Is it time to introduce an Irish version of the Brazilian “Nota fiscal” to combat the black economy and plug the hole in our public finances?
In Sao Paulo State in Brazil, if a trader does not provide customers with a nota fiscal, he will be considered to be a criminal.
Strong stuff….but read on
Certain economic sectors throughout São Paulo were identified as needing help in order to decrease both tax evasion and unfair competition. After studies were completed, a project was developed to incentivise consumers to require the issuance of a Nota Fiscal (billing document) at the time of purchase.
Legislation introduced in 2007 provides for rebates and credits against ICMS tax paid (the equivalent of VAT) in the State of São Paulo.
To participate, the consumer must request the tax document at the time of purchase and provide their CPF or CNPJ (taxpayer identification numbers) to have a right to the credits and qualify for possible rewards. So that the credits are generated, commercial establishments must complete the electronic registration of the tax document in the Nota Fiscal Paulista system. Then the Finance Department of the State of São Paulo system completes the calculation of the appropriate entitled credit.
The program's objectives were to:
1. Incentivise the population to request a tax invoice for every transaction. Previously, consumers did not feel compelled to ask for a Nota Fiscal, since they received no direct benefit or gain.
2. Reduce the prevalence of the “black economy” and sale of smuggled and illicit goods
3. Generally reduce tax evasion.
Benefits to the consumer are in the form of a rebate of tax through a combination of the following:
a. Transfer to a bank account
b. Transfer to another person e.g. family member
c. Credits against other taxes e.g. income taxes
d. Charitable donation
In addition a proportion of the tax collected is reserved in a “lottery” and distributed in prizes to taxpayers as well as donated to charity. (For example money has been credited to the famous Cancer Hospital of Barretos to build a molecular biology laboratory for cancer research.
The Nota Fiscal Paulista (NFP) project would not have been possible without the intensive use of technology.
Since the project targets public citizens, NFP is Internet-based for easy accessibility by citizens. Because of this, one of its requirements is high availability (24 hours a day, seven days a week), with the ability to support a large number of simultaneous connections. A peak of approximately 12,000 simultaneously active users has already been observed. To access the site, the consumer logs in and can consult the documents issued in their name (within a time frame of up to five years), donate received credits, request deposits in a current account, register claims against suppliers (generally for not registering tax documents in the system) and view tickets and awards received in the scope of raffles organized by NFP.
Credit of up to 30% of tax paid is not unusual.
Would it work here?
Could Irish citizens get used to quoting their PPS number every time they buy a takeaway pizza, the weekly groceries or a pair of shoes or a pint of Guinness? Would your window cleaner give you a “nota fiscal”?
Is our so called smart economy ready for such an initiative?
It has been successful in Brazil and could work here if we wanted.