In this paper we analyze the impacts of some changes in tax and credit policies on informal business in Brazil. To do this, we use a computable general equilibrium approach. The main findings shows that a reduction in 1% of tax rates on production or on labor income or capital income can reduce the size of the informal sector and the number of informal jobs, without reducing tax revenue.A more accurate result can be obtained with a reduction in the cost of credit instead of using lower tax rates. The most effective policy seems to be the reduction of taxes on production.
informality; general equilibrium; taxation; credit cost
