No full-text available
To read the full-text of this research,
you can request a copy directly from the authors.
Analytic foundations: Measuring the redistributive impact of taxes and transfers
... There are two ways of calculating the Shapley values (see Chantreuil & Trannoy, 2013;Enami et al., 2017;Sastre & Trannoy, 2002). In the "zero income inequality decomposition" approach, we remove a factor from the set of contributing factors to assess its impact on inequality. ...
... According to the "equalized income inequality decomposition" approach, the factor we are interested in is distributed equally among economic units. In the current context, "zero income inequality decomposition" is more appropriate because as Enami et al. (2017) notes, the equal distribution of taxes is not equalizing; on the contrary, it is regressive. Although Enami et al. (2017) consider the absolute level of taxes, this reasoning still holds true for tax rates, which is the measure used in this paper. ...
... In the current context, "zero income inequality decomposition" is more appropriate because as Enami et al. (2017) notes, the equal distribution of taxes is not equalizing; on the contrary, it is regressive. Although Enami et al. (2017) consider the absolute level of taxes, this reasoning still holds true for tax rates, which is the measure used in this paper. ...
One way inflation affects consumption inequality is through its varying impact on the purchasing power of different households. Indirect taxes, which affect commodity price levels, are another effective factor influencing consumption inequality. Turkey is a highly unequal country with a long history of high inflation. Moreover, indirect taxes have been used frequently as a policy tool in the last decades. This study develops a novel approach to examining the relative contributions of household inflation rates and indirect tax changes to real consumption inequality and applies it to the case of Turkey. The analysis is carried out using both household-level data and artificial panel data created to apply the Shapley and Owen decomposition methods. The findings roughly can be summarized in two points. First, while nominal consumption during the 2003–2019 period became more equal, real consumption inequality increased as a result of price changes during that time. Variations in household inflation rates are the primary source of increased inequality. Second, changes in indirect taxes account for 31% to 68% of the unequalizing effect of price changes, depending on the method used. Results imply that monetary and indirect tax policy mix have been in favor of the rich in this period.
... It has been used, for example, to decompose inequality into contributions of income sources (see Sastre and Trannoy, 2002 Chantreuil and Trannoy, 2013, among others). However, as Shorrocks (2013) There are two ways of calculating the Shapley values (see Sastre and Trannoy, 2002;Enami et al., 2017;Chantreuil and Trannoy, 2013). In the "zero income inequality decomposition" approach, we remove a factor from the set of contributing factors to assess its impact on inequality. ...
... The above analysis can be extended to include indirect taxes. However, in cases where there is an aggregation scheme, such as in the current setting, nested-Shapley or Owen decomposition methods are more suitable (see, for example, Sastre and Trannoy, 2002;Enami et al., 2017Shorrocks, 2013. In both nested Shapley and Owen methods, the variable of interest is decomposed into primary factors, which are then decomposed into secondary factors and so on. ...
... The last parts compute half of the difference between the Shapley contribution of prices (SP) and the change in inequality when only prices change ( ( ⃗ 0, ℎ ) − ( ⃗ 0, 0 ℎ )). In constructing the equations, we followed Enami et al. (2017) rather than Sastre and Trannoy (2002), who assumed the last term to be zero. Because inequality in the base year is not zero, this formula is more suited to the current setting. ...
One way inflation affects inequality is through its varying impact on the purchasing power of different households. Indirect taxes, which affect commodity price levels, are another effective factor influencing inequality. Turkey is a highly unequal country with a long history of high inflation. Moreover, indirect taxes have been used frequently as a policy tool in the last decades. This study applies the commonly used method in the literature to analyse distributional consequences of household level inflation rates, and extends it to analyse the role of indirect tax changes in this relationship. The analysis is carried out using both household-level data and artificial panel data created to apply the Shapley and Owen decomposition methods. The findings indicate that while nominal consumption during the 2003–2019 period became more equal, real consumption inequality increased as a result of price changes during that time. Another striking finding is that changes in indirect taxes account for 31–57% of the unequalizing effect of price changes, depending on the method used.
... Kakwani (1977), which essentially measures departures from proportionality and takes values between -1 and 1; the larger the value of the index is, the more progressive is the social intervention. However, this index is not affected by the size of the corresponding transfer (Enami, Lustig and Aranda, 2017). Estimates of the index are reported on the right vertical axis of the graph. ...
During the last decade, Greece faced one of the most severe debt crises among developed countries, leading to Economic Adjustment Programs in order to avoid a disorderly default. Public expenditure was cut, tax rates were increased and new taxes were introduced, aiming at restoring public finances. Prominent among the latter were recurrent property taxes that had played a very minor role before the crisis. These taxes helped to boost public revenues but were hugely unpopular. The paper examines in detail their distributional impact and finds that they led to increases in inequality and (relative) poverty. The result is stronger in the case of inequality indices that are relatively more sensitive to changes close to the bottom of the distribution and poverty indices that are sensitive to the distribution of income among the poor.
