false premise

Image_Elyeser Szturm

By Rogério Viola Coelho*

In Brazil, holders of capital in general, and bankers in particular, are immunized as taxpayers

I - False premise of insufficient resources to deny the maintenance of social isolation

The health crisis generated by the lethal virus made the defense of life emerge in the public sphere as a fundamental individual right. A right for all and a right for each individual. And the recognition of this right as a universal value gave rise to many spontaneous gestures of solidarity by social subjects of the most diverse formats. The main form of solidarity provided especially to people who are part of risk groups was through social isolation, with the stoppage of extensive economic activities.

Solidarity in its essence is always a gesture of detachment from some people to the benefit of other people or social segments in favor of other social segments, one of the links being in a fragile situation. Solidarity, achieved through social isolation, was recommended by public authorities - governors and mayors - but consented and assumed mostly by the social segments involved. The people directly affected were formal and informal workers, plus small, medium and micro entrepreneurs, who account for around 90% of jobs.

The main recipients of solidarity are identifiable in this pandemic – the elderly and people with chronic diseases, plus health professionals. A social grouping approaching 20% ​​of the population. In this partial universe there is an indeterminate number of people who have already lost or will lose their lives. However, the risk to life also affects people outside these groups, as evidenced by the documented occurrences.

In addition to these partial solidarities, carried out by more or less extensive segments within society – spontaneous or consensual acts and gestures – there is legal solidarity, which is created and imposed by law and provided through the State. It is a form of institutionalized solidarity that involves involuntary contributions from society as a whole, through tax charges levied on all its members. This involuntary solidarity of society began in Brazil at the beginning of the last century through the Caixas de Assistência, when for the first time the State's contribution was established, which was added to that of employees and employers to provide social security and health benefits. Subsequently, legal solidarity was raised to the constitutional level, appearing in an exemplary way in the 1988 Constitution.

Legal solidarity, instituted by the constituent power, must be exercised through the constituted powers, which are given the power to impose their contribution on each and every member of the community. This superior form of solidarity fulfills the function of ensuring the exercise of fundamental rights which, as expressed in the Preamble of the Constitution of Brazil, constitutes the first mission of the democratic State established by it.

The two forms of solidarity – spontaneous and imposed by the State – reveal the two dimensions of fundamental rights: the ethical dimension and the legal dimension, defined by Peces-Barba, a Spanish jurist with a vast body of work devoted to their study. The first form reveals a moral quality of individuals or social groupings, while the second, imposing, originates from popular sovereignty. It is an expression of the general will of the people made positive at the constituent moment.

The first of these fundamental rights is the right to life (art. 5) and, as a logical consequence, the right to health that was established in the Constitution, in these terms “Art. 196 – Health is everyone’s right and the duty of the State, guaranteed through social and economic policies aimed at reducing the risk of disease and other injuries and universal and equal access to actions and services for its promotion, protection and recovery”.

It seems evident in this statement that the guarantee of universal and equal access to State services for health protection, in the case of the ongoing pandemic, requires the continuity of social isolation. No one is capable of contesting that, when this isolation ceases, there will be the announced collapse of the health system, generating total impossibility of universal access for infected people to actions and services for the protection of health.

On the other hand, it is undeniable that the suspension of economic activities, aimed at delaying the spread of the virus – to enable the realization of the rights to health and life – entails temporary restrictions on the exercise of the right to work, the right to come and go and the right to free exercise of economic activities. In this way, objectively, there is a temporary suspension or reduction of the exercise of fundamental rights of extensive social groupings.

In order to overcome and mitigate the harmful effects of the temporary suspension of the exercise of these rights, broad intervention by the State has become imperative, on an emergency basis. It would be possible to offset the effects of this suspension, with the State subsidizing companies temporarily, to guarantee the payment of wages, with the maintenance of jobs in return. This is what most countries have done. In addition, it has become imperative to pay direct financial assistance to self-employed and informal workers who are hampered in their activities. This intervention, as we have seen, is imposed by the Constitution on the powers constituted by the principle of solidarity, which is one of the fundamental principles of the Republic, leaving the Executive Power with the legislative initiative and the subsequent management of activities aimed at helping the recipients.

