FISCAL PERFORMANCE OF MUNICIPALITIES: A COMPARATIVE ANALYSIS FOR THE MESOREGIONS OF NORTHERN MINAS AND TRIÂNGULO MINEIRO

Abstract

This work aims to analyze, in a comparative study, the effect of fiscal decentralization based on transfers in the collection performance of the municipalities of the mesoregions of Triangulo Mineiro and North of Minas Gerais. To this end, it seeks to relate the differences in per capita collection between municipalities (dependent variable) to lump sum transfers and per capita income. The study is based on two hypotheses: (i) that lump-sum intergovernmental transfers, by granting an unconditional and unrequited source of revenue, tend to reduce the fiscal effort of municipal governments; (ii) that municipalities in more developed regions and with greater fiscal capacity present a greater tax collection effort than poorer regions. The study is based on analysis of the theoretical framework on fiscal decentralization based on transfers. To test the hypotheses, an econometric model is estimated relating the variables and uses the Ordinary Least Squares (OLS) method. The main results indicate that lump sum transfers reduce the stimulus to own collection. However, there were no significant differences in the tax collection effort between the analyzed mesoregions.