successful region established fertile ground for interventions involving participation and state capacity-building. Whether the effects observed in the third region were sustainable beyond the experimental period remains an open question.

In sum, existing research provides a suggestive body of evidence that direct citizen engagement in participatory processes influences how citizens interact with the state and civil society. Many scholars expect citizens’ relative levels of engagement in participatory processes to influence their behavior surrounding taxation as well. Yet, a large, long-term observational study that links political institutions to tax compliance is missing from this line of research, particularly in developing countries and examining the longer-term effects of these institutions. We address this lacuna by drawing from a database of 5,570 Brazilian municipalities, over a 13-year period to evaluate the extent to which participatory institutions affect local tax outcomes. As noted earlier, our analysis demonstrates a connection between the presence of participatory institutions and municipal revenue collection. We develop theoretical rationales for how participatory institutions influence tax compliance in the next section of the paper.

We theorize that these participatory institutions have an effect on tax compliance because they lie at the confluence of efforts to promote transparency, participation and accountability. Greater transparency associated with public forums dedicated to budgets increases the likelihood that citizens and civil society organizations can hold their governments accountable. The direct, ongoing participation of citizens in policy-making forums increases the likelihood that this information will be used in the policy cycle’s formulation and implementation stages as citizens provide important knowledge to inform policies and monitor officials.

# **Brazil: Municipalization and a new Participatory Architecture**

Brazil provides an excellent environment to test hypotheses connecting governance to tax compliance for several reasons. First, Brazil’s 1988 Constitution decentralized significant service delivery responsibilities to municipalities. Municipalities are now partially responsible for producing public services that allow citizens to more-fully exercise their formally guaranteed constitutional rights; municipal governments now account for roughly 15% of all public spending. Municipal governments receive most of their revenues from the federal government to fund these services, but municipalities also retain the ability to collect property and sales taxes. The federal government sets the level of the sales tax. Municipalities have some authority to set the property tax rate, but the variation is between 2% and 5% of assessed property value. Thus, federal rules severely constrain municipal governments’ tax authority. The municipalization of service delivery made public officials directly responsible for schools, roads, and public health clinics– all visible areas that citizens demand.

Second, Brazil’s governments built a vast participatory architecture during the 1990s and 2000s. Tens of thousands public policy councils are now in use across the country and millions of individual citizens have participated in policy conferences (Barretto Santos 7