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Many governments try to reduce poverty and inequality through a mixture of taxes, transfers, and public services. Individual policies, such as taxation or cash transfers, are frequently evaluated on how well they address these goals. CGD nonresident fellow Nora Lustig’s Commitment to Equity project assesses overall impact of a country’s fiscal policy package on poverty and inequality
China is characterized by high prefiscal overall, urban-rural and regional inequality. Applying standard fiscal incidence analysis, we estimate the redistributive effect of taxes and social spending on income distribution and poverty.
Using standard fiscal incidence analysis and the new methodological developments by the Commitment to Equity (CEQ) Institute, this paper estimates the impact of fiscal policy on inequality and poverty in sixteen countries in Latin America around 2010.
Latin America is known for high levels of inequality, which governments can lessen somewhat through smart policy. In this paper, Nora Lustig and others analyze how and whether taxes, subsidies, and social spending reduce inequality across countries in the region and identify which policies are most beneficial.
Using the Iranian Household Expenditure and Income Survey (HEIS) for 2011/12, we apply the marginal contribution approach to determine the impact and effectiveness of each fiscal intervention, and the fiscal system as a whole, on inequality and poverty in Iran.
We conducted a fiscal impact study to estimate the effect of taxes, social spending, and subsidies on inequality and poverty in El Salvador, using the methodology of the Commitment to Equity project. Taxes are progressive, but given their volume, their impact is limited. Direct transfers are concentrated on poor households, but their budget is small so their effect is limited; a significant portion of the subsidies goes to households in the upper income deciles, so although their budget is greater, their impact is low. The component that has the greatest effect on inequality is spending on education and health. Therefore, the impact of fiscal policy is limited and low when compared with other countries with a similar level of per capita income. There is room for improvement using current resources.