IDEAS home Printed from https://ideas.repec.org/a/eee/wdevel/v70y2015icp13-27.html
   My bibliography  Save this article

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

Author

Listed:
  • 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.

Suggested Citation

  • 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
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0305750X14004094
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.worlddev.2014.12.011?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Cameron G. Thies, 2005. "War, Rivalry, and State Building in Latin America," American Journal of Political Science, John Wiley & Sons, vol. 49(3), pages 451-465, July.
    2. Alston, Lee J. & Melo, Marcus Andre & Mueller, Bernardo & Pereira, Carlos, 2013. "Changing social contracts: Beliefs and dissipative inclusion in Brazil," Journal of Comparative Economics, Elsevier, vol. 41(1), pages 48-65.
    3. Robert H. Bates & Da-Hsiang Donald Lien, 1985. "A Note on Taxation, Development, and Representative Government," Politics & Society, , vol. 14(1), pages 53-70, March.
    4. Castro, Lucio & Scartascini, Carlos, 2015. "Tax compliance and enforcement in the pampas evidence from a field experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 116(C), pages 65-82.
    5. Bratton, Michael, 2012. "Citizen Perceptions of Local Government Responsiveness in Sub-Saharan Africa," World Development, Elsevier, vol. 40(3), pages 516-527.
    6. Timothy J. Goodspeed, 2011. "Corruption, accountability, and decentralization: theory and evidence from Mexico," Working Papers 2011/32, Institut d'Economia de Barcelona (IEB).
    7. Olken, Benjamin A., 2010. "Direct Democracy and Local Public Goods: Evidence from a Field Experiment in Indonesia," American Political Science Review, Cambridge University Press, vol. 104(2), pages 243-267, May.
    8. Kirchler, Erich & Hoelzl, Erik & Wahl, Ingrid, 2008. "Enforced versus voluntary tax compliance: The "slippery slope" framework," Journal of Economic Psychology, Elsevier, vol. 29(2), pages 210-225, April.
    9. Francesco Caselli & Guy Michaels, 2013. "Do Oil Windfalls Improve Living Standards? Evidence from Brazil," American Economic Journal: Applied Economics, American Economic Association, vol. 5(1), pages 208-238, January.
    10. Boulding, Carew & Wampler, Brian, 2010. "Voice, Votes, and Resources: Evaluating the Effect of Participatory Democracy on Well-being," World Development, Elsevier, vol. 38(1), pages 125-135, January.
    11. Castro, Lucio & Scartascini, Carlos, 2015. "Tax compliance and enforcement in the pampas evidence from a field experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 116(C), pages 65-82.
    12. Claudio Ferraz & Frederico Finan, 2008. "Exposing Corrupt Politicians: The Effects of Brazil's Publicly Released Audits on Electoral Outcomes," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 123(2), pages 703-745.
    13. Stephan Litschig & Yves Zamboni, 2011. "Audit risk and rent extraction: Evidence from a randomized evaluation in Brazil," Economics Working Papers 1270, Department of Economics and Business, Universitat Pompeu Fabra, revised Jun 2013.
    14. Morrison, Kevin M., 2009. "Oil, Nontax Revenue, and the Redistributional Foundations of Regime Stability," International Organization, Cambridge University Press, vol. 63(1), pages 107-138, January.
    15. Nicholas Eubank, 2012. "Taxation, Political Accountability and Foreign Aid: Lessons from Somaliland," Journal of Development Studies, Taylor & Francis Journals, vol. 48(4), pages 465-480, March.
    16. Brautigam,Deborah & Fjeldstad,Odd-Helge & Moore,Mick (ed.), 2008. "Taxation and State-Building in Developing Countries," Cambridge Books, Cambridge University Press, number 9780521888158, September.
    17. James Andreoni & Brian Erard & Jonathan Feinstein, 1998. "Tax Compliance," Journal of Economic Literature, American Economic Association, vol. 36(2), pages 818-860, June.
