Federal fiscal aid to the states maintained the 2020 tax revenue at the same level as 2019. However, there was an uneven distribution of resources for health. Average expenditure on education dropped by 9%, even in the states with increased ICMS revenues
In 2020, ICMS revenue (Tax on the Circulation of Goods and Services) registered a real decline of less than 2% on average, whereas 12 states registered an increase in the collection of this tax.
The federal financial assistance to states (Complementary Law 173/2020) was more significant than the states’ revenue losses. Even states with no tax revenue losses received these transfers.
Our research found a significant surge in the states’ health expenditures, as expected. Furthermore, there was a proportional increase in social assistance expenditures, even though the absolute volume was not significant, suggesting that some states also focused on this sector on top of the federal emergency assistance.
The lack of a strategy for tackling the pandemic led to an average decline of 9% in education expenditures. Surprisingly, most states registered this decline, including states with ICMS gains. Some states have reduced spending on education by over 20%.
Team responsible for Policy Brief No 27
Ursula Dias Peres (USP-EACH, CEM)
Fábio Pereira dos Santos (São Paulo City Council Technician)
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The Solidary Research Network was formed to help improve the standard, calibrate the focus and improve the quality of federal, state and municipal government policies that seek to respond the COVID-19 crisis with the aim of helping to save lives.