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Flypaper effect revisited: evidence for tax collection efficiency in Brazilian municipalities
Open accessAbstract
The purpose of this article is to propose a reinterpretation of the traditional flypaper effect according to which central government transfers to local governments increase public spending by more than do increases in private income. Here, higher transfers from the federal government might induce less efficiency in local tax collection opposed to the income effect. Initially, we build a model in order to point out the possible existence of that flypaper effect in a context of standard maximization on the part of local governments. Next, we construct efficiency scores for Brazilian municipalities using Free Disposable Hull (FDH), taking into consideration two outputs: amount of per capita local tax collected -tax revenue- and the size of local informal economy - tax base. Last, using two stages least squares and Tobit regressions, which the instruments is built upon the rules established in the 1988 Brazilian Constitution and where we find that unconditional transfer funds to municipalities, we estimate that transfers have the opposite effect (negative) of consumer's income on efficiency of taxation, which leads us to a reinterpretation of the flypaper effect.
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References 65 · Cited by 66
Research works printed but not linked: 34
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Metadata
- Authors
- Mattos, E., Rocha, F., & Arvate, P.
- Affiliations
- Escola de Economia de São Paulo (BR)
- Universidade de São Paulo (BR)
- Fundação Getulio Vargas (BR)
- Venue
- Estudos Econômicos (São Paulo)
- Publisher
- FapUNIFESP (SciELO)
- Published
- 2011-06
- Volume
- 41
- Issue
- 2
- Pages
- 239-267
- ISSN
- 0101-4161 (ISSN-L)
- OpenAlex
- W2104233035
- Cited by
- 66
- References
- 65
- Citations by year
- 2026: 4 · 2025: 2 · 2024: 1 · 2023: 4 · 2022: 5 · 2021: 5 · 2020: 8 · 2019: 8 · 2018: 5 · 2017: 3 · 2016: 4 · 2015: 5 · 2014: 5 · 2013: 4 · 2012: 1
- FWCI
- 22.09
- Type
- journal article
- Language
- en
- Open access
- diamond
- doi.org
- Licence
- cc-by-nc
- Locations
- Estudos Econômicos (São Paulo) (publishedVersion, cc-by-nc)
- LA Referencia (Red Federada de Repositorios Institucionales de Publicaciones Científicas) (publishedVersion, cc-by-nc)
- LA Referencia (Red Federada de Repositorios Institucionales de Publicaciones Científicas) (publishedVersion, other-oa)
- Portuguese National Funding Agency for Science, Research and Technology (RCAAP Project by FCT) (publishedVersion)
- Americanae (AECID Library) (submittedVersion, cc-by-nc)
- DOAJ (DOAJ: Directory of Open Access Journals) (submittedVersion, cc-by-sa)
- Topics
- Social Sciences › Political Science and International Relations › Local Government Finance and Decentralization
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Taxation and Compliance Studies
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic Growth and Fiscal Policies
- Keywords
- flypaper effect, tax collection efficiency, intergovernmental transfers, fiscal federalism, municipal taxation, informal economy, tax base, efficiency scores, Brazilian municipalities, fiscal decentralization
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- Mattos, E., Rocha, F., & Arvate, P. (2011). Flypaper effect revisited: evidence for tax collection efficiency in Brazilian municipalities. Estudos Econômicos (São Paulo). https://doi.org/10.1590/s0101-41612011000200002
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