Taxation beyond Representation: The Role of the Brazilian State in a Multilevel Governance Structure

The Brazilian national government’s implementation of tax incentives questions the territorial understanding of multilevel governance and the politics beyond collecting revenue. There has been a shift in political power between government elites in terms of implementing and guarding tax policy in the interaction amongst local and international actors. The political pressure on tax policy as a result of the bargain process and the inability to collect tax revenue throughout the multilevel governance structure are the driving force for change in the role of the national government. The result is the convergence of political rhetoric in competing tax systems and revenue collection mechanisms in a multilevel governance structure that leads to the consolidation of power through taxation mechanisms by the national government. The utilization of taxation mechanisms occurs through the interaction between supranational, subnational, and local institutional relationships which cause the Brazilian national government to centralize its tax system. An analysis of tax mechanisms in the Cardoso and da Silva presidencies and subsequent findings suggest a need to examine the role of the national government, particularly in regards to changes toward political bargaining between governmental elites.