Innovation and efficiency in local tax administration: evidence from Brazil

Abstract

This article examines how Brazilian municipalities enhance their fiscal capacity through administrative and technological innovations, utilising three local taxes: property, service, and property transfer taxes. Using a mixed-method design that integrates three-stage Data Envelopment Analysis and the Malmquist Productivity Index with Qualitative Comparative Analysis, we examine both efficiency levels and the configurations of practices that produce high performance. The results indicate that there is no single dominant model for tax collection success, and different combinations of administrative, technological, and regulatory instruments can support efficiency gains, depending on the institutional context and the trajectory of each municipality. The findings advance theory on fiscal capacity and dynamic capabilities by showing that efficiency stems from complementary or substitutive practices, demonstrating methodologically the value of combining symmetric and asymmetric approaches to capture causal complexity, and highlighting the policy relevance of strengthening data infrastructures before deploying context-sensitive instruments to enhance revenue mobilisation and fiscal autonomy.