    18. Mr. Dhaneshwar Ghura, 1998. "Tax Revenue in Sub-Saharan Africa: Effects of Economic Policies and Corruption," IMF Working Papers 1998/135, International Monetary Fund.
    19. Joel Slemrod & Caroline Weber, 2012. "Evidence of the invisible: toward a credibility revolution in the empirical analysis of tax evasion and the informal economy," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(1), pages 25-53, February.
    20. Ali, Merima & Fjeldstad, Odd-Helge & Sjursen, Ingrid Hoem, 2014. "To Pay or Not to Pay? Citizens’ Attitudes Toward Taxation in Kenya, Tanzania, Uganda, and South Africa," World Development, Elsevier, vol. 64(C), pages 828-842.
    21. Gustavo J. Bobonis & Luis R. Cámara Fuertes & Rainer Schwabe, 2016. "Monitoring Corruptible Politicians," American Economic Review, American Economic Association, vol. 106(8), pages 2371-2405, August.
    22. Timothy J. Goodspeed, 2011. "Corruption, accountability, and decentralization: theory and evidence from Mexico," Working Papers 2011/32, Institut d'Economia de Barcelona (IEB).
    23. Paler, Laura, 2013. "Keeping the Public Purse: An Experiment in Windfalls, Taxes, and the Incentives to Restrain Government," American Political Science Review, Cambridge University Press, vol. 107(4), pages 706-725, November.
    24. Arvate, Paulo Roberto, 2013. "Electoral Competition and Local Government Responsiveness in Brazil," World Development, Elsevier, vol. 43(C), pages 67-83.
    25. Claudio Ferraz & Frederico Finan, 2011. "Electoral Accountability and Corruption: Evidence from the Audits of Local Governments," American Economic Review, American Economic Association, vol. 101(4), pages 1274-1311, June.
    26. Brautigam,Deborah & Fjeldstad,Odd-Helge & Moore,Mick (ed.), 2008. "Taxation and State-Building in Developing Countries," Cambridge Books, Cambridge University Press, number 9780521716192, September.
    27. Mr. Vito Tanzi & Mr. Hamid R Davoodi, 1997. "Corruption, Public Investment, and Growth," IMF Working Papers 1997/139, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Amadou Boly & Maty Konte & Abebe Shimeles, 2021. "Corruption Perception and Attitude Towards Taxation in Africa [To Pay or Not to Pay? Citizens’ Attitudes Toward Taxation in Kenya, Tanzania, Uganda, and South Africa]," Journal of African Economies, Centre for the Study of African Economies, vol. 30(Supplemen), pages 140-157.
    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).
    3. Capasso, Salvatore & Cicatiello, Lorenzo & De Simone, Elina & Gaeta, Giuseppe Lucio & Mourão, Paulo Reis, 2021. "Fiscal transparency and tax ethics: does better information lead to greater compliance?," Journal of Policy Modeling, Elsevier, vol. 43(5), pages 1031-1050.
    4. Ronconi, Lucas & Zarazaga S.J., Rodrigo, 2015. "Labor Exclusion and the Erosion of Citizenship Responsibilities," World Development, Elsevier, vol. 74(C), pages 453-461.
    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).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Giulia Mascagni, 2018. "From The Lab To The Field: A Review Of Tax Experiments," Journal of Economic Surveys, Wiley Blackwell, vol. 32(2), pages 273-301, April.
    2. repec:idq:ictduk:13726 is not listed on IDEAS
    3. repec:idq:ictduk:8967 is not listed on IDEAS
    4. von Haldenwang, Christian, 2020. "Digitalising the fiscal contract: An interdisciplinary framework for empirical inquiry," IDOS Discussion Papers 20/2020, German Institute of Development and Sustainability (IDOS).
    5. Cappelen, Alexander W. & Fjeldstad, Odd-Helge & Mmari, Donald & Sjursen, Ingrid Hoem & Tungodden, Bertil, 2021. "Understanding the resource curse: A large-scale experiment on corruption in Tanzania," Journal of Economic Behavior & Organization, Elsevier, vol. 183(C), pages 129-157.
    6. repec:idq:ictduk:13751 is not listed on IDEAS
