The Impact of ICMS Tax Collection on State of Ceará after the Concession of Fortaleza Airport

Abstract

In Brazil, the concession of major airports to private entities aims to enhance infrastructure and operations, yet its fiscal impact on state revenues remains a critical question for policymakers. This study analyses this fiscal impact, with a specific focus on whether the 2017 privatization of Fortaleza Airport boosted the collection of the ICMS tax in the state of Ceará. We employ a dual-method approach. First, a panel data regression assesses the general impact of concessions on ICMS revenue across five northeastern states (2000–2022). Second, the Synthetic Control Method (SCM) isolates the specific causal effect of the Fortaleza concession by comparing Ceará to a weighted combination of similar untreated states. The panel regression reveals passenger movement as a key revenue driver, with the Fixed Effects model indicating a significant positive relationship from concessions. The SCM analysis shows a significant positive divergence emerging four years post-concession, suggesting a long-term positive impact on Ceará’s ICMS collection. The findings confirm that airport concessions can generate significant, long-term fiscal benefits for state governments by stimulating the tax base. These benefits, however, materialize only after a prolonged operational stabilization period, providing crucial evidence for policymakers designing temporal planning and risk-sharing arrangements in future infrastructure privatization policy.