Abstract

BRITO SANTOS FERNANDES, Carlândia; SILVA DA CUNHA, Marina  and  ROBERTO VASCONCELOS, Marcos. Giving with one hand and taking away with the other. Estud. Econ. [online]. 2019, vol.36, n.73, pp. 43-70. ISSN 2525-1295.

This study analyzes the impact of fiscal policy on income inequality for the Brazilian states over the period 2004-2014. Using the GMM system, we find robust evidence that, while increases in total expenditure, spending with social assistance and security, and expenditure on infrastructure reduce inequality, total and capital revenues and expenditures related to public debt increase inequality. Thus, the net effect of fiscal policy on inequality may not be positive mainly because the tax system is still very regressive and many of the resources are spent on debt. Therefore, the discussion of how to determine and qualify social spending levels in Brazil, which are necessary to fight poverty and reduce social and income inequalities, is directly related to the revision of the tax collection system.

Keywords : Fiscal Policy; Public Spending; Inequality; Brazilian States.