    7. Hallsworth, Michael & List, John A. & Metcalfe, Robert D. & Vlaev, Ivo, 2017. "The behavioralist as tax collector: Using natural field experiments to enhance tax compliance," Journal of Public Economics, Elsevier, vol. 148(C), pages 14-31.
    8. Lucie Gadenne, 2017. "Tax Me, but Spend Wisely? Sources of Public Finance and Government Accountability," American Economic Journal: Applied Economics, American Economic Association, vol. 9(1), pages 274-314, January.
    9. Eric Avis & Claudio Ferraz & Frederico Finan, 2018. "Do Government Audits Reduce Corruption? Estimating the Impacts of Exposing Corrupt Politicians," Journal of Political Economy, University of Chicago Press, vol. 126(5), pages 1912-1964.
    10. K. Kivanç Karaman & Sevket Pamuk, 2011. "Different Paths to the Modern State in Europe: The interaction between domestic political economy and interstate competition," Europe in Question Discussion Paper Series of the London School of Economics (LEQs) 7, London School of Economics / European Institute.
    11. Broms, Rasmus, 2017. "Colonial Revenue Extraction and Modern Day Government Quality in the British Empire," World Development, Elsevier, vol. 90(C), pages 269-280.
    12. Gobena, Lemessa Bayissa & Van Dijke, Marius, 2016. "Power, justice, and trust: A moderated mediation analysis of tax compliance among Ethiopian business owners," Journal of Economic Psychology, Elsevier, vol. 52(C), pages 24-37.
    13. James Alm, 2019. "What Motivates Tax Compliance?," Journal of Economic Surveys, Wiley Blackwell, vol. 33(2), pages 353-388, April.
    14. Monika Bauhr & Nicholas Charron, 2018. "Why support International redistribution? Corruption and public support for aid in the eurozone," European Union Politics, , vol. 19(2), pages 233-254, June.
    15. Andersen, Jørgen Juel & Sørensen, Rune Jørgen, 2022. "The zero-rent society: Evidence from hydropower and petroleum windfalls in Norwegian local governments," Journal of Public Economics, Elsevier, vol. 209(C).
    16. Cavalcanti, Francisco & Daniele, Gianmarco & Galletta, Sergio, 2018. "Popularity shocks and political selection," Journal of Public Economics, Elsevier, vol. 165(C), pages 201-216.
    17. Mawejje, Joseph & Sebudde, Rachel K., 2019. "Tax revenue potential and effort: Worldwide estimates using a new dataset," Economic Analysis and Policy, Elsevier, vol. 63(C), pages 119-129.
    18. Pessino, Carola & Izquierdo, Alejandro & Vuletin, Guillermo, 2018. "Better Spending for Better Lives: How Latin America and the Caribbean Can Do More with Less," IDB Publications (Books), Inter-American Development Bank, number 9152, November.
    19. Tania Masi & Antonio Savoia & Kunal Sen, 2018. "Is there a fiscal resource curse? Resource rents, fiscal capacity and political institutions," Global Development Institute Working Paper Series esid-096-18, GDI, The University of Manchester.
    20. Kettle,Stewart & Hernandez,Marco & Ruda,Simon & Sanders,Michael, 2016. "Behavioral interventions in tax compliance : evidence from Guatemala," Policy Research Working Paper Series 7690, The World Bank.
    21. Vanessa van den Boogaard & Wilson Prichard & Nikola Milicic & Matthew Benson, 2016. "Tax revenue mobilization in conflict-affected developing countries," WIDER Working Paper Series wp-2016-155, World Institute for Development Economic Research (UNU-WIDER).
    22. Flores-Macías, Gustavo A., 2018. "Building support for taxation in developing countries: Experimental evidence from Mexico," World Development, Elsevier, vol. 105(C), pages 13-24.
    23. Chowdhury Mohammad Sakib Anwar & Alexander Matros & Sonali Sen Gupta, 2018. "Tax Evasion, Embezzlement and Public Good Provision," Working Papers 232397285, Lancaster University Management School, Economics Department.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:wdevel:v:70:y:2015:i:c:p:13-27. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/worlddev .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.