In view of the State's imperative for immediate action, there was no time to generate new revenues through new taxation or compulsory loans, in the name of the postulate of social solidarity. Both impositions have been resisted by the constituted powers, repeatedly invoking an exceeding of the tax burden bearable by the market economy.

With this active resistance, the premise of the insurmountable lack of State resources was reinforced in the collective imagination. A belief that prevented the realization of social rights enshrined in the Constitution and, more recently, enabled the emptying of already implemented social rights, as seen in the recent Social Security reform. However, the constituent legislator foresaw the possibility of the occurrence of emergency situations, as is configured in situations of public calamity, declared by Peces-Barba, Gregório. Fundamental Rights Course (I) – Edit. Eudema University. ed. 1991, pg. 33. “The fundamental rights express both a basic morality and a basic legality.” Congress in the first half of March. It regulated the extraordinary forms of State intervention, starting with Article 62, which authorizes the head of the Executive Branch to issue a Provisional Measure, in case of relevance and urgency. And paragraph 3 of article 167 authorizes “the opening of extraordinary credit to meet unpredictable and urgent expenses, such as those resulting from war, internal commotion or public calamity”.

In addition, the STF, provoked by the government, authorized the removal of limitations of the Fiscal Responsibility Laws and Budgetary Guidelines for increased expenses. Even EC -95, which in 2017 established a ceiling for public spending, frozen for 20 years, provides for the possibility of extraordinary expenses in the event of a public calamity (§ 2, II, of art. 107 of the ATDCT, with the wording of EC-95). Such situations could increase the public debt. Pressured, the government forwarded, at the beginning of March, projects proposing aid to the informal and unemployed, setting its monthly value at R$ 200,00 for just three months, a value that was raised by Congress to R$ 600,00. And, in addition, he gave money to banks so that they could make loans to companies with a view to maintaining jobs. Then he authorized the total or partial suspension of work with the receipt of corresponding fractions of unemployment insurance.

More than a month after the formal declaration of a state of calamity, the benefit destined for the poorest workers, identified as informal, including street vendors, fairgrounds, small artisans, and more the unemployed, arrives with delay, drop by drop. This universe reaches fifty million people, who must earn every day what they immediately need to live. The so-called “invisible” legion has recently been added to this universe, formed by over forty million people.

The portion intended for entrepreneurs in medium-sized, small and micro companies to subsidize the maintenance of millions of jobs did not reach its destination or reaches its destination very limitedly. Instead of making resources available directly to companies, banks were elected as transferors. To make the loans effective, they demanded guarantees and imposed higher interest rates than advertised, precisely for the most needy companies. Recent surveys revealed that a month after the institution of financing, only 10% of the universe of recipient companies had effective access to subsidies. The government's resistance was expressed in the inadequacy of the fixed values. It continued to delay the execution of the initial proposal, making a real slow-down operation in the management of resources. The diversion of subsidies intended for companies to maintain jobs during the period of social isolation highlights the purpose of driving recipients - entrepreneurs and workers - to despair in order to force an end to the suspension of economic activities.

The underlying premise for denying the possibility of state intervention is the widespread belief that insufficient resources are insurmountable. Under these conditions, the only solution would be to restart the economy to ensure jobs and the survival of formal and informal workers.

Simultaneously, the president preaches in the public space the wide and immediate opening of economic activities, as an imperative of national salvation. He supports the end of social isolation and personally produces repeated breaches of protocol in the demonstrations he provokes. In his daily appearances, Bolsonaro explicitly assumes a rhetoric of naturalization and trivialization of the loss of life announced by science. His speech reached the extreme when he stated that: (…) “Are people going to die? Yes, but we have to think about the economy!”. After that he made an adjustment, replacing “think about the economy” with “think about saving jobs”.

He thus maintained that there was an inevitable collision between two fundamental rights – the right to life (of a minority) and the right to work (of the vast majority). Sustaining that such a dilemma is unavoidable, he wants to impose the absolute supremacy of the right to work, with the annihilation of the right to life.

