Of Governance and Revenue : Participatory Institutions and Tax Compliance in Brazil
Traditionally, governments seek to mobilize tax revenues by expanding their enforcement of existing tax regimes and facilitating tax payments. However, enforcement and facilitation can be costly and produce diminishing marginal returns if citizens...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2019
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/855201553787807050/Of-Governance-and-Revenue-Participatory-Institutions-and-Tax-Compliance-in-Brazil http://hdl.handle.net/10986/31492 |
| Summary: | Traditionally, governments seek to
mobilize tax revenues by expanding their enforcement of
existing tax regimes and facilitating tax payments. However,
enforcement and facilitation can be costly and produce
diminishing marginal returns if citizens are unwilling to
pay their taxes. This paper addresses gaps in knowledge
about tax compliance, by asking a basic question: what
explains why citizens and businesses comply with tax rules?
To answer this question, the paper shows how the voluntary
adoption of two different types of participatory governance
institutions influences municipal tax collection in Brazil.
Municipalities that voluntarily adopt participatory
institutions collect significantly higher levels of taxes
than similar municipalities without these institutions. The
paper provides evidence that moves scholarship on tax
compliance beyond enforcement and facilitation paradigms,
while offering a better assessment of the role of local
democratic institutions for government performance and tax compliance. |
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