The fiscal performance of Santa Catarina’s municipalities and its determinants: An econometric analysis of the period from 2000 to 2008
DOI:
https://doi.org/10.4013/pe.2011.72.02Abstract
This paper aims to analyze the efficiencyof the municipalities of Santa Catarina State (Brazil) in the generation of revenue and reduction of their dependence on transfers from the Federal Government. In order to do this, we calculated the Index of Tax and Economic Performance (ITEP) based on the methodology by Oliveira et al. (2000). Next, it was performed two econometric regressions, a cross-section and panel data, aiming to diagnose what variables explainthe ITEP. The study covered 265 municipalities of Santa Catarina State (from 2002 to 2007) and used the following explanatory ITEP variables: agriculture, industry and service’s GDPs, current expenses, totalliabilities and the seaside dummy variable to capturethe effect of tourism activities. The main conclusions show that more than 50% of the municipalities ITEPis less than one unit, demonstrating that the transfers from the Federal Government exceeds the sumof the cities’ own tax revenues to the share-part ofthe ICMS. The municipalities that present the highest ITEP rates have some specific characteristics, suchas: diversified economic activities, populous cities, alarge enterprise installed and intense exploration of tourism. The municipality of Joinville had the highest ITEP. Joinville’s own tax revenues combined with the return of the ICMS exceed ten times the amount received from transfers from the Federal Governmentin all years of the study. Concerning GDP sectors, the highest performance was observed in the services sector, followed by the industrial sector. Agriculture has contributed negatively. The dummy variable showed that all the seaside municipalities were, on average, 14% more representative than other municipalities for ITEP formation, confirming the potential of the sectorto generate revenue for municipalities
Keywords: public finances, municipalities of Santa Catarina, tax efficiency.
JEL Classifi cation: H71, R50, H21
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