FEDERALISM, TAXES AND ITS IMPACTS ON THE MUNICIPALITY:

HISTORICAL ANALYSIS AND ITS CURRENT DEVELOPMENT

Abstract

Federalism is a system that divides power between different levels. In Brazil, this system is formed by the Union, the States and the Municipalities. Competencies are assigned to each entity, including taxation. The tax jurisdiction is the power conferred by the Federal Constitution to a given federative entity to institute and collect taxes. In turn, the distribution of tax revenue is a mechanism that seeks to guarantee resources between different levels of government, in order to allow them to exercise their competences. In this sense, from the perspective of federative entities, the municipality is recognized as autonomous and part of the structure of the Brazilian State, however, finances are the fundamental assumption for municipal autonomy and in this respect municipalities depend financially on the States and the Union. This article is the result of the monograph presented to the Law course, where the historical and conceptual aspects of federalism, tax jurisdiction and tax revenue sharing were addressed in order to verify whether the current model influences to effect autonomy or generate dependence of the municipality. It concludes that, although the municipality is recognized as autonomous and part of the structure of the Brazilian State, it is dependent on funds from the Union and the member states. It is also worth mentioning that the applied methodology was bibliographical, exploratory and qualitative.