Minas Gerais in the Brazilian Federation, 1889-1937

By John D. Wirth | Go to book overview

CHAPTER EIGHT Fiscal Federalism

STRONG IN CONGRESS, militarily autonomous as were few states in the Old Republic, Minas was fiscally weaker than its ranking as the federation's second economic power would at first glance suggest. Minas could realistically aspire to lead the Republic in tandem with São Paulo. But that state's dazzling economic growth generated large tax revenues and attracted foreign credit, whereas Minas lived close to cutbacks and austerity budgets. Compared with Pernambuco, Minas had some leeway. But if Minas was relatively well off within the federation, it was critically short of funds in relation to its very large, and for the most part painfully backward, population.

Mineiros acted cautiously because they wanted to keep their good credit rating abroad and because they disliked deficits, but also because they were constrained, even frightened, by a weak tax base dependent on exports. The drawbacks were well known: export taxes weighed heavily on producers, hindered the growth of interstate commerce, and were highly vulnerable to sudden shifts in international prices, so that the budgetary process was chaotic. When exports were strong, as in the 1890's and 1920's, revenues were still insufficient to finance schools, public health, and infrastructure projects. In lean times, for example the 1898-1909 period and the early 1930's, these state services were curtailed. Given this restricted and vulnerable tax base, the fiscal conservatism of this state was something more than a famous culture trait.

Mineiros were also famous for not paying taxes. Despite good intentions, no governor until Artur Bernardes ( 1918-22) was able to shift a

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Minas Gerais in the Brazilian Federation, 1889-1937
Table of contents

Table of contents

  • Title Page iii
  • Preface vii
  • Contents ix
  • Figures and Tables xi
  • Introduction xiii
  • Chapter One - the Minas Mosaic 1
  • Chapter Two - the Economy 31
  • Chapter Three - Society and Culture 65
  • Chapter Four - State Politics: Men, Events, and Structures 97
  • Chapter Five - the Political Elite 140
  • Chapter Six - State and Nation: Political Dimensions 164
  • Chapter Seven - Toward Integration 185
  • Chapter Eight Fiscal Federalism 204
  • Conclusion 225
  • Appendixes 235
  • Notes 267
  • Bibliography 295
  • Index 309
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