Paulo Vieira da Cunha, partner at Verbank Consulting: “The reform is a milestone. While estimates are imprecise and actual results will depend on conditions at the time, it alone could potentially boost GDP from its current -2 percent trend to something closer to 4 percent. This is not a miracle, but rather a recognition of the damage caused by the current system. The new regime consolidates five different federal, state and municipal taxes, which were previously subject to 27 different state-level specific laws, numerous exemptions, incentives and a confusing array of sector-specific credits. These taxes were charged cumulatively, with taxes due on top of taxes already paid, creating a system ripe for corruption. The new regime replaces this with a single non-cumulative VAT charge with two rates: one for the federation and one for the states. To maintain the same level of tax revenue, the combined rate will be high (at least 25 percent), and political concessions have introduced costly exemptions. Conditions are favorable for the law to be approved this year, with complementary laws detailing important parts needing to be approved next year. The transition will…”