Tax reform in Brazil:an evaluation at the crossroads

Tax reform has been a central issue of the Brazilian economic debate for at least a decade. But despite the supposedly reformist resolution of several governments, very little was in fact achieved. The idea of reforming the country’s indirect taxation system is, once again, in the forefront of the government’s agenda. The complexity of Brazil’s fiscal federalism has been often and rightly mentioned as a major difficulty to the advancement of the tax reform. This paper tries to look beyond fiscal federalism and focus on difficulties of a different kind, that have to do with the sheer magnitude of the reform and the uneven sectoral distribution of the indirect-tax burden in the country. After an initial section providing a brief historical and institutional background, section B discusses the various tax-reform attempts that took place since 1997, and draws useful insights for the analysis of the political economy of the taxreform deadlock. Sections C and D look into indirect taxation in Brazil, calling attention to challenges entailed by the scale of the intended reform and the uneven sectoral distribution of the tax burden. The political economy of the involved difficulties is discussed in section E. Concluding remarks are presented in section F.

Public sector debt dynamics in Brazil

1. INTRODUCTION 2. POLICY MIX AND THE PUBLIC-SECTOR NET DEBT 3. SKELETONS IN THE CLOSET, PRIVATIZATION PROCEEDS AND SEIGNIORAGE 4. SIMULATING DEBT DYNAMICS 5. SENSITIVITY ANALYSIS 6. CONCLUDING REMARKS APPENDIX: THE SIMULATION MODEL

A deterioração do regime fiscal no segundo mandato de Lula e seus desdobramentos

No Brasil, o efeito mais grave da recente crise econômica mundial adveio da onda de afrouxamento generalizado de restrições orçamentárias que teve origem nas economias avançadas. A crise deu ao governo pretexto para mudanças substanciais no regime fiscal e nas relações entre o Estado e a economia. A metade final do segundo mandato do Presidente Lula tem sido marcada por clara deterioração de contas públicas, com expansão mais acelerada de gastos primários e compromisso cada vez mais frouxo com o cumprimento estrito de metas fiscais. Revelando preferência inequívoca por soluções de project financing intensivas em recursos públicos, o governo tem recorrido à emissão de dívida pelo Tesouro para promover rápida expansão do crédito estatal subsidiado. As mudanças vêm implicando reversões de avanços institucionais importantes que chegaram a parecer definitivos, como a absoluta separação entre as contas do setor público não-financeiro e das instituições financeiras federais. O artigo analisa a extensão dessa multifacetada deterioração do regime fiscal e seus possíveis desdobramentos

Reforma tributária: urgência, desafios e descaminhos

1. AGENDA FISCAL E REFORMA TRIBUTÁRIA 2. A MOBILIZAÇÃO TRIBUTÁRIA DA ESTABILIZAÇÃO 3. RECONVERSÃO DO SISTEMA TRIBUTÁRIO: PROPORÇÕES DO DESAFIO 4. FEDERALISMO E ECONOMIA POLÍTICA 5. AVERSÃO AO RISCO, CONFORMISMO E OUSADIAr the real interest rates and achieve sustained growth.

Além da Estabilização: Desafios da Agenda Fiscal

With the external accounts problems reasonably solved, Brazil’s economic policy agenda is bound to be increasingly focused on fiscal issues. What makes the design of economic policy especially complex in this area is the fact that there are several superimposed and potentially conflicting fiscal agendas. The main challenge of the country’s economic policy over the coming years will be to successfully conciliate the multiple fiscal agendas that will have to be faced, in order to remodel and to resize the extraction and allocation of fiscal resources that already amount to 40 percent of GDP. The scope for economic growth and construction of a more equitable society will largely depend upon the degree of success the country’s political system will be able to show in its response to this challenge.Ajuste Fiscal, Reforma Fiscal, Reforma Tributária, Economia Política, Brasil

Fiscal federalism and procyclical spending: the cases of Argentina and Brazil

Este trabajo estudia las Fuentes de la prociclicalidad del gasto para gobiernos subnacionales en Argentina y Brasil. Encontramos que los esquemas de coparticipación de los impuestos explican solo una parte menor de la prociclicalidad de los recursos de las entidades subnacionales, siendo la mayor parte explicada por la prociclicalidad de los propios recursos. Esto es especialmente visible cuando esa prociclicalidad se mide relativa al producto de cada entidad subnacional. Usando evidencia de corte transversal para distintas jurisdicciones podemos concluir que, a su vez, la prociclicalidad del gasto resulta de la prociclicalidad de los recursos, mediante el llamado "voracity effect". La conclusión es que el debate sobre la prociclicalidad del gasto de entidades subnacionales debiera concentrarse mucho mas en mejorar los sistemas impositivos locales que en cambiar los regimenes de coparticipación.This paper studies the sources of procyclicality for the spending of subnational governments in Argentina and Brazil. We find that tax sharing schemes explain only a marginal share of the prociclicality of revenues, with most of the prociclicality coming from subnational government's own resources. This is more so when the prociclicality of each source is measured vis a vis each jurisdiction's output. Cross jurisdiction evidence supports the claim that procyclicality of spending results from the procyclicality of revenues, through the so called "voracity effect". The conclusion is that the debate on prociclical subnational spending should focus on improving the tax collection schemes at the local level and not on reforming the tax sharing agreements.Instituto de Investigaciones Económica