Economist questions thesis that tax reform will generate growth

Economist Erik Figueiredo casts doubt on the hypothesis that the tax reform supported by the government will necessarily increase GDP. “This is based on a model that nobody really knows if it works, if it was calibrated correctly”, says Figueiredo, who chaired Ipea in 2022 and is now executive director of the Mauro Borges Institute of Statistics and Socioeconomic Studies (IMB) , linked to the government of Goiás. “When you look at the international evidence, you can’t find any concrete experience that actually looks at this.”

The economist compared the growth rate of countries that use VAT five years before the adoption of the tax and five years after. On average, growth in the previous five years was 1.7%, while in the post-VAT period the pace of GDP growth was 1.1%. In the case of Argentina, the advance of the indicator in both periods was 4.6% and 2.1%, respectively.

“So actually there has been a slowdown in these countries. Is it only in Brazil that this growth is guaranteed?”, he asks. “Clearly, we are not discussing a cause and effect relationship here. There are many particularities that can determine the success or otherwise of IVA in different countries. But it is precisely these particularities that are being put aside at the moment”, he points out.