Distribution of the ICMS share: how can it be used to promote better results in education?

Sasso, Maiara; Varela, Patrícia Siqueira; Righetto, Patricia

Maiara Sasso

Universidade de São Paulo, São Paulo, SP, Brazil.

http://orcid.org/0000-0002-0794-2864

Patrícia Siqueira Varela

Universidade de São Paulo, São Paulo, SP, Brazil.

http://orcid.org/0000-0002-4444-2930

Patricia Righetto

Universidade de São Paulo, São Paulo, SP, Brazil.

http://orcid.org/0000-0002-6418-254X

Maiara Sasso is a doctoral candidate in controllership and accounting at Universidade de São Paulo (USP). She is a professor at Fundação Instituto de Pesquisas Contábeis, Atuariais e Financeiras (FIPECAFI). E-mail: maiarasassop@gmail.com

Patrícia Siqueira Varela has a doctorate in controllership and accounting from Universidade de São Paulo (USP). She is a professor at the same institution. E-mail: psvarela@usp.br

Patricia Righetto has a Master’s degree in Public Policy Management at Universidade de São Paulo (USP). E-mail: patricia.righetto@usp.br

Conflicts of interest: The authors declare they do not have any commercial or associative interest that represent conflict of interests toward the manuscript.

Authors’ contribution: Formal analysis, Conceptualization, Data curation, Investigation, Methodology: Sasso, M.; Varela, P.S.; Righetto, P. Project administration, Writing - Review and Edition, Supervision, Validation, Visualization: Sasso, M.; Varela, P.S. Writing - first draft: Sasso, M. Funding acquisition: Varela, P.S.

Feature	Conditionality based on
Feature	Input	Output
Grant objectives	Spending levels	Quality and access to public services
Grant design and administration	Complex	Simple and transparent
Conditions	Expenditures on authorized functions and objects	Output-based delivery results
Local government autonomy and budgetary flexibility	Little	Absolute
Transparency	Little	Absolute
Focus	Internal	External, competition, innovation, and benchmarking
Accountability	Hierarchical to higher-level government, controls on inputs, and process with little or no concern for results	Results-based, bottom-up, client-driven

