Indirect expenditures of the Federal Government: relevance for Tax Policy management, recent evolution and perspectives for improving governance

Abstract

This paper aims to highlight the dual structure of financing public policies of the Federal Government and, in this context, its relevance to the management of tax policy. In this scenario, it gives particular emphasis to the Federal Government's indirect spending, consisting of tax expenditures and credit and financial subsidies from the Federal Government, as a complementary modality to direct spending, available to the public manager to guide the financing of public policies. The analysis of the normative, institutional, and procedural framework of direct and indirect federal expenditures aims to demonstrate the existence of significant asymmetries in the conformation of these instruments of public management. Direct expenditures contain consolidated rites and processes, while indirect expenditures present gaps in the normative, procedural and institutional order, which brings together elements in opposition to the effectiveness of the policies thus outlined. The records of the international experience are intended to undertake good practices in the management of these expenditures and then endogenize procedures and institutional practices that contribute to the improvement of the policies thus outlined. Considering the diagnosis of the governance parameters of the Federal Government's indirect spending, and related gaps, institutional actions and guidelines are highlighted in favor of defining a framework of leadership, strategy and control to guide these expenditures. Based on the analysis, we postulate normative changes and institutional and procedural guidelines to contribute to increased transparency, social control, accountability and greater effectiveness of public policies guided by the Federal Government's indirect spending.