Abstract
The literature has shown that public policy programs based on social protection for the most needy, provide a reduction in income inequalities, as long as these policies bring neutrality to fiscal policy, that is, they do not increase the public deficit. The instruments of social protection, especially those of direct income transfer to the most needy, may result in an increase in consumption by the poorest classes, and consequently an improvement in tax revenue, especially in the collection of ICMS, consumption tax . So, we intend to show here that emergency aid, which is a temporary income transfer program implemented by the Federal Government to mitigate the impact of the economic crisis resulting from the COVID-19 pandemic, had direct implications for the economy; especially in improving the income of the most needy and a return, in part of the benefit, to the revenues of the States, in the form of taxation. Said Emergency Aid minimized the drop in collection, or even maintained the collection levels of ICMS, the most important tax of the States, which contributed to the revenue of these federated entities. As a result of the fiscal problems caused, Emergency Aid heated the economy and boosted consumption in order to keep the state ICMS tax collection at even higher levels, in many states, compared to the pre-pandemic period. The objective is to outline an empirical strategy to measure the impact that the emergency aid had on the collection of ICMS, that is, to measure the sensitivity of the variation of the ICMS of the States due to the injection of resources of this transfer program.
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