FPM: importance, dependence and the impact of the reductions for the city of Boa Vista-RR - an analysis of the period 2001-2011

Abstract

In Fiscal Federalism and the Constitution of 1988, municipalities received official delegation of taxing power to establish, enforce, collect taxes and administer its own jurisdiction. In contrast, there has been a heavy reliance on transfer of resources from the Union, especially the Municipalities Participation Fund - MPF. This paper aims to describe the importance and dependence on this fund for the city of Boa Vista, RR, through an analysis of the years 2001 to 2011. For this purpose we performed a exploratory, given the need to support adequate theoretical and collect essential information for the design work. Thus it was observed that the FPM transfers to Boa Vista has always maintained a significant growth from 2001 to 2007, thanks to the stability of the coefficients of participation that were kept for judgments favorable to the city, creating a fiscal security for the control of its revenues and costs. But there was a drastic and unexpected reduction in transfers from the FPM in 2008, due to the change in methodology for calculating GDP, which directly affected the per capita income, and finding, through the 2007 census, the population of the City was overestimated, thus causing the drop in the coefficient of participation. This fact showed that the city has difficulties to self fund through the collection itself, which has a low representation in their net.