Program of Fiscal Studies - PEF

Lines of Research:

Policy & Strategy

Coordinators:
Professor Fernando Antonio Rezende Silva
Professor Armando Santos Moreira da Cunha

Objectives

The creation of a program of studies geared to examining Brazilian fiscal problems seeks to compensate for deficiencies in terms of information and knowledge of the topic. In this respect, focusing on the federal budget is a priority, albeit not the exclusive concern. The focus should also be on the relationship between the federal budget and state and municipal budgets, bearing in mind the peculiarities of Brazilian federal fiscal policy and the importance of the process of decentralization of responsibilities and resources for quality in terms of action of the public sector.

The broad spectrum of questions to be taken into consideration, would suggest that studies can be concentrated on four main areas:

the budgetary dimension, which examines the generation of information and conducts an analysis of the public budget, seeking to identify the priorities established therein, with respect to the use of resources derived from taxation, and the processes which led to their implementation (approval by the legislative authorities), in order to assess them in relation to the needs of the country and the interest of the population;
the tax dimension, which concentrates on understanding the economic and social consequences of the tax system, with special emphasis on aspects related to the competitiveness of Brazilian producers in the global marketplace and the equitable sharing of the burden of taxes on Brazilian society;
the administrative dimension, which is concerned with the management of government policy and programs, the mechanisms of internal and external control and with the evaluation of the results of these policies;
the federative dimension, which focuses on the study of intergovernmental transfers of funds and other mechanisms of financial cooperation between central government and the states and municipalities, with special emphasis on concerns involving political and administrative decentralization and fiscal responsibility.

Each of these dimensions examines various relevant aspects for the development of the program of fiscal studies. With respect to the budget, it is important to consider the various stages of the process leading up to the publication of the budget and its subsequent implementation. Between the time of the original proposal submitted to Congress by the Executive Branch and its approval by the Legislative Branch through to the final result of its implementation, the budget is subjected to substantial modification. In these modifications, the various players involved seek to defend their particular interests -- commitment to fiscal adjustment, the demands imposed by Parliament members in the name of their constituents, the need for expansion of social programs, the expectations of the suppliers of goods and services, among others -- as well as during the preliminary steps of its elaboration and approval in the budget, as much as during its implementation. It is therefore not sufficient to concentrate solely on the scrutiny of the budgetary document. It is necessary to monitor each step of the process permanently.

In the area of taxation, recent debate and the failure of attempts to implement Tax Reform have drawn attention to the main distortions of the Brazilian taxation system, though the lack of a general consensus on the matter shows how far Brazil is from its objective of constructing a new system in line with current requirements. Among the many questions involved, two deserve special attention, namely competitiveness and fairness. While recent changes in taxation have concentrated on macroeconomic aspects of fiscal adjustment, the microeconomic consequences have been relegated to secondary position, making it more difficult for the Brazilian producer to tackle the challenges of the more liberal economic context and regional integration. On the other hand, the increase in the regressiveness of taxes has contributed to the increase of the sacrifices demanded from lower income taxpayers. Focusing on these questions will enable the program of fiscal studies to contribute to pushing for the changes required.

The generalized belief that in addition to being excessively cumbersome the Brazilian state is inefficient has led to some attempts to improve methods of administrative management and control over expenses. With regard to management, the emphasis has been placed on adopting management models traditionally employed by the private sector, following the example of the procedures adopted by the Ministry of Planning for priority projects included in the "Moving Brazil Forward" (Avança Brasil) campaign. As regards controls, the latest measure involves attempts to use the Internet as a way of giving transparency to public actions and granting citizens greater access to government. Although these measures are commendable they are still isolated instances and require in-depth evaluation.

Another way of achieving efficiency in public administration is to bring those in government closer to the general public by decentralization of public responsibility, particularly that which is more directly related to meeting the demands of the population. Although decentralization is included in various chapters of the Brazilian Constitution of 1988, particularly those dealing with urban and social questions, the implementation of the necessary measures for heeding the demands of the constitutional brief faces difficulties of various types, among which are political, financial, technological and managerial questions. The complexity of the federal Brazilian fiscal system is the root of the difficulties and is an aspect which deserves due attention.