Part 1: categories with standardized calculation
Egalitarian part	Corresponds to the share of resources that are equally distributed among municipalities. Also called minimum share.
Geographic area	Directly proportional to the territorial area of the municipality. It is the index resulting from the percentage relationship between the municipality area and the total area of the corresponding state.
Population	Corresponds to the directly proportional index resulting from the relationship between the total population of each municipality and the total population of its corresponding state.
VAT	Additional portion to the amount to be received by the municipal entity due to the value-added tax, that is, the 75% of the share belonging to municipalities to be distributed according to the derivation principle (Brasil, 1988BRASIL. Constituição da República Federativa do Brasil de 1988. Brasil, 1988. Disponível em: Disponível em: http://www.planalto.gov.br/ccivil_03/constituicao/ConstituicaoCompilado.htm . Acesso em: 15 maio 2020. http://www.planalto.gov.br/ccivil_03/con... ).
Part 2: categories with specific calculation
Environment	Comprises criteria related to the proportion of public and/or private environmental conservation units, such as environmental preservation areas, indigenous communities/lands, ecological stations, parks, forest reserves, forests, and forest areas.
Farming	Comprises criteria related to the transfer of resources based on cultivated area, that is, agricultural production in the territory of the municipality in relation to the production of its respective state. Certain state laws point to this criterion, the primary productivity, including agricultural, livestock, extractive, and food production, as well as the market of agricultural and horticultural products.
Own-source revenue	In most cases, this criterion is calculated based on data provided by State Courts of Auditors. It corresponds to the index resulting from the percentage of own-source revenue of each municipality or the percentage between the value of own-tax revenue of each municipality and the sum of the tax revenue of all municipalities in the state. Certain entities include in the calculation the value of federal and state transfers received by the municipality or the relative participation of all municipalities in the state in the per capita collection of municipal taxes.
Health	Comprises health-related criteria and can be calculated based on the transfer of resources in view of the municipal health quality index, obtained through indicators of infant mortality; the relationship between expenditures with per capita health in the municipal entity and the sum of per capita health expenditures in all municipalities in the respective state; an egalitarian way among municipalities that fall into the most advanced management conditions of the Municipal Health System, according to the basic operating standard of the public health system (Sistema Único de Saúde - SUS), among others.
Education	Comprises criteria related to the transfer of resources based on educational indicators, such as: quality index of municipal education, number of students enrolled, relationship between the total number of students assisted and the minimum care capacity of the municipality.
Equalization	Calculated and distributed according to the following criteria: proportionally inverse to the sum of the population, geographic area, and VAT indices of each municipal entity compared to the total of the state; equally among all municipalities that do not achieve a pre-established index, among others.
Rural population	Comprises criteria that include the proportion between the number of rural properties registered in the municipality and those registered in the respective state, as well as the resulting proportion between the number of inhabitants of the rural area of the municipality and the rural population of the state.
Sanitation	Comprises criteria related to the promotion of home waste treatment, including landfill composting, among others.
Social coefficient	Corresponds to the division of the percentage by the sum of the inverse of the Human Development Index (HDI) of all existing municipalities in the state multiplied by the inverse of the HDI of each municipality (Brasil, 2004aBRASIL. Lei nº 157, de 20 de janeiro de 2004. Brasil, 2004a. Disponível em: Disponível em: http://app1.sefaz.mt.gov.br/0425762E005567C5/250A3B130089C1CC042572ED0051D0A1/7DEDB9DE180B3E9A04256E220072D052 . Acesso em: 15 maio 2020. http://app1.sefaz.mt.gov.br/0425762E0055... ).
Others	Comprises distribution criteria for tax integration programs, public safety, cultural heritage, tourism, sports, consortium participants that provide health services, as well as mining municipalities, those home to penitentiary facilities, more populous municipalities, among others.

Categories	Revoked laws								Laws in force
Categories	Number of criteria [2]	Number of states that use the criteria [3]	Minimum (%) [4]		Maximum (%) [5]		Average (%) [6]	Deviation (%) [7]	Number of criteria [8]	Number of states that use the criteria [9]	Minimum (%) [10]		Maximum (%) [11]		Average (%) [12]	Deviation (%) [13]
Egalitarian part	11	11	2	MT	25	RR	10.68	7.01	18	18	2	PR; SP	25	RR; SE	12.48	7.41
Environment	1	1	-	1	MG		1	-	25	17	1	PE; SP	9.5	TO	4.34	2.49
Geographic area	7	7	1	MG	12.5	PI	4.57	3.94	16	16	0.3	AM	10	PI	3.71	2.83
Population	10	10	2.5	TO	15	AL	7.57	4.25	15	15	0.5	RO	13	SP	5.05	3.63
Farming	2	2	1	MG	3.5	RS	2.25	1.77	7	7	1	MG	8	PR	3.99	2.52
Own-source revenue	2	2	2	MG	8	MT	5	4.24	7	7	0.4	RJ	5	SP	2.55	1.63
Equalization	1	1	-	25	PE		25	-	6	5	1.7	RJ	17	PE	6.49	6.31
Health	1	1	-	2	MG		2	-	6	5	2	MG; PE	5.5	ES	3.42	1.70
Education	2	2	2	MG	12.5	CE	7.25	7.42	4	4	2	MG; PE	18	CE	6.15	7.91
Rural population	1	1	-	5	RS		5	-	4	3	5	RS	8	PR	6.67	1.53
Sanitation	-	-	-				-	-	3	3	2	PE	5	PB	3.50	1.50
VAT	4	4	4.7	MG	15	GO	8.67	4.87	3	3	1	SP	10	GO; SC	7	5.20
Social coefficient	-	-	-				-	-	1	1		11%	MT		11	-
Others	3	1	3.1	MG	3.1	MG	3.11	-	13	6	0.5	RS	5	AL; MS	3.16	1.84
Total	45								128

