participation by citizens and new budget processes and patterns of decision-making led to wider public involvement especially among poor citizens in Porto Alegre, Brazil. Lower income citizens understood that increases in taxes would mean increases in services and benefits for them as a result of participating in regional meetings (Schneider and Baquero 2006).

Schneider and Baquero (2006) showed that participatory budgeting mobilized support for tax reforms among all citizens regardless of income level. The common determinant influencing satisfaction with tax contributions was confidence in participatory budgeting. Citizens who trusted in participatory budgeting were more satisfied with their tax contributions. The mediating factor distinguishing between the poor and middle class was perceived benefit. A perceived increase in non-material benefits (i.e., improved efficiency, reduced corruption) increased middle class satisfaction. On the other hand, an increase in material benefits (e.g., investment in social sectors) increased satisfaction by the lower class. Perceptions about what are the benefits of participatory budgeting also differed by income level. The middle class was more likely to link PB to democratic values and more transparent government whereas the lower class was more likely to associate PB with investments for poor and increased social assistance. However, all citizens perceived both material and non-material benefits from participatory budgeting. In short, citizens’ positive perceptions of PB were associated with enhanced satisfaction with their tax contributions and thereby increased tax revenues.

These patterns were evident in a broader comparative analysis of 25 countries in Latin America and Europe that showed that PB led to increases in tax revenues and a decrease in delinquencies (Cabannes 2004). The immediate visibility of the work and services that resulted from PB changed citizens’ views on taxes and their related habits. For example, the PB advisors reported, “The community, on learning what the municipality’s budgetary and financial situation is, becomes aware of its budgetary restrictions. Then, when there are not enough resources for the implementation of its projects, the community decides to collaborate with personnel, financial resources or materials, aiming not only at increasing the resources available for them, but at enlarging the infrastructure initially approved” (p. 36).

# **_Indicators_**

- **_Trust in participatory budgeting_** and perceived benefits were measured by survey responses (Cabannes 2004, Schneider and Baquero 2006).

- **_Compliance_** and increases in revenue were measured by tax receipts (Cabannes 2004, Schneider and Baquero 2006)

# **Citizens are more willing to pay taxes when they perceive that their preferences are taken**

**into consideration by public institutions** . Frey, Benz and Stutzer’s (2004) review of the literature argues that procedural utility – individuals’ preferences about how instrumental outcomes are generated – are a value to citizens’ satisfaction along with the actual outcomes themselves (e.g., in taxation, wealth redistribution, and public good allocation). These arguments support research suggesting that if participatory budgeting makes citizens feel like they have a say in the priority-setting and that their voices are heard, they will be more satisfied with the outcomes even if they are not optimal.

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