Brazil Sanctions Law to Confiscate 30% of people’s Foreign Investments
The government will dig deeper into taxpayer pockets to ‘heal’ its crisis.
When a government has no money, it either prints it from thin air or steals it from taxpayers’ pockets. In the case of Brazil, its state of indebtedness and disastrous credit rating does not allow it to borrow more money abroad without having to pay hefty fees, so Dilma Rousseff has signed a new law, which was approved by the Congress, to tax people’s foreign income and investment returns.
Brazilian President Dilma Rousseff sanctioned on Thursday what has been called the Repatriation Act, which seeks to regulate resources and goods from lawful origins but that have not been declared before Brazilian authorities because they are kept abroad.
The Rousseff administration is taking advantage of the fact that, due to the deepening economic crisis, Brazilians may opt for bringing the fruit of their work and investment into the country, in which case they will be stripped of 30% of the total value of the assets they want to repatriate.
In addition to taking advantage of poor economic conditions, the government is also imposing a punishment on people’s economic success abroad, penalizing them so the bureaucrats can confiscate nearly a third of their property.
The proposal, which had already been approved by Congress and the Senate, is one of the priorities of Rousseff’s Executive to ‘balance public accounts’ which are in the red due to the gross mismanagement and shameless corruption that dominates Brazilian politics. With this kind of ‘tax amnesty’, the Brazilian government hopes to raise some R$21 billion.
Now, those who avail themselves of this law must pay just under a third of the value of all declared assets that they want to bring into the country.
The sum corresponds to a 15% tax on the money and the other remaining 15% due to a fine for having undeclared money. In other words, people who successfully live, work and invest outside the decaying Brazilian borders are treated as criminals for, say, owning a house, a car, investing in metals or the stock market and wanting to bring the money to their country to enjoy the fruit of their success.
Brazilians already get penalized when they want to realize financial transactions that originate in Brazil, for example, paying college tuition. In this case, the government also taxes 30% of the amount being sent abroad.
The dishonesty of the Brazilian government goes even further. All Brazilian nationals who do not adhere to this law, and if it is discovered that he has undeclared money or assets abroad, he must pay 225% of the amount in fines and face possible trouble with the law. This is an example of how a government uses punishment and coercion against its people for pursuing their dreams, working hard and being successful abroad, because that is an impossibility in their country.
At first glance, it seems that this strong tax rate will discourage potential stakeholders. But economist Marcio Salvato ensures that today there are many Brazilians “who are experiencing financial difficulties and need to take the money back into the country”.
It remains to be seen whether ministers, congressmen and women, as well as other rich politicians will abide by this law. The Brazilian government would certainly collect even more money if the new law had been written without “exceptions”. Those exceptions will undoubtedly allow the powerful and connected to keep their assets safe and whole.
“People did, for example, real estate sales transactions abroad without declaring them in Brazil and they have the cash on them. Those people can now bring the money in: it is better to pay the fine now,” says Salvato.
The restrictions imposed by Rousseff’s government did not approve the suggestions made by Congress to allow people to pay the 30% tax over a 12 month period, something that the Federal deputies had considered as a possibility for Brazilians who accepted to pay this tax amnesty.
Rousseff has also rejected applying the law to undeclared goods such as jewelry, gems or works of art. They may not be regulated by this law because, according to the government, it would benefit shell companies with no clear business. This in itself, the new regulation says, may serve for those shell organizations to carry out money laundering.
The opposition criticized the Repatriation Act on the grounds that the measure will allow the movement of money from drug trafficking and other unlawful transactions. At this point, it seems that all that the Rousseff administration wants it money, lots of it, it does not matter where it comes from and the law will provide a great opportunity to make that dream come true.