Studies identify improvements in revenue collection

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Results were discussed in a webinar promoted by FGV Cidades in partnership with the IDB.

Is it possible to measure the benefits of innovative tax collection programs such as the implementation of the Electronic Tax Invoice? According to a study conducted by researchers at FGV Cidades, yes. Using statistical and econometric methods, it is possible to assess the economic impacts of these policies. Three studies that analyzed innovations in tax collection in Brazil were discussed in a webinar jointly promoted by FGV Cidades, the Center for Innovation in Urban Policies at the São Paulo School of Business Administration (FGV EAESP), and the Inter-American Development Bank (IDB) on November 7.

The topic is currently on the Brazilian public agenda, due to the ongoing vote on Tax Reform in Congress. The experts discussed the opportunity that the digitalization process represents in terms of innovation and simplification in tax collection. “Opportunities like this, where simple vp maintenance mailing lead innovation generates an increase in tax collection, cannot be wasted. The IDB financing supporting innovation was certainly very relevant, especially for municipalities,” highlighted the director of FGV Cidades, Ciro Biderman.

The online seminar featured three panels, starting with the theme “Innovations in tax collection in Brazil: from Digitalization to Data Science”, presented by researcher George Avelino (FGV Cepesp), moderated by Lycia Lima (FGV EESP) and with comments by Vanessa Rahal (Insper). The next session, moderated by Maria Cristina MacDowel (IDB) addressed the theme “How to measure gains from innovations in the tax system: the case of Brazilian states”, presented by Ciro Biderman (FGV Cidades), with comments by Enlinson Matos (FGV Cepesp). The last panel featured the theme “Revenue impacts of PROFISCO and PNAFM III”, presented by André Martínez Fritscher (IDB) and Maria Cristina Mac Dowell (IDB). The comments were made by Ricardo de Souza Moreira (Federal Revenue Service) and mediated by Isaias Coelho (FGV Direito SP).

Increased transparency and efficiency
The implementation of the Electronic Invoice (NF-e), which digitizes and simplifies tax compliance, has resulted in a gain of approximately 10% in tax revenue, according to a study conducted by researchers at FGV, with funding from the IDB. The study was based on information from state revenues, the Federal Revenue Service and the Annual Social Information Report (RAIS), which deals with the labor market. The empirical strategy used was the analysis of Differences in Differences, which consisted of comparing states and sectors that had not yet started the NF-e program with those that had already started it over time.

According to the results, presented by FGV Cepesp researcher George Avelino, although the states are at different stages, with the first programs implemented from 2007 onwards, digitalization has promoted cost reduction and made collection more efficient, by allowing greater cooperation from taxpayers.

“The digitalization of tax collection should increase the transparency of the process, at least its legitimacy given the aspects common to all taxpayers, strengthening cooperation,” highlighted the political scientist. According to Avelino, tax collection is a central issue for political economy, as it is a condition for the existence of the State itself.