Property tax: A tax adjustment methodology for Belo Horizonte/MG

Abstract

The planning and municipal tax management in Brazil has experienced many different difficulties, including those affecting beyond own tax collection, as well the involvement of the population in defining the municipality budget policy. In many cases, the lack of accurate and detailed information is central to the failure of the policy tax of Brazilian municipalities. Given this situation, this paper proposes an adjustment methodology that estimates the disparity level and/or disproportionate tax burden of property tax in Belo Horizonte, based on the principles of tax equity and ability to pay, given by the level of average household income. The results show high regional disparity in the tax burden, considering the income and services in each census tract. While in Centro-Sul region there is a strong prevalence of underestimated tax collection, the census tracts located in the Norte, Venda Nova and Barreiro indicates predominance of tax reduction factors.