Flavio Maluf is high-ranking executive of the Eucatex company in Brazil. He joined the firm more than three decades ago. Maluf has served in the trade, industrial and sales sectors of the company before his appointment as president. Below are some of Flavio Maluf’s insights into tax incentives and the impact they have on societies and businesses.
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What is the point of fiscal incentive laws asks Flavio Maluf? He answers that they are meant to spur the economic and social development of the nation. Maluf admits that many entrepreneurs struggle in launching new businesses in Brazil. This is because of high taxation and regulation.
What is the solution to this? Flavio Maluf believes it is fiscal incentive laws that give new businesses breaks from the heavy tax and regulation burdens that would be imposed on them by the government. Fiscal incentive laws can be made to target a certain sector says the Eucatex executive. For example, laws can be made that will target the medical, scientific or technological industry. The goal of these incentives would be to foster innovation in these sectors that can help society and other sectors of the economy.
Under standard taxation, money goes directly to the government. In Brazil, there is a lot of corruption and management. In general, it can be said that governments often squander any money they receive. The situation is perhaps especially severe in Brazil.
Fiscal incentive laws divert money from the government and instead let it flow directly to businesses, consumers, and society in general. With lower tax burdens, companies can invest in more equipment. They can also hire more people. Higher wages may result as well.
A lower tax burden can mean can also mean that companies can lower prices. This means that the consumer will benefit. Higher wages and low prices can mean greater disposable income. This means an improving economy.
The concept of a tax or fiscal incentive is pretty simple states Flavio Maluf. It can span varying levels of scope. For example, it can be on a city-wide scale, an industrial scale or even a national scale. The scope of the fiscal incentive laws depends on the government policy and goals.