Brazil, as a democratic state of law, is a federation, qualified by the indissoluble union of federal entities, as well as the political autonomy of each of these.
This model aims the balance of power among the federal entities, in order to harmonize, through cooperation and the definition of powers, the relations between the federal entities, ensuring political and administrative participation of the Union, States, Municipalities and Federal District.
In this context, the Federal Constitution of 1988 provides the power division of the federal entities: material powers, legislative powers, and the tax matter powers.
In general, the constitutional legislator chooses that certain matters should be exclusive competences of the Union, which ones cannot be delegated to another entity; while others are common responsibility of Union, States, Municipalities and Federal District.
Some needs are provided by the political entities, or by the private sector through delegation or concession, and may be enjoyed individually through tariff payment are known as “public services” (concept stricted).
For instance: it is solely the Union who can operate, directly or through authorization, concession or permission: a) the electric power services and facilities and the energetic exploitation of watercourses, jointly with the States where are the potential hydropower; b) air and aerospace navigation and airport infrastructure; c) railway and waterway services between seaports and national borders or which cross the boundary of the State or Territory; d) sea, river and lake ports.
In relation to the legislative powers, the solely competence of the Union is relativized by the Federal Constitution, as its delegation is allowed, through Complementary Act – type of law that requires a qualified quorum for approval –, to the other federative entity. While at the level of States and Municipalities, the Federal Constitution assured them legislative powers concurrent or supplementary to the Union.
At the end, on tax matter powers the Federal Constitution specifies which type of taxes and contributions each federal entity can collect. For example, the States are allowed to collect the Tax on Circulation of Goods, which is similar to the value added tax that is collected in many other nations.