Fiscal redistribution in favor of the development of local and regional tourism

Abstract

Municipalist federalism is a model that decentralizes policies, although it does have certain distortions in terms of the distribution of revenues and the contribution of the municipalities. Promoting tourism is one of these policies that deserves highlighting. Few states effectively seek to redistribute their revenues, which leads us to the following objective: to analyze the redistribution of the tax known as the ICMS Turístico as a policy of decentralization, considering the size of the municipalities. This article combines quantitative methods in order to verify a relationship between competitiveness and tourism dependence with investments in tourism, as well as qualitative methods detailing eight municipalities in particular. The object of this analysis is the state of Minas Gerais, a pioneer in redistributing its revenues from a tax on municipalities focused on tourism. The results show a significant contribution to development, especially among the larger municipalities with the criteria of applicability more limited in the smaller towns. The model of redistribution adopted in the form of the ICMS Turístico may prove a viable solution to the problems of the federative pact in Brazil.