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Revealed Corruption, Taxation, and Fiscal Accountability: Evidence from Brazil

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  • Timmons, Jeffrey F.
  • Garfias, Francisco

Abstract

Fiscal contract theories hypothesize that government performance affects tax collection and that institutions that foster representation and accountability link taxes and services. We use randomly generated municipal audit reports with objective measures of corruption from Brazil to assess whether new information about corruption affects municipal property tax collection and the structure of fiscal institutions. We find short-run effects consistent with this theory: property tax revenue rises with clean audit reports and falls as revealed corruption increases; furthermore revealed corruption increases the probability that a municipality adopts participatory budgeting. Our results indicate modest demand-side constraints on taxation and budgetary institutions.

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  • Timmons, Jeffrey F. & Garfias, Francisco, 2015. "Revealed Corruption, Taxation, and Fiscal Accountability: Evidence from Brazil," World Development, Elsevier, vol. 70(C), pages 13-27.
    • Handle: RePEc:eee:wdevel:v:70:y:2015:i:c:p:13-27
    DOI: 10.1016/j.worlddev.2014.12.011
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    2. Boly, Amadou & Konte, Maty & Shimeles, Abebe, 2019. "Corruption and tax morale in Africa," MERIT Working Papers 2019-042, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
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    5. Salvatore Capasso & Lorenzo Cicatiello & Elina De Simone & Lodovico Santoro, 2022. "Corruption and tax revenues: Evidence from Italian regions," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 93(4), pages 1129-1152, December.
    6. Gustavo J. Bobonis & Paul Gertler & Marco Gonzalez-Navarro & Simeon Nichter, 2023. "Does Combating Corruption Reduce Clientelism?," NBER Working Papers 31266, National Bureau of Economic Research, Inc.
    7. Diogo Ferraz & Enzo B. Mariano & Daisy Rebelatto & Dominik Hartmann, 2020. "Linking Human Development and the Financial Responsibility of Regions: Combined Index Proposals Using Methods from Data Envelopment Analysis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 150(2), pages 439-478, July.
    8. Weigel, Jonathan, 2020. "The participation dividend of taxation: how citizens in Congo engage more with the state when it tries to tax them," LSE Research Online Documents on Economics 104561, London School of Economics and Political Science, LSE Library.
    9. Kendall D. Funk & Erica Owen, 2020. "Consequences of an Anti‐Corruption Experiment for Local Government Performance in Brazil," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 39(2), pages 444-468, March.
    10. Solé-Ollé, Albert & Sorribas-Navarro, Pilar, 2018. "Trust no more? On the lasting effects of corruption scandals," European Journal of Political Economy, Elsevier, vol. 55(C), pages 185-203.
    11. Claudiu Albulescu & Matei Tamasila & Ilie Taucean, 2016. "Shadow Economy, Tax Policies, Institutional Weakness and Financial Stability in Selected Oecd Countries," Managing Innovation and Diversity in Knowledge Society Through Turbulent Time: Proceedings of the MakeLearn and TIIM Joint International Conference 2016,, ToKnowPress.
    12. Mwoya Byaro & Abel Kinyondo, 2020. "Citizens' Trust in Government and Their Greater Willingness to Pay Taxes in Tanzania: A Case Study of Mtwara, Lindi, and Dar es Salaam Regions," Poverty & Public Policy, John Wiley & Sons, vol. 12(1), pages 73-83, March.
    13. Amat, Francesc & Beramendi, Pablo, 2016. "Economic and Political Inequality: The Role of Political Mobilization," CAGE Online Working Paper Series 277, Competitive Advantage in the Global Economy (CAGE).
    14. Joaquín Artés & Juan Luis Jiménez & Jordi Perdiguero, 2023. "The effects of revealing the prosecution of political corruption on local finances," Empirical Economics, Springer, vol. 64(1), pages 249-275, January.
    15. Oyarzo, Mauricio & Paredes, Dusan, 2019. "Revisiting the link between resource windfalls and subnational crowding out for local mining economies in Chile," Resources Policy, Elsevier, vol. 64(C).
    16. Zhang, Yue-Jun & Jin, Yan-Lin & Chevallier, Julien & Shen, Bo, 2016. "The effect of corruption on carbon dioxide emissions in APEC countries: A panel quantile regression analysis," Technological Forecasting and Social Change, Elsevier, vol. 112(C), pages 220-227.
    17. Gianmarco Daniele & Benny Geys, 2015. "Exposing politicians’ ties to criminal organizations: the effects of local government dissolutions on electoral outcomes in southern Italian municipalities," Working Papers 2015/41, Institut d'Economia de Barcelona (IEB).

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