Is it effective or not? Revisiting the effectiveness of PMAT

Abstract

The Program for the Modernization of Tax Administration and Management of Basic Social Sectors (PMAT), administered by BNDES, constitutes a public policy that provides subsidized loans to finance initiatives aimed at enhancing local tax administration. Its primary objective is to augment the collection of own-source revenues while reducing municipalities’ dependence on vertical transfers. This article evaluates the program’s impact on tax revenues within Brazilian municipalities, utilizing a difference-in-differences estimator with multiple treatment periods. Unlike earlier studies on this matter, this research innovatively includes municipalities that applied for, but did not receive, program funds as a control group, since they have a more similar profile to the municipalities that benefited. The results differ from those previously documented in the literature, indicating that the program did not have a substantial impact on the tax revenues of the municipalities that received assistance, thereby suggesting that the modernization efforts financed by the program were insufficient to enhance local tax collection.