Revealed Corruption, Taxation and Fiscal Accountability: Evidence from Brazil

This version last revised July 2014. An appreciably cleaner, better and final version has been published in World Development 70:13–27, 2015. We encourage readers to consult it. Note that this paper initially circulated under the following title: “Government Performance, Taxationand Fiscal Accountab

58 Pages Posted: 1 Aug 2011 Last revised: 30 Jan 2015

See all articles by Jeffrey F. Timmons

Jeffrey F. Timmons

NYU Abu Dhabi

Francisco Garfias

Stanford University - Department of Political Science

Date Written: July 27, 2014

Abstract

Fiscal contract theories hypothesize that government performance affects tax collection and that institutions that foster representation and accountability link taxes and services. These propositions rest on strong assumptions about information and have not been tested rigorously. We use 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. The effect of revealed corruption increases marginally when audits are released before elections, suggesting that elections are one, but not the sole, mechanism connecting revealed corruption with changes in fiscal outcomes. Our results indicate modest demand-side constraints on taxation and budgetary institutions that are consistent with fiscal contract theory.

Keywords: fiscal contract, taxation, corruption, accountability

JEL Classification: H1, H26, H72, N4

Suggested Citation

Timmons, Jeffrey F. and Garfias, Francisco, Revealed Corruption, Taxation and Fiscal Accountability: Evidence from Brazil (July 27, 2014). This version last revised July 2014. An appreciably cleaner, better and final version has been published in World Development 70:13–27, 2015. We encourage readers to consult it. Note that this paper initially circulated under the following title: “Government Performance, Taxationand Fiscal Accountab, , Available at SSRN: https://ssrn.com/abstract=1903418 or http://dx.doi.org/10.2139/ssrn.1903418

Jeffrey F. Timmons (Contact Author)

NYU Abu Dhabi ( email )

PO Box 129188
Abu Dhabi
United Arab Emirates
(971) 262 84523 (Fax)

HOME PAGE: http://https://nyuad.nyu.edu/en/academics/faculty/jeffrey-timmons.html

Francisco Garfias

Stanford University - Department of Political Science ( email )

Stanford, CA 94305
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
279
Abstract Views
1,603
rank
153,499
PlumX Metrics