IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/127865.html

Digital highways to development: Mobile internet and tax revenues in Brazil

Author

Listed:
  • Maciel, Mateus
  • Zuchowski, David

Abstract

Investment in critical infrastructure is essential for long-term development. However, low tax revenues in developing countries often constrain such investment. In this paper, we examine whether the expansion of high-speed mobile internet infrastructure can generate additional tax revenue. To identify the causal effect, we exploit the staggered rollout of 3G and 4G infrastructure across municipalities in Brazil. Using an event study approach, we find that the expansion of this technology leads to a lasting increase in income tax revenue, driven almost entirely by higher corporate income tax collection. We show that the additional tax revenue results from increased economic activity and formalization following the expansion of high-speed mobile internet. Our findings indicate that investment in digital infrastructure can stimulate economic growth and strengthen fiscal capacity in developing countries. This means that policymakers in developing countries with low tax revenues should expand their focus beyond tax-collection reforms and integrate growth-enhancing investments into their agenda.

Suggested Citation

  • Maciel, Mateus & Zuchowski, David, 2025. "Digital highways to development: Mobile internet and tax revenues in Brazil," MPRA Paper 127865, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:127865
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/127865/1/MPRA_paper_127865.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Mr. Matthieu Bellon & Ms. Era Dabla-Norris & Salma Khalid & Juan Carlos Paliza & Jillie Chang & Pilar Villena, 2022. "Digitalization and Tax Compliance Spillovers: Evidence from a VAT e-Invoicing Reform in Peru," IMF Working Papers 2022/057, International Monetary Fund.
    2. Rafael La Porta & Andrei Shleifer, 2014. "Informality and Development," Journal of Economic Perspectives, American Economic Association, vol. 28(3), pages 109-126, Summer.
    3. Alexander Yarkin, 2025. "Home-Country Internet and Immigrants' Well-Being," AEA Papers and Proceedings, American Economic Association, vol. 115, pages 432-437, May.
    4. Manchin, Miriam & Orazbayev, Sultan, 2018. "Social networks and the intention to migrate," World Development, Elsevier, vol. 109(C), pages 360-374.
    5. Changlin Yu & Yanming Li, 2025. "Digitalization of tax collection and enterprises’ social security compliance," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 32(4), pages 1213-1252, August.
    6. Rocha, Rudi & Ulyssea, Gabriel & Rachter, Laísa, 2018. "Do lower taxes reduce informality? Evidence from Brazil," Journal of Development Economics, Elsevier, vol. 134(C), pages 28-49.
    7. Timothy Besley & Torsten Persson, 2014. "Why Do Developing Countries Tax So Little?," Journal of Economic Perspectives, American Economic Association, vol. 28(4), pages 99-120, Fall.
    8. Goodman-Bacon, Andrew, 2021. "Difference-in-differences with variation in treatment timing," Journal of Econometrics, Elsevier, vol. 225(2), pages 254-277.
    9. Joana Naritomi, 2019. "Consumers as Tax Auditors," American Economic Review, American Economic Association, vol. 109(9), pages 3031-3072, September.
    10. Vanessa Hellwig, 2023. "Digital gravity? Firm birth and relocation patterns of young digital firms in Germany," Journal of Regional Science, Wiley Blackwell, vol. 63(2), pages 340-378, March.