In this way, we move in the opposite direction to the movement adopted by most civilized countries affected by the pandemic. All have earmarked huge financial resources to support social isolation, increasing the public debt or issuing currency. In addition, it has been granting non-refundable loans to companies, made directly by governments, with the sole consideration of maintaining jobs.

It is evident in the set of his speeches that Bolsonaro was always aware that the end of social isolation, with the resumption of the economy, could lead to the acceleration of contamination and the rapid depletion of the installed capacity to serve the universality of people in need of hospitalization. He is also aware of the consequence uniformly predicted by health agents that this would lead to a significant increase in deaths. With this motivation, he tries to minimize at every step the social significance of the announced losses of human life.

Having the duty to proceed in a different way, it assumes a conduct directly contrary to what prescribes the constitutional norm of art. 196. At the same time, it violates the norm of the Penal Code that provides: “Art. 268 – Infringe determination of the public authority, intended to prevent the introduction or spread of a contagious disease”.

It is present in their conduct, in addition to contravening the law, the subjective element of culpability that is a requirement to configure the crime. The subjective element notoriously exceeds conscious guilt, attributable to the agent who, being aware of the possible harmful result, hopes that it does not occur. In the specific case, in addition to predicting the harmful result, with high probability, it expresses an Olympic indifference to the effectiveness of this result. The agent's culpability thus rises to the level of eventual intent.

Recently, several economists are looking for sources of substantial resources for an effective intervention by the State in the situation of public calamity. Bresser Pereira proposed increasing the currency in circulation by issuing bonds by the Treasury and acquiring them by the Central Bank with accumulated reserves. And he maintains that it would have no inflationary effect in the face of the recession. After several others defended similar solutions, Ciro Gomes formulated a complete proposal, in two stages. First, issue currency, with an increase in public debt by around 10% of GDP (about 700 billion reais) and then, after the pandemic, create and increase taxes, focusing on dividends, interest, inheritances and large fortunes, to increase the collection at around 300 billion annually, which would be used to offset emissions and stimulate the economy.

The Minister of Economy even came out in favor of the idea, without referring to values, but introduced two requirements. First, wait for market interest rates to drop to zero, so that there are no other bidders in the public sale of the bonds, and second, wait for unemployment rates to double. As can be seen, the government's policy is to prolong and worsen the recession and only then implement the measures. This once again reveals the underlying objective of taking advantage of the crisis to reduce the real value of work, subjecting it to free play in the deregulated market, with the unprecedented increase in informality.

Faced with the reductionist behavior of the government – ​​and prolonged resistance to the adoption of measures that cannot be postponed to defend the lives and health of so many people – its comparison with that of the rulers of other countries affected by the pandemic becomes relevant. newspaper report Valor Econômico (17/03/2020) announces the launch in Spain of a resource package that reaches 200 billion euros, equivalent to almost 20% of that country's GDP.

In Brazil, as reported by the press in March, the proposal was just to “reinforce the need to approve the remaining reforms (Administrative, Tax and once again Labor) so that they alleviate government spending”. Further on, projects emerged, later improved by Congress. And today, the amount announced for effective intervention in tackling the health crisis reaches 224,6 billion reais, which corresponds to 2,97% of GDP, according to sources at the Ministry of Economy (Agency Brazil).

The initial assumption assumed by the government is again the premise of insufficient State resources, an idea that was internalized in the collective imagination and continually reiterated by government agents and the market's media portals. This premise had served as a basis for the hollowing out of social rights, pursued by the organic market party, made up of economic agents from all walks of life. With the advance of the pandemic, this premise justifies a policy aimed at ending social isolation, with the risk of exponential expansion of the virus, which could lead to the disposal of a few hundred thousand leftovers, due to illness or poverty.

II - The ideology of the premise of insufficiency

The idea of ​​insufficient revenue for the Brazilian State has been propagated for years to support the resistance of the constituted powers to the realization of fundamental, social and individual rights. Rights that were enshrined and surrounded by institutional guarantees by the constituent power. Recently, with the announcement of the fiscal crisis of the State, voluntarily aggravated by the austerity policies, this insufficiency served as a premise to sustain the retreat of the social rights already conquered.

