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Performance-Based Wages in Tax Collection: The Brazilian Tax Collection Reform and Its Effects

Author

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  • Kahn, Charles M
  • Silva, Emilson C D
  • Ziliak, James P

Abstract

We use panel data from the Brazilian tax collection authority to examine the effects of a major incentive reform instituted in 1989 to improve tax enforcement. Beforehand, fine collections per inspection were relatively stable; however, a striking trend break occurred afterwards, which we attribute to the incentive reform not to changes in the macroeconomy or personal and corporate income tax rates. Our estimates suggest the growth in fines per inspection after the reform is about 75% above what it would have been without it and that there is substantial heterogeneity in the impact of the reform across tax regions.

Suggested Citation

  • Kahn, Charles M & Silva, Emilson C D & Ziliak, James P, 2001. "Performance-Based Wages in Tax Collection: The Brazilian Tax Collection Reform and Its Effects," Economic Journal, Royal Economic Society, vol. 111(468), pages 188-205, January.
    • Handle: RePEc:ecj:econjl:v:111:y:2001:i:468:p:188-205
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    Cited by:

    1. Roberto Burguet & Juan José Ganuza & José Garcia Montalvo, 2016. "The microeconomics of corruption. A review of thirty years of research," Economics Working Papers 1525, Department of Economics and Business, Universitat Pompeu Fabra.
    2. Simon Burgess & Carol Propper & Marisa Ratto & Emma Tominey, 2017. "Incentives in the Public Sector: Evidence from a Government Agency," Economic Journal, Royal Economic Society, vol. 127(605), pages 117-141, October.
    3. Benjamin A. Olken & Rohini Pande, 2012. "Corruption in Developing Countries," Annual Review of Economics, Annual Reviews, vol. 4(1), pages 479-509, July.
    4. repec:idb:brikps:6883 is not listed on IDEAS
    5. Frederico Finan & Benjamin A. Olken & Rohini Pande, 2015. "The Personnel Economics of the State," NBER Working Papers 21825, National Bureau of Economic Research, Inc.
    6. Adnan Q. Khan & Asim I. Khwaja & Benjamin A. Olken, 2016. "Tax Farming Redux: Experimental Evidence on Performance Pay for Tax Collectors," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(1), pages 219-271.
    7. Fretes Cibils, Vicente & Ter-Minassian, Teresa & Scrofina, J. Sebastián & Ortega, Federico & Ríos, Germán & Rasteletti, Alejandro & Ramírez Verdugo, Arturo & Pineda, Emilio & Martínez-Vázquez, Jorge &, 2015. "Decentralizing Revenue in Latin America: Why and How," IDB Publications (Books), Inter-American Development Bank, number 6883.
    8. Van Rijckeghem, Caroline & Weder, Beatrice, 2001. "Bureaucratic corruption and the rate of temptation: do wages in the civil service affect corruption, and by how much?," Journal of Development Economics, Elsevier, vol. 65(2), pages 307-331, August.
    9. Baethge, Caroline & Fiedler, Marina, 2016. "Aligning mission preferences: Does self-selection foster performance in working groups?," Passauer Diskussionspapiere, Betriebswirtschaftliche Reihe B-18-16, University of Passau, Faculty of Business and Economics.
    10. Vicente Fretes Cibils & Teresa Ter-Minassian & J. Sebastián Scrofina & Federico Ortega & Germán Ríos & Alejandro Rasteletti & Arturo Ramírez Verdugo & Emilio Pineda & Jorge Martínez-Vázquez & Cristián, 2015. "Decentralizing Revenue in Latin America: Why and How," IDB Publications (Books), Inter-American Development Bank, number 88858 edited by Vicente Fretes Cibils & Teresa Ter-Minassian, February.
    11. Charles Angelucci & Antonio Russo, 2015. "Petty corruption and citizen feedback," Working Papers 2015/25, Institut d'Economia de Barcelona (IEB).
    12. Ciccia, Diego & Distefano, Rosaria & Reito, Francesco, 2022. "The mismatch between potential and actual shirking in a model of bureaucracy," MPRA Paper 115452, University Library of Munich, Germany.
    13. Yahagi, Ken, 2021. "Law enforcement with motivated agents," International Review of Law and Economics, Elsevier, vol. 66(C).
    14. Ríos, Germán & Ortega, Federico & Scrofina, J. Sebastián, 2012. "Sub-national Revenue Mobilization in Latin America and Caribbean Countries: The Case of Venezuela," IDB Publications (Working Papers) 4052, Inter-American Development Bank.
    15. repec:dau:papers:123456789/12197 is not listed on IDEAS
    16. Barinova, V. A. (Баринова, В.) & Eremkin, V. A. (Еремкин, В.) & Lanshina, T. A. (Ланьшина, Т.) & Pleskachev, Yuriy Andreevich (Плескачев, Юрий Андреевич), 2016. "Restrictions on the Use of Effective (Incentive) Contracts in the Public Sector and Public Service [Ограничения Применения Эффективных (Стимулирующих) Контрактов В Бюджетном Секторе И На Государств," Working Papers 964, Russian Presidential Academy of National Economy and Public Administration.
    17. Arindam Das-Gupta & Shanto Ghosh & Dilip Mookherjee, 2004. "Tax Administration Reform and Taxpayer Compliance in India," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 11(5), pages 575-600, September.
    18. Charles Angelucci & Antonio Russo, 2022. "Petty Corruption And Citizen Reports," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 63(2), pages 831-848, May.
    19. Nick Manning & Zahid Hasnain & Jan Henryk Pierskalla, 2012. "Public Sector Human Resource Practices to Drive Performance," World Bank Publications - Reports 25489, The World Bank Group.
    20. Atkinson, Adele & Burgess, Simon & Croxson, Bronwyn & Gregg, Paul & Propper, Carol & Slater, Helen & Wilson, Deborah, 2009. "Evaluating the impact of performance-related pay for teachers in England," Labour Economics, Elsevier, vol. 16(3), pages 251-261, June.
    21. Nagac Kadir, 2013. "Effect of Tax Administration Reform and Audits on Tax Evasion in Turkey," Review of Middle East Economics and Finance, De Gruyter, vol. 8(3), pages 1-23, January.
    22. Blaufus, Kay & Schöndube, Jens Robert & Wielenberg, Stefan, 2020. "Strategic interactions between tax and statutory auditors and different information regimes: Implications for tax audit efficiency," arqus Discussion Papers in Quantitative Tax Research 249, arqus - Arbeitskreis Quantitative Steuerlehre.
    23. Simon Burgess & Marisa Ratto, 2003. "The Role of Incentives in the Public Sector: Issues and Evidence," The Centre for Market and Public Organisation 03/071, The Centre for Market and Public Organisation, University of Bristol, UK.
    24. Charles Angelucci & Antonio Russo, 2015. "Petty Corruption and Citizen Reports," CESifo Working Paper Series 5528, CESifo.
    25. Cracau, Daniel & Franz, Benjamin, 2013. "Bonus payments as an anti-corruption instrument: A theoretical approach," Economics Letters, Elsevier, vol. 120(1), pages 1-4.

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