Of Governance and Revenue
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.
| Main Authors: | , , |
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| Format: | Working Paper biblioteca |
| Language: | English |
| Published: |
World Bank, Washington, DC
2019-03
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| Subjects: | TAX COMPLIANCE, GOVERNANCE, MUNICIPAL FINANCE, TAXATION, SUBSIDIES, TAX REVENUES, TAX REVENUE COLLECTION, DEMOCRACY, PARTICIPATION, |
| Online Access: | http://documents.worldbank.org/curated/en/855201553787807050/Of-Governance-and-Revenue-Participatory-Institutions-and-Tax-Compliance-in-Brazil https://hdl.handle.net/10986/31492 |
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| 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. |
|---|