Abstract
Brazilian fiscal reform got to deadlocks because proposals tried to avoid considering federal relations. There are two main types of federal relations: the competitive and the cooperative. In both types is possible to observe coordination mechanisms. Brazilian federalism is a mixture of both types what leads to difficulties finding solutions. We argue that is more important to find mechanisms to facilitate cooperation than to discuss the qualities of any alternative fiscal structure. Fiscal reforms brings along a great deal of uncertainty. So it is important to discuss the reform timing and the compensation mechanisms before hand.
Highlights
Brazilian fiscal reform got to deadlocks because proposals tried to avoid considering federal relations
Brazilian federalism is a mixture of both types what leads to difficulties finding solutions
Fiscal reforms brings along a great deal of uncertainty
Summary
Brazilian fiscal reform got to deadlocks because proposals tried to avoid considering federal relations. In the beginning of the 90’s Brazilian tax burden was 25% of GDP and by 2004 it was more than 32.8% of GDP1 This could indicate that Brazilian fiscal structure has no problems. In this article we argue that a better way to approach fiscal problems would be to understand the elements that lead to deadlocks and hinders cooperation among actors involved. The first section points the Brazilian fiscal problems and the failure of the proposals that where advanced to solve It is discussed how intergovernmental problems are better understood as a problem of allocation of property rights among government levels in the presence of distributional conflict. In the third section we identify the main conflicts that can be observed in inter-governmental relations and on the fourth section, we point out which are the main determinants of the observed paralysis and alternative routes of solution
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