Paradoxes of the institutional tax environment in Brazil: Law in Books versus Law in Action in the Brazilian´s Tax Collection System

Abstract

Taxes are present in almost all human societies, and have been for ages. Currently, no organized state can survive without collecting taxes from its citizens, even if, as in many cases, it is met with some animosity. Voluntary non-payment of a mandatory tax is subject to the tax enforcement procedure of debt collection. However, within the Brazilian tax environment there are factors which likely contribute towards tax default. Therefore, if on one hand legislation sets out a relatively severe collection process (with the possibility of the debtor having to auction off assets), then on the other hand the application of this legislation strays away from its main objective which is to satisfy the creditor within a reasonable time period. There is no harmony between the legislation and its application which, in short, is a paradox in itself. The causes of this situation are: an unsuccessful level of tax collection, continual installments offered to debtors, and the difficulties creditors experience in acquiring assets from the collection companies. The effects of such circumstances are: depletion of the Public Treasury, overwhelming the courts with the increasing number of collection procedures, creating a vicious circle out of the constant need to grant further installments, and the incredulity in the Brazilian institutional tax environment.