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Furtado, Bernardo Alves
Year of Publication: 
Series/Report no.: 
Texto para Discussão 2520
Abstract (Translated): 
The executive vetoed two legislative proposals on the creation and emancipation of municipalities in its entirety in 2013 and 2014. In August 2018, another supplementary bill, with six other proposals attached, is under an emergency regime, awaiting a vote in the House plenary. The theme of creation and emancipation of municipalities is pressing in the Brazilian legislative debate. The academic literature lists evidence of the negative results of municipal fragmentation, especially for metropolitan regions. This monograph quantifies the quality of life of metropolitan citizens in the face of four alternative rules of distribution of municipal tax collection. Hence, it adds evidence to the current literature, usually of an argumentative nature. Methodologically, a validated agent-based spatial model is simulated with three markets: real estate, goods and labor. Upon these markets, taxes on consumption, profits, wages, property and real estate transactions are applied. The alternatives tested are verified through econometric models. Two of them use real exogenous variables and three use simulated data. The results confirm two central conclusions. First, the progression of the Municipal Participation Fund (MPF) and its relevance to guarantee a better quality of life in metropolitan municipalities is confirmed. The second indication is that the simple municipal merger would improve citizens' quality of life, compared to the status quo in 23 Brazilian metropolises. In some cases, the metropolitan municipal merger is sufficient to compensate for a hypothetical absence of the FPM criteria. In any case, the monograph presents quantitative evidence that allows comparing alternative tax distributions for each of the 40 simulated metropolises, identifying more efficient forms of fiscal distribution and contributing to contemporary literature and parliamentary debate.
fiscal efficiency
creation and municipal emancipation
metropolitan regions
fiscal federalism
Document Type: 
Working Paper

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