Tax Me, But Spend Wisely? Sources of Public Finance and Government Accountability

Lucie Gadenne

No 269315, Economic Research Papers from University of Warwick - Department of Economics

Abstract: Existing evidence suggests that extra grant revenues lead to little improvements in public services in developing countries - but would governments spend tax revenues differently? This paper considers a program that invests in the tax capacity of Brazilian municipalities. Using variations in the timing of program uptake I find that it raises local tax revenues and that the increase in taxes is used to improve both the quantity and quality of municipal education infrastructure. In contrast increases in grants over which municipalities have the same discretion as over taxes have no impact on any measure of local public infrastructure. These results suggest that the way governments are financed matters: governments spend increases in tax revenues more towards expenditures that benefit citizens than increases in grant revenues.

Keywords: Financial; Economics (search for similar items in EconPapers)
Pages: 56
Date: 2016-10-10
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Tax Me, but Spend Wisely? Sources of Public Finance and Government Accountability (2017)
Working Paper: Tax Me, But Spend Wisely? Sources of Public Finance and Government Accountability (2016)
Working Paper: Tax Me, But Spend Wisely? Sources of Public Finance and Government Accountability (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uwarer:269315

DOI: 10.22004/ag.econ.269315

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