    11. Jenny C. Aker & Isaac M. Mbiti, 2010. "Mobile Phones and Economic Development in Africa," Journal of Economic Perspectives, American Economic Association, vol. 24(3), pages 207-232, Summer.
    12. repec:oup:ajagec:v:99:y:2017:i:1:p:1-18. is not listed on IDEAS
    13. Nina Czernich & Oliver Falck & Tobias Kretschmer & Ludger Woessmann, 2011. "Broadband Infrastructure and Economic Growth," Economic Journal, Royal Economic Society, vol. 121(552), pages 505-532, May.
    14. Harald Gruber & Pantelis Koutroumpis, 2011. "Mobile telecommunications and the impact on economic development [Discussion of “Why is infrastructure important?” in Alicia H. Munnell, (ed.), Is there a shortfall in public capital investment?]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 26(67), pages 387-426.
    15. Apeti, Ablam Estel & Edoh, Eyah Denise, 2023. "Tax revenue and mobile money in developing countries," Journal of Development Economics, Elsevier, vol. 161(C).
    16. Buys, Piet & Dasgupta, Susmita & Thomas, Timothy S. & Wheeler, David, 2009. "Determinants of a Digital Divide in Sub-Saharan Africa: A Spatial Econometric Analysis of Cell Phone Coverage," World Development, Elsevier, vol. 37(9), pages 1494-1505, September.
    17. Corbi, Raphael & Ferraz, Tiago & Narita, Renata, 2025. "Internal migration and labor market adjustments in the presence of non-wage compensation," Journal of Development Economics, Elsevier, vol. 177(C).
    18. Oyebola Okunogbe & Gabriel Tourek, 2024. "How Can Lower-Income Countries Collect More Taxes? The Role of Technology, Tax Agents, and Politics," Journal of Economic Perspectives, American Economic Association, vol. 38(1), pages 81-106, Winter.
    19. repec:bla:ecpoli:v:26:y:2011:i:67:p:387-426 is not listed on IDEAS
    20. Bellon, Matthieu & Dabla-Norris, Era & Khalid, Salma & Lima, Frederico, 2022. "Digitalization to improve tax compliance: Evidence from VAT e-Invoicing in Peru," Journal of Public Economics, Elsevier, vol. 210(C).
    21. Mascagni, Giulia & Mengistu, Andualem T. & Woldeyes, Firew B., 2021. "Can ICTs increase tax compliance? Evidence on taxpayer responses to technological innovation in Ethiopia," Journal of Economic Behavior & Organization, Elsevier, vol. 189(C), pages 172-193.
    22. Kanyam, Daniel A. & Kostandini, Genti & Ferreira, Susana, 2017. "The Mobile Phone Revolution: Have Mobile Phones and the Internet Reduced Corruption in Sub-Saharan Africa?," World Development, Elsevier, vol. 99(C), pages 271-284.
    23. Kotsogiannis, Christos & Salvadori, Luca & Karangwa, John & Murasi, Innocente, 2025. "E-invoicing, tax audits and VAT compliance," Journal of Development Economics, Elsevier, vol. 172(C).
    24. Ablam Estel Apeti & Eyah Denise Edoh, 2023. "Tax revenue and mobile money in developing countries," Post-Print hal-04712070, HAL.
    25. Callaway, Brantly & Sant’Anna, Pedro H.C., 2021. "Difference-in-Differences with multiple time periods," Journal of Econometrics, Elsevier, vol. 225(2), pages 200-230.
    26. Kalvin Bahia & Pau Castells & Genaro Cruz & Takaaki Masaki & Carlos Rodríguez-Castelán & Viviane Sanfelice, 2023. "Mobile Broadband, Poverty, and Labor Outcomes in Tanzania," The World Bank Economic Review, World Bank, vol. 37(2), pages 235-256.
    27. Bahia, Kalvin & Castells, Pau & Cruz, Genaro & Masaki, Takaaki & Pedrós, Xavier & Pfutze, Tobias & Rodríguez-Castelán, Carlos & Winkler, Hernán, 2024. "The welfare effects of mobile broadband internet: Evidence from Nigeria," Journal of Development Economics, Elsevier, vol. 170(C).
    Full references (including those not matched with items on IDEAS)

