The Paraguay of lower taxes sold dreams, but delivered nightmares, by Gleidson Carlos

The migration of Brazilian entrepreneurs to Paraguay is often presented as a demonstration that the neighboring country has discovered the formula to attract investment. Lesser taxes, less onerous labor legislation, competitive energy and less bureaucracy form a combination that, in the eyes of those who undertake in Brazil, seems to be a true business paradise. But we need to separate security opportunities.

Paraguay has approximately US$49 billion of GDP, while Brazil exceeds US$2.2 trillion. They are incomparable economies in size, consumer market, infrastructure and financial system.

The Brazilian entrepreneur wants to produce more, pay less taxes and expand his profit margin. It's legitimate! The problem is to imagine that a lower tax burden, by itself, represents a safer economic environment.

The recent Paraguayan banking crisis, involving the financial Ueno, with criminal investigation, questions about financial supervision and the departure of the president of Banco Central, brought to light precisely this discussion. Institutional instability has consequences on trust, credit and investment.

It is not a question of disqualifying Paraguay, which has economic growth and advances in the attraction of capital. It is a matter of recognizing that an expanding country also carries risks and limitations that cannot be ignored.

Brazil has its known problems: complex taxation, bureaucracy, interest and high costs. But it also offers a gigantic market, consolidated financial institutions and an economic structure that is not built overnight.

Capital seeks profitability, but it needs guarantees. After all, what is the use of saving in taxes if, in the face of a crisis, the security of investment is in doubt?

Paraguay can be an opportunity for expansion. To turn it into an absolute model of development, however, is another story.

 

The spoils of bolsonarism and the dilemma of Tarcisius, by Gleidson Carlos