MUNICIPAL PUBLIC FINANCES IN THE NORTHEAST: AN APPROACH BY HIERARCHICAL CLUSTERIZATION OF TAX CAPACITY AND FINANCIAL DEPENDENCE - 2005/2018

Abstract

Northeastern municipalities, in general terms, demonstrate inefficient collection mechanisms and proven dependence on transfers from other government bodies. In this sense, we seek to study the tax capacity and financial dependence, through an empirical approach showing the municipalities of this region in the years 2005 and 2018. The databases of the National Treasury Secretariat (STN), System of Accounting and Tax Information for the Brazilian Public Sector (Siconfi) and Finance for Brazil (FINBRA), relating to municipal finance in the Northeast. The study was carried out with theoretical/analytical support in public sector theories and with an em[1]phasis on applied economics, from the use of methods and techniques of economic analysis, through the construction of standardized indexes, considering the relationships, whether positive or negative, of the chosen variables with the general scenario; and then hierarchical clustering, in which northeastern municipalities were classified into three clusters, in the prisms considered. The main results obtained show the clustering of a substantial number of municipalities in clusters with the greatest financial dependence and the lowest collection capacity in the two years under analysis.