Consequences of the IPI waiver policy on municipalities in Bahia

Brazil is a federal republic so public finances are intertwined in the three spheres of government: the union states and municipalities. The LRF - Fiscal Responsibility Law - is primarily aimed at balancing public finances establishing targets to be achieved transparency rules control mechanisms and accountability. Thus by establishing a fiscal policy that influences the basis for calculating revenue that is shared between states and municipalities this work sought to highlight the impacts on the finances of municipalities in the state of Bahia which like all other Brazilian municipalities receive part of the revenue collected by the Federal Government (IR and IPI) under the title of FPM - Municipal Participation Fund. Given this scenario the reader will be able to understand how the public finances of the municipalities surveyed have been affected and what the consequences have been especially for the municipalities' public managers.