Effect of the Rural Territorial Tax municipalization on the tax collection of Brazilian municipalities

Abstract

The Federal Government, in order to improve the tax management of the Rural Territorial Tax (ITR), amended the tax legislation and created the possibility of entering into an agreement between the IRS and the municipalities to increase their participation in the amount transferred. Taxes through the supervision and collection of ITR. This paper aimed to analyze the effect that the ITR municipal inspection agreement had on the tax collection in question. To perform this analysis, we used as an empirical strategy the Difference in Differences model, through a municipal data panel from 2006 to 2010. As a result, we verified that the municipal inspection was able to increase up to 8.8% the collection of ITR.