State	Categories														Total
State	Egalitarian part	Environment	Geographic area	Population	Farming	Own-source revenue	Equalization	Health	Education	Rural population	Sanitation	VAT	Social coefficient	Others	Total
Part 1: revoked laws
MG	5.50	1	1	2.71	1	2		2	2			4.68		3.11	25
MT	2		3	7		8						5			25
TO	10		2.50	2.50								10			25
RS	2.50		7	7	3.50					5					25
AM	15		3	7											25
AP	10		3	12											25
CE	7.50			5					12.50						25
PB	20			5											25
AL	10			15											25
RR	25														25
GO	10											15			25
PI			12.50	12.50											25
PE							25								25
Part 2: laws in force
MG	5.50	1.35	1	2.70	1.	1.90	4.24	2	2					3.31	25
AP	6.99	1.40	1.14	2.60	1.40	2.60		2.60	2.60					3.67	25
RO	14	5	0.50	0.50	5										25
RJ	8.18	2.50	6.43	5.79		0.38	1.73								25
TO	8	9.50	2	2							3.50				25
PA	7	8	5	5											25
PR	2	5	2		8					8					25
MS	7	5	5			3								5	25
PB	20	5									5				30
GO	10	5										10			25
SP	2	1		13	3	5						1			25
RR	25														25
SE	25														25
AM	24		0.30	0.70											25
MA	15		5	5											25
RN	15		5	5											25
AL	15		2.50	2.50										5	25
SC	15											10			25
MT		5	1	4		4							11		25
PI		5	10	10											25
RS		7		7	3.50		2			5				0.50	25
AC		5													5
CE		2						5	18						25
PE		1				1	17	2	2		2				25
BA			7.50	10			7.50								25
ES			5		6			5.50		7				1.50	25

State	Revoked laws				Laws in force
State	Year of creation of the basic law	Number of changes (# of laws)	Year of the last law change	% of non-changed criteria	Year of creation of the basic law	Number of changes (# of laws)	Year of the last law change	% of non-changed criteria
ES					1989	2	1997	0
SC					1989	1	1990	0
RN					1997	1	2009	0
PI	1989	0		100	1998	2	2009	0
PE	1990	0		100	2000	1	2003	0
AL	1991	0		100	1997	1	2008	25
RS	1981	0		100	1997	3	2009	33
MT	1985	0		100	2000	1	2004	40
SP					1981	1	1993	43
PA					1991	1	2012	50
PR					1990	2	1998	57
MS					1991	2	2011	60
RO					1994	1	1996	60
RJ					1996	1	2007	83
SE					1990	0		100
MA					1992	0		100
RR	1991	0		100	1993	0		100
AP	1993	0		100	1996	0		100
BA					1997	0		100
AM	1990	0		100	2002	0		100
TO	1995	0		100	2002	0		100
AC					2004	0		100
CE	1996	0		100	2007	0		100
MG	1995	1	2000	92	2009	0		100
PB	1981	1	1998	50	2011	0		100
GO	2000	0		100	2012	0		100

States	Revoked laws	Laws in force
AM, RR	Traditional	Traditional
MA, RN, SC, SE	-	Traditional
AL, GO, PB, PI	Traditional	Almost traditional
BA, PA, RJ, RO, SP	-	Almost traditional
AP, TO	Traditional	Non-traditional
MT, RS	Almost traditional
CE, MG, PE	Non-traditional
AC, ES, MS, PR	-

[1] Maiara Sasso is a doctoral candidate in controllership and accounting at Universidade de São Paulo (USP). She is a professor at Fundação Instituto de Pesquisas Contábeis, Atuariais e Financeiras (FIPECAFI). E-mail: maiarasassop@gmail.com

Brasil

Brasil

Distribution of the ICMS share: how can it be used to promote better results in education?

ABSTRACT