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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.
Authors
Associate Director
Lucie is an Associate Director at the IFS and an Associate Professor at Queen Mary University of London.
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- Publisher
- Institute for Fiscal Studies
Suggested citation
Gadenne, L. (2015). Tax me, but spend wisely? Sources of public finance and government accountability. London: Institute for Fiscal Studies. Available at: https://ifs.org.uk/publications/tax-me-spend-wisely-sources-public-finance-and-government-accountability (accessed: 14 May 2024).
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