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Brazil fact of the day, federalism edition
In today’s Brazil, federalism and decentralisation have become a question of uncontrolled flows of money from the central state to the provinces. 10 per cent of the municipalities of Brazil do not raise any tax at all. At the same time, 89 per cent of them derive 95 per cent or more of their income from transfer payments from Brasilia, or from the government of their federal state.
Here is the link, which argues, correctly, that Brazil has too much dysfunctional federalism. I might add that infrastructure here is another (related) problem, read the post above this one. For a country of Brazil's importance, the quality of the roads, airports, and so on is abysmal. Did I mention that only about fifteen million of the voters pay income taxes?
Posted by Tyler Cowen on December 26, 2006 at 04:15 AM in Political Science | Permalink
Comments
Looks like the kind of "federalism" that lef-wing government are introducing into Italy. IMHO, problems stir from too liuttle and not too much federalism: if you devolve spending power, but avoid fiscal (i.e. tax) decentralisation, you provide a huge incentive for overspending, given tha lack of any reponsiblity by local politicians. Local authorities should be left free to spend only their own.
Posted by: John Christian Falkenberg at Dec 26, 2006 6:58:15 AM
Tyler,
"only about fifteen million pay income taxes" ?
I dont think this can be correct.
The total number of voters is greater than 120 million.
Voting is compulsory, meaning that most taxpayers also vote. And I am almost certain there are much more than 15 million people who pay income tax in Brasil.
Posted by: Mauro Kochen at Dec 26, 2006 3:34:34 PM
My apologies for the doubts in the message above.
I just found out that in 2004, around 18 million people paid income tax in Brasil.
In spite of being Brazilian, I was surprised by the very low number of income tax payers.
Thanks for informing me.
Posted by: Mauro Kochen at Dec 26, 2006 4:07:29 PM
Yes, but proportionally, the poor pay heavy taxes, since most taxes are comsuption, not income based.
I think that the fact that the poor pays taxes but doesn´t use most public services(Like tuition-free universities) a major source of inequality in Brazil.
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