The fiscal equalization is a form of income transfer between the federal entities whose primary goal is to provide the recipients equality in the provision of public services. This form of transfer is based on strong cooperation between the entities in meeting the goal of reducing regional inequalities in the ability to provide essential services. The Constitution has, among its fundamental principles, the reduction of inequalities between regions, however, the relationship between the federal entities in our country is still guided on criteria that do not favor mutual aid. The Brazilian federation, which historically has gone through centralization and decentralization, today aims to increase the autonomy of federal entities. In this goal, the Constitution of the Republic has currently increased powers granted to the federal entities. In order to fulfill its constitutionally established obligations, and increase their own economies, Member States began granting tax incentives in masses, leading to the renouncement of income and exacerbating competition in the collection of taxes such as GST. This practice goes against the goal of equitable development between regions. In the analysis of the forms of transfers currently performed in our country, there is the freezing of the coefficients and the use of indicators criteria that do not reflect the concern to equalize the capacity of regions. In more developed federations, the fiscal equalization has been adopted, along with other redistributive transfers as a way to provide greater assistance to Member States with lower potential revenue collection, to the extent of their needs. Through the comparison between the federations to adopt the fiscal equalization, and federal relations in Brazil, considering the constitutional principles and the role of the Central Government, weighting is performed on the possible use of tax equalization mechanism in our legal system.
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