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


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


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.

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  • 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, 2004. "Incentives in the Public Sector: Evidence from a Government Agency," The Centre for Market and Public Organisation 04/103, Department of Economics, University of Bristol, UK.
    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. Frederico Finan & Benjamin A. Olken & Rohini Pande, 2015. "The Personnel Economics of the State," NBER Working Papers 21825, National Bureau of Economic Research, Inc.
    5. Khan, Adnan Q. & Khwaja, Asim I. & Olken, Benjamin A., 2016. "Tax farming redux: experimental evidence on performance pay for tax collectors," LSE Research Online Documents on Economics 66265, London School of Economics and Political Science, LSE Library.
    6. repec:idb:idbbks:6883 is not listed on IDEAS
    7. 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.
    8. 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.
    9. Simon M. Burgess & Carol Propper & Marisa Ratto & Emma Tominey, 2017. "Incentives in the Public Sector: Evidence from a Government Agency," Post-Print hal-01651132, HAL.
    10. Germán Ríos & Federico Ortega & J. Sebastián Scrofina, 2012. "Sub-national Revenue Mobilization in Latin America and Caribbean Countries: The Case of Venezuela," IDB Publications (Working Papers) 4052, Inter-American Development Bank.
    11. repec:dau:papers:123456789/12197 is not listed on IDEAS
    12. 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.
    13. Nick Manning & Zahid Hasnain & Jan Henryk Pierskalla, 2012. "Public Sector Human Resource Practices to Drive Performance," World Bank Other Operational Studies 25489, The World Bank.
    14. 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.
    15. 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, Department of Economics, University of Bristol, UK.
    16. Adnan Q. Khan & Asim I. Khwaja & Benjamin A. Olken, 2014. "Tax Farming Redux: Experimental Evidence on Performance Pay for Tax Collectors," NBER Working Papers 20627, National Bureau of Economic Research, Inc.
    17. 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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