The measures taken by the Michel Temer government are positive, but insufficient to leverage economic growth in the short term. To this end, the Temer government should immediately implement a broad program of public infrastructure works (energy, transportation, housing, basic sanitation, etc.) to raise the population's employment and income levels of the population and, consequently, promote the increase of consumption of the families resulting of increase of the salary mass and the income of the companies with the investments in public works. The increase in the salary mass and the adoption of a credit policy will encourage the consumer to buy more. The public works program would increase productive capacity and increase investment in industry, contributing to heating commercial activity and services, as well as raise levels of government tax collection.

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THE INSUFFICIENT SET OF MEASURES OF MICHEL TEMER
GOVERNMENT TO RETAKE ECONOMIC GROWTH IN BRAZIL
Fernando Alcoforado *
The Michel Temer government recently announced the stimulus set of measures for the
retaking of growth of the Brazilian economy focused on the renegotiation of debts of
companies and individuals. A tax regularization program was opened with the Internal
Revenue Service valid for companies and individual taxpayers with debit until
November 30, 2016. Two measures related to the FGTS (Service Time Guarantee Fund)
were included that provide for the increase of the remuneration of the balance of the
worker in the Guarantee Fund and reduction of the additional fine of 10% collected by
the employer, staggered for a decade.
The Temer government's argument for adopting economic set measures is based on the
fact that the high indebtedness of companies and families is today one of the great
obstacles to the retaking of Brazilian growth, by inhibiting investments and
consumption. The Temer government has taken set of measures to regularize the tax
situation of corporations as quickly as possible so that they can obtain credit and grow
and, consequently, raise government tax revenues. In an attempt to boost the sales of
commerce, the government also decided to release the charge of different price for the
same product, according to the means of payment. That is, the practice, not allowed
today, to offer cash discount (or charge more on the credit card) will be legalized.
BNDES (National Bank for Economic and Social Development) will facilitate access to
credit for micro, small and medium-sized enterprises (MSMEs). There will be an
increase from R$ 90 million to R$ 300 million of the credit limit; Increased
participation of TJLP (Long-term Interest Rate) in financing; Doubling of the BNDES
card limit, to R$ 2 million. MPMEs with revenues up to R$ 300 million can renegotiate
debts. The government will allow companies and individuals to pay tax debts due by
November 30, 2016 under favorable conditions. The companies will be able to
eliminate from their debts losses calculated up to December 31, 2015 and declared until
June 30, 2016. The payment term, with basic interest rate of the economy (Selic)
incidence, will vary between 60 and 96 months.
The 10% fine that companies collect from the FGTS in cases of dismissal without just
cause will end up at the expense of the workers. It will be reduced by 1 % every year for
10 years. The FGTS profits will be distributed among the Fund's quota holders.
According to the government, 50% of the result will be divided and incorporated into
the account of the participants. The government will regulate the Guaranteed Real
Estate Letter (LIG) to stimulate the supply of credit in the real estate market. A
provisional measure (MP) will be regulated creating the electronic duplicate
(registration of financial assets that are used to guarantee credit operations) to increase
security of creditors aiming at reducing the bank spread.
The government will adopt measures aimed at reducing bureaucracy by unifying 13
social security, tax and labor obligations of four organs: Federal Revenue, INSS, Caixa
and the Ministry of Labor, and the provision of accounting and tax information in the
states. The electronic invoice for services will be implemented. The process of
restitution and compensation of taxes will be more agile. The government will adopt
measures aimed at accelerating the process of export and import of goods. The idea is to

