Friday, February 11, 2011

Self-Enforcing Mechanisms

I am, for the second year in a row, felled by a nasty sinus infection.  So blogging from bed this morning and I can think of anything to write about save for another tale from Brazil.

In Brazil these days the federal government has a system that will refund to consumers part of the VAT tax they pay on purchases of consumer goods.  In order to claim the refund, you have to give the equivalent of your Social Security number to the cashier every time you check out.  These purchases get recorded in a central computer system and the government keeps a running tally for every citizen, which you can log in and check. [This is all, by the way, as I understand it and was explained to me - details might be a bit off]

Why, you might reasonably ask, doesn't the government just lower the VAT, or just have the retailer award the refund on the spot?  Because this system creates a natural enforcement system which compels the retailers to report all sales to the government and pay the appropriate tax, part of which gets refunded to the customers.  Failing to do so will cause a great kerfuffle among customers that find that a purchase was not recorded.

Pretty clever.  Of course this system only works in a modern age where computers and the internet are common.

On a side note, I was very proud of my nascent Portuguese last time I was there and would march up to the cashier of a store ready for whatever they said: "did you find everything you were looking for?", "is this all for you today?", do you want to pay in cash or credit?", "how are you today?"  Whatever.  Of course, every time I was dumbfounded by a quick question that was entirely incomprehensible to me.   So I had to mutter "er, I speak Portuguese badly and I didn't understand."  Of course what they were asking me for was my national tax number.  Brazilians are the most wonderful people though and rather than being nasty about my failures in their native tongue (ala the French, whose tongue I master pretty well, but still get snide attitude from Parisian shopkeepers), they are incredibly accommodating and delighted that you try.

My favorite story was from a bookstore where I, once again, forgot about the tax thingy and was dumbstruck at the question.  The cashier immediately apologized for embarrassing me and apologized that his English (which was great) was not so good.  I apologized that my Portuguese (which is poor) was poor and he said that, no Portuguese is too hard to learn and I shouldn't be expected to speak it in Brazil.  Too funny.  The reality is it is not very hard except for making the nasal sounds and it is a beautiful language that is super fun to speak because of all the wonderfully exaggerated intonation.

If I were not so sick I'd look the tax thing up and do a little real research on it, but I am too tired.  Comment with links if any of you are so motivated.

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