Abstract for: Analyse Of Tax Competition In Brazil Using the System Dynamic Approach

The present study analyzes the systemic interaction of tax competition in Brazil, aiming to identify the elements that perpetual this practice and its effects on the economy. It should be noted that according to the system model, the results obtained with the tax competition is not even optimal condition for the less favored resource region (Northeast). Since, upon the incursion of specific investments in infrastructure (in the same amount of tax waivers), the behavior of GDP, infrastructure and revenue would be higher in this region. For this reason, it is evident that the sub-national level (decentralized) the only alternative industrial policy for the less affluent is the granting of tax incentives. However, this type of policy is effective palliative and temporary and does not constitute, per se, a sustainable policy to fix the route of economic concentration. It remains thus to the central government to put policies in place to income the attractiveness of these regions for private investment. Otherwise, these regions do not have incentives to reduce tax competition.