Tax benefits and sustainability: a study of municipalities in the state of Santa Catarina

Abstract

The relationship between tax benefits and sustainability is not well explored in empirical research, despite the importance of measuring and monitoring the effectiveness of tax expenditures. This article aims to analyze the influence of the ICMS tax benefits - tax on the circulation of goods and the provision of transport and communication services - on the sustainability of municipalities in the state of Santa Catarina. Structural equation modeling examined a set of secondary panel data collected between 2005 and 2017. Although the results point to statistically significant relationships, it appears that tax benefits promote economic sustainability to a high degree; social sustainability to a moderate degree; and environmental sustainability to a low degree.

Keywords:
tax benefits of ICMS; tax expenditure; municipalities; sustainability; triple bottom line