, as well as control over capital flows (Direct Foreign Investment) and the consequent transfers of income (profits and interest) to central countries, in the case of Brazil centrally for the USA.

(iii) The geopolitical control of the territory and the capacity for extraterritorial intervention. Three elements are integrated here: on the one hand, the autonomous military power that has a greater or lesser capacity to deter offensives by other belligerent States, the autonomous and sovereign use of the territory in accordance with the interests of a national project and, finally, the capacity to discretion and influence in the international multilateral decision-making order. Latin America shows enormous dependence and subordination in this aspect, either because of the inability to participate in international multilateral agreements, or because of the management of its territories, largely subject to the intervention of the US imperial power.

(iv) Finally, more central and of great consequence, the factors of social order considering the economic, educational and health quality of the population, the exercise of citizenship as a power of organization and collective coexistence, the power to exercise democratic interaction in state decisions. In this regard, we must emphasize that the different national conditions for the reproduction of capitalism in Latin America are based, to a large extent, on the super-exploitation of the workforce, resulting in the enormous impoverishment of workers. One of the direct consequences of this form of exploitation, in which the reproduction of workers takes place at a wage rate lower than the value of the labor force, is that the population's quality of life is very precarious, subjecting workers to enormous precariousness.

Restricted sovereignty is reflected in the fiscal limits of the peripheral States, as expressed by Jaime Osório (2014) “the precariousness of some institutions and structures or the 'deformations' present in the dependent world (…) [respond] to the needs of exploitation and domination, constitutive of the nature of that system”. The “deformations” seem to be less the result of inconsistencies or eventual circumstances and more something congenital from the logic of the “development of underdevelopment”, as stated by another interpreter of underdevelopment, André Gunder Frank.

Characterizing the fiscal regime is a key point, as it “reflects the specific forms of organization of the tax system and the budget management model, associated with the use of fiscal rules and the formatting of federalism” (Lopreato, 2013). By associating restricted sovereignty and the fiscal regime, it is understood how the fiscal factors (taxation, primary budget and public debt) are at the center of the limitations of sovereignty and constitute one of the bases of the economic dependence of underdeveloped nations.

Considering Latin America, it is observed in different countries the conformation of this dependent fiscal logic. A first aspect refers to tax structures, based on indirect taxes of a regressive nature and, in the case of income tax, the tax burden largely falls more heavily on the salaried population via withholding tax (Rossignolo and Sabaini, 2011 ).

This characteristic shape of the tax burden, which frees the rich from paying taxes and finances the public fund with indirect taxation on consumer goods and income tax on wages, constitutes a key mechanism for maintaining dependency.

However, in some contexts, such as the Brazilian case, this regressive form of taxation becomes even more critical. Thus, several tax instruments of sovereignty restriction are adopted, one of the most notable is the tax relief (non-payment of taxes) of the primary-export circuit. The large agrarian and mining businesses are totally exempt from paying taxes on exports, which imposes on the rest of Brazilian society, especially wage earners, the burden of sustaining the state budget and financing, including the export capacity of these business segments, whether in the maintenance of port, road, rail infrastructure, or by the loss of competitiveness of industrial segments, destroying local jobs.

The second constituent element of dependent tax regimes is the format for refinancing public debts, the Brazilian case being emblematic in this regard. As noted by Lopreato (2013) for the Brazilian case, the policy established during the dictatorial period (1974) was based on a system of guaranteed “repurchase” of securities, which established the basis for a model that practically eliminated the system risk. financial.

This model imposed notable consequences, firstly, the growth of the gross debt even in a non-deficit environment and, mainly, made the debt a liquidity condition of the financial system, both canceling out any system risk and transferring net value from the national economy to the patrons of the financial sector, whether internal or external. This model centered on the continuous expansion of the debt, independent of its own capacity to finance capital goods, became the core of the pathological low growth of the Brazilian economy and the growing financialization of the public budget.

Finally, the two aspects of the exposed fiscal logic are integrated with the imposition of legal mechanisms that increasingly restrict the use of public funds for social purposes, controlling the State's capacity to carry out public policies. The Brazilian case is again emblematic here, over the last thirty years, the legal instrument imposed on the public budget has become increasingly restrictive, walking in the first neoliberal cycle (Fernando Henrique Cardoso) since the approval of the loss of federative capacity of the sub-nationals. -national governments (states), with the withdrawal of their capacities to issue securities debt and the reduction of their contractual indebtedness limits (Law 9496/97), until the establishment of the Fiscal Responsibility Law (Complementary Law 101/2000).

This process culminates in the last six years with EC 95/16. The current amendment to the spending ceiling is nothing more than the deepening of the dependency fiscal regime, configuring the guarantee of the maximum fiscal budget committed to financial expenditures, reducing social expenditures to their minimum limit.

The continuity of this dependency fiscal regime will constitute the deepening of the loss of sovereignty, a central imbroglio to be dismantled by social struggles and, perhaps, by the next Lula administration.

*Jose Raimundo Trinidad He is a professor at the Institute of Applied Social Sciences at UFPA. Author, among other books, of Six decades of state intervention in the Amazon (Paka-armadillo).


Dario Rossignolo and Juan Carlos Gómez Sabaini. Impact of tax policies on equity in Latin American countries. In: José Nun (Comp.). Inequality and taxes. Buenos Aires: Intellectual Capital, 2011.

Francisco Luiz C. Lopreato. Paths of fiscal policy in Brazil. São Paulo: Unesp, 2013.

Jaime Osório. The State at the center of globalization. São Paulo: Popular Expression, 2014.

José Raimundo Barreto Trindade. Critique of the political economy of public debt and the capitalist credit system: a Marxist approach. Curitiba: Editora CRV, 2017.


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