    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. Fang, Chao & Pan, Jiafeng & Wu, Peng, 2026. "Reaching the last mile: Digitalization of tax administration and VAT compliance at the retail stage," Information Economics and Policy, Elsevier, vol. 72(C).
    2. Michael Barczay & Mr. Shafik Hebous & Fayçal Sawadogo & Jean-François Wen, 2025. "Taxing Mobile Money: Theory and Evidence," IMF Working Papers 2025/255, International Monetary Fund.
    3. Mensah,Justice Tei, 2023. "Mobile Phones and Local Economic Development : A Global Evidence," Policy Research Working Paper Series 10526, The World Bank.
    4. Bahia, Kalvin & Castells, Pau & Cruz, Genaro & Masaki, Takaaki & Pedrós, Xavier & Pfutze, Tobias & Rodríguez-Castelán, Carlos & Winkler, Hernán, 2024. "The welfare effects of mobile broadband internet: Evidence from Nigeria," Journal of Development Economics, Elsevier, vol. 170(C).
    5. Burak Uras & Tulio Bouzas, 2026. "The Price of Traceability: E-Payments, Tax Compliance, and Policy," Department of Economics Working Papers 2026_102, Department of Economics, Williams College.
    6. Coulibaly, Yacouba & Diallo, Askandarou Cheik, 2025. "Can fiscal rules improve banking system stability in developing countries?," Journal of Macroeconomics, Elsevier, vol. 86(C).
    7. Pafadnam, Neerbewendé Abdoul Rachid, 2024. "How does implementing the Extractive Industries Transparency Initiative (EITI) affect economic growth? Evidence from developing countries," European Journal of Political Economy, Elsevier, vol. 85(C).
    8. Denvil Duncan & Yongzheng Liu & Hailun Wei, 2026. "Decentralization, privatization, and firm tax compliance," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 33(2), pages 469-513, April.
    9. Shiyi Chen & Wanlin Liu & Hong Song & Qing Zhang, 2024. "Government‐led e‐commerce expansion project and rural household income: Evidence and mechanisms," Economic Inquiry, Western Economic Association International, vol. 62(1), pages 150-174, January.
    10. Damien GIROLLET, 2023. "Digital divides among microsized firms: Evidence from Sub-Saharan Africa," Bordeaux Economics Working Papers 2023-03, Bordeaux School of Economics (BSE).
    11. Neerbewendé Abdoul Rachid Pafadnam, 2024. "How does implementing the Extractive Industries Transparency Initiative (EITI) affect economic growth? Evidence from developing countries," Post-Print hal-04727043, HAL.
    12. Jung, Suhyun & Rogers, Martha, 2024. "Mobile phone adoption, deforestation, and agricultural land use in Uganda," World Development, Elsevier, vol. 179(C).
    13. Hagen Kruse & Franziska Lieselotte Ohnsorge & Gabriel Zenon Tourek & Zoe Leiyu Xie, 2025. "Bridging the Gap : Revenue Mobilization in South Asia," Policy Research Working Paper Series 11104, The World Bank.
    14. Sutirtha Bagchi & Libor Du ek, 2021. "Third-party Reporting and Tax Collections: Evidence from the Introduction of Withholding of the State Personal Income Tax," Villanova School of Business Department of Economics and Statistics Working Paper Series 50, Villanova School of Business Department of Economics and Statistics.
    15. Messono, Omang Ombolo, 2025. "The intersection of publics services digitalization and women's empowerment in tax revenue mobilization," Technological Forecasting and Social Change, Elsevier, vol. 219(C).
    16. Justice Tei Mensah & Kibrom Tafere & Kibrom A. Abay, 2026. "Saving Lives through Technology: Mobile Phones and Infant Mortality," Economic Development and Cultural Change, University of Chicago Press, vol. 74(3), pages 997-1040.
    17. Notsu, Naruki & Hirota, Haruaki & Akai, Nobuo, 2025. "Inter-municipal cooperation and tax enforcement capabilities," Regional Science and Urban Economics, Elsevier, vol. 114(C).
    18. Bouzas, Tulio & Uras, Burak, 2026. "The Price of Traceability: E-Payments, Tax Compliance, and Policy," Other publications TiSEM b35a98be-6600-4dcd-8010-b, Tilburg University, School of Economics and Management.
    19. Kotsogiannis, Christos & Salvadori, Luca & Karangwa, John & Murasi, Innocente, 2025. "E-invoicing, tax audits and VAT compliance," Journal of Development Economics, Elsevier, vol. 172(C).
    20. Bellon, Matthieu & Dabla-Norris, Era & Khalid, Salma, 2023. "Technology and tax compliance spillovers: Evidence from a VAT e-invoicing reform in Peru," Journal of Economic Behavior & Organization, Elsevier, vol. 212(C), pages 756-777.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    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:pra:mprapa:127865. 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: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    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.