PMAT’s main goal is to improve tax administration and the quality of public spending of Brazilian municipalities. Created in 1997, PMAT initially focuses in Projects to Modernize Tax Administration, aiming to strengthen the municipalities’ own tax revenues and decrease their dependence on funds from the central government. After two years, PMAT expanded its scope to public spending, including the management of social services.
Taking into account the information available by Ministry of Finance, besides the initial motivation of PMAT and the characteristics of these investments, this analysis focus in one of the specific goals of PMAT, that is the increase of nominal revenue of property tax of urban real estate (IPTU).
The study compares, using analysis of covariance and linear regression models, the increases in IPTU revenues of municipalities supported by PMAT against those of a control group. As the test of spatial autocorrelation indicates that geographical proximity is important for the evolution path of IPTU, the control group was composed by municipalities that shared geographical boundaries with municipalities supported by PMAT. Such rule is straightforward and allows for a representative and relevant control group. In the period of the analysis, 240 cities received resources from PMAT, while the control group has 890 cities.
The result of this work points that the Brazilian municipalities supported by PMAT observed higher increases in IPTU revenues than their neighbors, however the observed increase shows an important interaction with the size of the municipality. The results have practical relevance for municipalities seeking to improve their property tax revenues, but might also provide useful guidance for policy-making.