All of Scioteca
Communities & Collections By Issue Date Authors Titles Subjects Country / Region
Profiles
Our Authors
My Account
Login

The impact of taxes and social spending on inequality and poverty in Argentina, Bolivia, Brazil, Mexico and Peru: a synthesis of results

We apply a standard tax and benefit incidence analysis to estimate the impact on inequality and poverty of direct taxes, indirect taxes and subsidies, and social spending (cash and food transfers and in-kind transfers in education and health). The extent of inequality reduction induced by direct taxes and transfers is rather small (2 percentage points on average) especially when compared with that found in Western Europe (15 percentage points on average). What prevents Argentina, Bolivia and Brazil from achieving similar reductions in inequality is not the lack of revenues but the fact that they spend less on cash transfers -especially transfers that are progressive in absolute terms- as a share of GDP. Indirect taxes result in that net contributors to the fiscal system start at the fourth, third and even second decile on average, depending on the country. When inkind transfers in education and health are added, however, the bottom six deciles are net recipients. The impact of transfers on inequality and poverty reduction could be higher if spending on direct cash tranfers that are progressive in absolute terms is increased, leakages to the nonpoor are reduced and coverage of the extreme poor by direct transfer programs is expanded.

Abstract

Description

Subject

Impuestos | Equidad e inclusión social | Desarrollo social | Políticas públicas | Investigación socioeconómica | Finanzas públicas | Pobreza

País / Región

Argentina
Brasil
México
Perú

URI

https://scioteca.caf.com/handle/123456789/234

Date

2012

Cite from this publication

Collections

6.1 Documentos de trabajo en investigación socioeconómica

Endorsement

Review

Supplemented By

Referenced By

Creative Commons license

CC-BY-NC
Except where otherwised noted, this item's license is described as CC-BY-NC
Thumbnail Image

Files

taxes-social-spending-inequality-poverty-argentina-bolivia-brazil-mexico-peru-synthesis-results.pdf (968.02 KB)

Authors

Journal Title

Journal ISSN

Volume Title

Publisher

CAF

Related Items

Thumbnail Image
RED 2025. Chapter 5: Subnational government revenues: The role of taxes and transfers

This chapter examines the revenue structure of subnational governments in Latin America and the Caribbean, where, on average, 58% comes from transfers and 42% from...

Thumbnail Image
Public expenditures and debt at the subnational level: Evidence of fiscal smoothing from Argentina

This paper uses the particular features of the tax-sharing regime Coparticipación Federal de Impuestos and the fact that some provinces earn hydrocarbon royalties to investigate...

Thumbnail Image
On the middle 70%. The impact of fiscal policy on the emerging middle class in Latin America using Commitment to Equity

This paper analyzes the effects of indirect and direct taxes, as well as monetary and in-kind transfers on the income distribution in nine Latin American...

Thumbnail Image
Electoral Consequences of Violent Crime: Evidence from Venezuela

To what extent to do voters hold political incumbents accountable for policy outcomes? This paper considers retrospective voting in the context of violent crime. Using...

Thumbnail Image
Integrating Early-life Shocks and Human Capital Investments on Children´s Education

This study investigates how early-life conditions interact with subsequent human capital investments to influence future educational outcomes. To provide causal evidence, we exploit two sources...

Thumbnail Image
Local governments' capacity and performance: evidence from peruvian municipalities

This paper explores the extent of technical capacity constraints in Peruvian local governments. To do that, we study how effective municipalities are in using a...