Speaker: Devis Decet
Title: Tax administration organization and fiscal capacity
Abstract: This paper studies how the centralization of tax administration impacts fiscal capacity. Following a sizable reduction in personnel due to retirements and externally imposed budget cuts, the Brazilian federal tax authority closed three local tax offices in 2017 and twenty-four in 2020. Affected municipalities experienced a reduction in tax collection after the closings. The absence of evidence for differential trends in tax collection or economic activity suggests that the observed tax revenue decline is due to a reduction in tax enforcement. I investigate the role of a specific mechanism: the distance between tax offices and municipalities. Results suggest that, despite the pervasive role of technology in tax collection and auditing, physical distance remains a relevant friction and limits tax officials' ability to monitor local economic activity.
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