Decentralization, Tax Administration, and Taxation: Evidence from Brazil’s Rural Land Tax
A. Bragança, D. Britto, A. Fonseca, D. Moura, B. Sampaio|, A. Sant’Anna, D. Szerman
This paper evaluates a program that partially decentralized the administration of rural land taxes to local authorities in exchange of increases in their share of tax revenues. Using microdata from tax returns, we find that the program led to an expansion of tax revenues by 20% after five years. Decentralization expanded tax revenues mainly by increasing reported land values. Using satellite data, we find that partial decentralization did not influence farmer behavior significantly. A cost-benefit exercise indicates that partial decentralization had large returns. Overall, the findings indicate that cooperation between local and central authorities can increase property taxation in contexts with incomplete information and weak enforcement capacity.
Event: World Bank Land Conference 2024 - Washington
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