The amendment to the spending cap (EC-95) thrived on the premise that the other side, that of State revenues, which comes from tax impositions, had already “hit the ceiling”. That is to say, the lack of State resources would be definitely insurmountable. The promotion of labor reform and social security reform followed this logic, when the Minister of Economy maintained the imperative of a minimum economy of 1 trillion reais in 10 years, in order to prevent the system from reaching insolvency and the State from evolving into the collapse.

The postulate of insufficient State resources to cover its expenses was deeply internalized in the collective imagination in our country, being decisive to plant this belief. In this context, the protagonism is composed of the media portals of the market, operating with the certification of orthodox economists, installed in the chairs of public and private universities, continually called to testify.

By imposing itself as a premise, this idea was exempt from demonstration. It became a dogma that guides the narratives of organic intellectuals and political leaders in the democratic field. It is reflected in the propositional inertia of institutionalized parties. Admitting the premise of insufficiency without questioning, they limit themselves to defending the remaining rights of workers, invoking the principle of prohibition of retrogression in intermittent crises. They do not elaborate global reform projects, limiting themselves to the defense of gradual advances with specific projects.

In parliament, the institutional opposition parties took on isolated manifestations, limiting themselves to formulating proposals for tax imposition on the income and assets of the rich. However, such initiatives are dissociated from any concrete proposal to restore reduced social rights or to resume the construction of our incipient social state.

III. The political fallacy of the insufficiency premise

With the publication of the results of research by Piketty and his disciples, who analyzed the regressive tax system in Brazil, it seems the time has come to review and denounce the falsehood of this premise, which is the true policy of the State in Brazil. It was demonstrated that here the holders of capital in general, and bankers in particular, are practically immunized as taxpayers.

According to data from the OECD - Organization for Economic Cooperation and Development -, only Estonia and Slovakia, in addition to Brazil, are not taxed on businessmen's dividends, while in other countries the rates vary between 25% and 44% on their income. And the inheritance tax, which varies between 24% and 40% in central countries, in Brazil corresponds to only 3,86%.

A tax imposition on profits, interest and dividends, which are constitutionally subject to taxation, could produce an additional annual revenue of around 300 billion per year – 10 times more than the annual cost of Bolsa Família – and in 10 years we would have an amount cumulative amount of 3 trillion reais.

The constitutional provision for this tax imposition is a direct and necessary result of the fundamental principle of solidarity. A fundamental constitutional principle capable of imposing an involuntary contribution from privileged social strata for the benefit of fragile strata, especially those who lack regular work.

As Ferrajoli, renowned Italian constitutionalist, observed, the original manifestation of popular sovereignty that takes place through constituent power conditions and limits the subsequent manifestations of popular sovereignty in the course of the ordinary political process. This secondary manifestation is exercised through the powers constituted by eventual majorities. It was up to these powers to carry out the tax impositions on capital gains, and not to suppress them or block their incidence, as they have been doing in Brazil.

With these resources, a new intervention by the State in the economy would be made possible, aiming directly to generate work for the 50 million surpluses, now increased by another 40 million of the so-called “invisible”. Such intervention would be aimed at promoting the exercise of the right to work for all, the basic social right of all people (art. 170, item VIII CF). And the realization of this project, generating more economic activity and development, would certainly provide a significant growth in tax collection, establishing a new virtuous cycle.

The guidelines for a macro project to generate work based on planned action as a State policy should be immediately propagated and debated in the public sphere by the Emancipatory Organic Party. And then widely advocated in the political process in order to gain collective awareness. This project would be opposed to the ultraliberal project assumed by market agents. Such a project consists of the emptying of social rights, aiming at reducing the total cost of work, at the level dictated by the law of supply and demand. Project underway in Brazil that also aims to reduce the size of the State, through adjustment measures and privatizations. Measures that have already failed in the countries where they were imposed. As Stiglitz, a famous economist and public policy analyst, warned, such countries tend to drown in the recession that they usually deepen, with the underlying purpose of justifying new cuts in the body and in the regulatory activity of the State.

* Rogerio Viola Coelho é attorney.

Originally published on the website Brazil of Fact

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