Brazil’s Centerwest, Southeast and South finance the whole of Brazil and especially the poor North and Northeast

RIO DE JANEIRO, BRAZIL – Brazil’s Centerwest is getting more prosperous thanks to the agricultural boom. For the first time, Goiás, Mato Grosso, Mato Grosso do Sul, and the Federal District paid more in federal taxes than they received in transfer payments in 2021.

The figures were compiled by Poder360 newspaper using figures from the Internal Revenue Service.

With this result, the Centerwest joined the traditionally prosperous South and Southeast. States in all three regions paid more taxes each year than they received in transfers to state and local governments.

All northeastern states received more in transfers than they paid in federal taxes. There is one exception in the otherwise equally destitute North, namely the Amazon region.

ANALYSIS

The list shows changes in the federal structure and regional development.

It shows which regions in Brazil are capable of generating wealth and which regions could not survive on their own.

You can’t look at the numbers in isolation. There are exceptions to the excellent performance of the Federal District and the Amazon. The wealth of Brasilia is the result of the inflation of the federal state apparatus.

The prosperity of Manaus depends on the free trade zone. It will not be able to sustain the high average income of people there on its own in the long run.

In the Centerwest, the advance is evident. Agribusiness growth is driving the region’s economy. Whether this will lead to a desirable diversification with sophisticated and dynamic industries and services remains to be seen.

It is not desirable for a state to receive more from the federal government than it pays in taxes. It is an aberration. If they were all like that, Brazil would have to be supported by another country.

It is essential to point out that the criterion does not even consider federal payments for services, as in the case of universities.

The ideal is that all states pay more taxes than they receive in transfers. And that this difference is negligible. The federal government’s role is to provide what is exclusively its responsibility, such as territorial defense. The commuting of public money should be gradually reduced until it disappears altogether.

With information from Poder360