Tax cuts with stability of the Brazilian tax burden: what explains the puzzle of the decade 2005–2014?

Resumen

This paper uses Brazilian monthly tax burden time series as an input for a study of its recent dynamic determinants. The estimates shows that tax burden reached 33,4% of GDP in 2014, which is lower than 33,6% of 2005 and without trend of growth. In addition, an analysis of tax policy in Brazil during the decade 2005–2014 characterized by tax cuts predominance. Based on this information this paper is dedicated to a paradox: why is the tax burden stable, even in the presence of tax cuts? The causes of this paradox are investigated by a descriptive analysis and an econometric model with variable parameters. The main objectives are to assess the trajectories of tax revenues components, its relations with the economic incidence base, and the possible influences of the tax cuts in such relations