Economic and fiscal impacts of a (re)taxation of exports in Minas Gerais

Abstract

The aim of the study is to evaluate the impacts of an export burden, considering an interregional Computable General Equilibrium approach, focusing on the state of Minas Gerais. The results suggest that a re-tariffing of foreign sales would have a negative impact on the economic activity, as it would discourage exports, generating negative impacts on the level of sectoral production, with a decrease in investment and household consumption. For Minas Gerais, the negative impacts are greater than the rest of Brazil average, given the state's export profile. On the other hand, the revenue collected would be greater than the fall in GDP, which could help the intended fiscal adjustment in the state. An additional simulation shows that allocating additional revenue to public spending would more than offset the loss of GDP.

Keywords:
Taxation; Kandir law; Minas Gerais; computable general equilibrium