Brazil is still one of the better ones when it comes to fiscal responsibility.
I hope so. Actually, for the last decade or so the current government has been lowering the standards on the public sector accounting and manipulating the numbers both on public finance and on mixed capital companies, so we just do not trust the rosy picture the government paints. It is like we are living for the last decade on the trust built on the decade and a half before that.
where I live (one of the larger cities in Europe), a lot of administration has moved to Brazil because of the lower tax cap (at least that is what they told us).
Yes, that is true. But the common citizen, who earns a lot less than his First World counterpart, pays double: he pays taxes to keep roads, but has to change his mini SUV often because asphalt is so bad cars last less; he pays taxes to keep the police force, but has to pay for private security because of violence and criminality; he pays taxes to build schools and hire teachers, to the cost of up to US$5K per pupil (in the Federal District) and then pays another U$5K per children in a private school because public schools are garbage; and he has to live in a closed condominium because public streets are too noisy, since government is not competent enough to police noise levels and mediate between neighbours. Also, plan on the additional risk from a practically nonfuncional judicial system. Many people resort to bribery to get justice done or to navigate state bureaucracy.
Also, taxes on payroll, on manufacturing and imports are ridiculously high. Manufactured or imported goods usually cost triple as they would cost in the US, or double the European prices.
If you earn enough to pay double for all these services government is supposed to provide, and to pay around double for everything imported (which is nearly all electronics and automobiles plus quite some stuff), life is pretty good.
The reason why I, as a foreign investor, would prefer Brazil over, lets say India, is that Brazil is now pretty much in the same position as the US was a long time ago: you have their own natural resources, your own industry and your own sales market. A major drop in foreign demand would not influence Brazil as much as it would influence China or India, who are very dependent on the western demand.
Actually, we are totally dependent on selling commodities, specially to China.