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reduce by 40% the time for the dispatch of the products. Integrate customs procedures
involving agricultural inspection, sanitary surveillance and the Army.
The new debt refinancing program will have three options for membership, according to
the company profile. Individuals with debts to the Tax Authorities and Companies that
have recorded tax loss will have two options, which allow amortization of debt and
installments in up to 60 months. Business taxpayers and individuals with Arrears and
delays - basically related to Income Tax - can choose between 1) paying 20% of the
cash flow and financing the remainder 96 times; and 2) pay 21.6% of the debt in 36
months and stagger the remainder.
The economic set of measures of the Michel Temer government is a set of measures that
should have little impact on the "recovery" of the economy, although not irrelevant.
Michel Temer government adopts measures to reduce costs and interest of the use of
credit card for shopkeepers and consumers that collaborate in order to raise the
consumption of the families. Of greater impact is the facilitation of the payment of debts
of companies with the government. The companies will be able to use tax credits or tax
losses to eliminate any debt, even social security. When they have a tax loss, companies
can reduce the tax basis of tax for years in which they have a taxable profit (the amount
that is the basis for calculating taxes). Now they can reduce debt right away. Debts can
be refinanced in terms of five to ten years, with Selic interest rates. Because of the
recession, companies are increasingly late in paying taxes. This refinancing can
therefore reduce clutter and debt.
The measures taken by the Michel Temer government are positive, but insufficient to
leverage economic growth in the short term. To this end, the Temer government should
immediately implement a broad program of public infrastructure works (energy,
transportation, housing, basic sanitation, etc.) to raise the population's employment and
income levels of the population and, consequently, promote the increase of consumption
of the families resulting of increase of the salary mass and the income of the companies
with the investments in public works. The increase in the salary mass and the adoption
of a credit policy will encourage the consumer to buy more. The public works program
would increase productive capacity and increase investment in industry, contributing to
heating commercial activity and services, as well as raise levels of government tax
collection.
The economic measures adopted by the Michel Temer government are therefore rather
timid. Government leaders in Brazil need to understand that in an exceptional situation
like the current one there is an imperative need for the government to be proactive in
planning national development. The Brazilian government should elaborate an
economic plan that contributes to the retaking of the development of Brazil that
indicates for the population and for the productive sectors a perspective of retaking of
economic growth. Instead, the Michel Temer government adopts a neoliberal economic
policy that abdicates the intervention of the Brazilian State broadly in the economic
environment. It is the inexistence of a development plan one of the factors that lead to
the immobility of the private sector in the realization of investments in Brazil leading to
a real paralysis.
In order to combat economic stagnation, in addition to the public works program, the
Michel Temer government needs to adopt urgent measures that would contemplate the
following: 1) promote a broad program of exports, especially agribusiness and the
mineral sector; 2) drastically reduce bank interest rates to encourage household

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consumption and investment by businesses; and, 3) reduce the tax burden by freezing
public sector high salaries, elimination of stewardship and public administration bodies,
and reducing the burden of paying interest and amortization of public debt. To keep
inflation under control, the Michel Temer government should encourage the domestic
production of goods and services and when it is insufficient to carry out imports to
counter demand inflation.
* Fernando Alcoforado, member of the Bahia Academy of Education, engineer and doctor of Territorial
Planning and Regional Development from the University of Barcelona, a university professor and
consultant in strategic planning, business planning, regional planning and planning of energy systems, is
the author of Globalização (Editora Nobel, São Paulo, 1997), De Collor a FHC- O Brasil e a Nova
(Des)ordem Mundial (Editora Nobel, São Paulo, 1998), Um Projeto para o Brasil (Editora Nobel, São
Paulo, 2000), Os condicionantes do desenvolvimento do Estado da Bahia (Tese de doutorado.
Universidade de Barcelona, http://www.tesisenred.net/handle/10803/1944, 2003), Globalização e
Desenvolvimento (Editora Nobel, São Paulo, 2006), Bahia- Desenvolvimento do Século XVI ao Século XX
e Objetivos Estratégicos na Era Contemporânea (EGBA, Salvador, 2008), The Necessary Conditions of
the Economic and Social Development-The Case of the State of Bahia (VDM Verlag Dr. Muller
Aktiengesellschaft & Co. KG, Saarbrücken, Germany, 2010), Aquecimento Global e Catástrofe
Planetária (P&A Gráfica e Editora, Salvador, 2010), Amazônia Sustentável- Para o progresso do Brasil e
combate ao aquecimento global (Viena- Editora e Gráfica, Santa Cruz do Rio Pardo, São Paulo, 2011),
Os Fatores Condicionantes do Desenvolvimento Econômico e Social (Editora CRV, Curitiba, 2012),
Energia no Mundo e no Brasil- Energia e Mudança Climática Catastrófica no Século XXI (Editora CRV,
Curitiba, 2015) and As Grandes Revoluções Científicas, Econômicas e Sociais que Mudaram o Mundo
(Editora CRV, Curitiba, 2016) .