... Specifically, we analyze how much the contribution of this program to reducing inequality and poverty, and TSP's overall effectiveness, would change if in addition to the elimination of the cash transfer from the top two decile, deciles VII and VIII were also no longer eligible and the resulting savings from the latter two deciles were transferred to the remaining income deciles (policy simulation 1) or to the bottom 30% (policy simulation 2). 6 To estimate the impact of both the universal and 'Second Phase' of TSP, as well as policy simulations 1 and 2, we rely on standard fiscal incidence analysis as described in Lustig (2018). Fiscal incidence analysis is used to assess the distributional impacts of a country's taxes and transfers. ...
Using the Iranian Household Expenditure and Income Survey for 2011/12, we estimate the impact and effectiveness of various components of Iran’s fiscal system on reducing inequality and poverty. We utilize the marginal contribution analysis to determine the impact of each component, and we introduce newly developed indicators of effectiveness to calculate how well various taxes and transfers are operating to reduce inequality and poverty. We find that the fiscal system reduces the poverty-head-count-ratio by 10.5 percentage points and inequality by 0.0854 Gini points. Transfers are generally more effective in reducing inequality than taxes while taxes are especially effective in raising revenue without causing poverty to rise. Although transfers are not targeted toward the poor, they reduce poverty significantly. The main driver is the Targeted Subsidy Program (TSP), and we show through simulations that the poverty reducing impact of TSP could be enhanced if resources were more targeted to the bottom deciles.
... Transfers that follow such a pattern are considered pro-poor. When the per capita transfer decreases with income, the concentration coefficient turns negative (Table 8; see Enami et al., 2016). Spending on tertiary education is progressive in relative terms only; that is, the benefit as a proportion of market income decreases with income. ...
This paper estimates the impact of Tunisia's tax and transfer system on inequality and poverty and assesses the benefits from public spending on education and health. Results show that Tunisia's redistributive fiscal policy reduces inequality and extreme poverty significantly. However, based on the national poverty line, the headcount ratio increases, implying that a large number of the poor people pay more in taxes than they receive in cash transfers and subsidies. This is due to a relatively high burden of personal income taxes and social security contributions for low‐income households.
... 22. For more about how vertical equity, reranking, and horizontal inequity are defined and used in the analyses throughout this volume, see chapter 1 as well the work by Enami, Lustig, and Aranda (2017). ...
... For that purpose, the effects are computed not only at the national level and among the poor according to national official standards, but also across predefined income groups by international standards, namely poor, vulnerable, middle class, and wealthy individuals. 6 Secondly, the paper presents results for innovative measures related to income-based poverty and inequality, namely " fiscal impoverishment " and " fiscal gains to the poor " (Higgins and Lustig, 2016), and " marginal contributions " to poverty and inequality (Enami, Lustig and Aranda, 2017). Finally, the paper offers evidence of a counterintuitive but possible (and frequently overlooked) result: Chile's fiscal system features regressive, yet equalizing indirect taxes. ...
This paper applies a comprehensive tax-benefit incidence analysis to estimate the distributional effects of fiscal policy in Chile in 2013. Four results are indicative of an overall positive net effect of fiscal interventions on poverty and inequality. First, subsidies exert a positive, yet modest effect on poverty and inequality, whereas direct transfers are progressive, equalizing, and reduce the poverty headcount by 4 to 5 percentage points, depending on the poverty line used. Second, although social contributions are unequalizing and poverty-increasing, direct taxes on personal income are equalizing and poverty-neutral, whereas indirect taxes are poverty-increasing but exert a counterintuitive, yet feasible equalizing effect known as Lambert's conundrum. Third, social spending on tertiary education is slightly equalizing but it is not pro-poor, contrary to the effects of social spending on basic and secondary education and health, which are not only equalizing but also pro-poor. Finally, the net effect of Chile's tax/transfer system leaves fewer individuals impoverished relative to the number of fiscal gainers, and the magnitude of monetary fiscal gains is significantly higher than that of fiscal impoverishment.
Purpose: This study aims to demonstrate the impact of taxes on prices and production in Jordan. Theoretical framework: Study problem lies in asking the following questions Does the tax system in Jordan serve the economic aspects? Does the tax in Jordan affect the economic aspect? Is the tax in Jordan fair? Is there an impact of the tax on prices in Jordan? Is there an impact of the tax on production in Jordan? What is the effect of taxes on consumer speeding on necessary versus luxury goods? What is the impact of higher taxes on personal income of consumers? The effect of Lower taxes on the economy and disposable income? What is the alternative for governments to increase their income other than direct higher tax system? What is the effect of various government entities; such as financial, administrative, and social corruption on Jordan economy? Design/methodology/approach: Researchers used standard analysis method and vector error correction model for the period (2011-2020), and used the profit margin ratio indicator as a representative indicator for production and prices. Findings: Results showed a long-term causal relationship between prices and production; from one side and direct and indirect taxes; from the other side and that relationship between short-term deviations and long-term reliability is corrected at a rate of (3%) per year. Results showed a negative significant impact of indirect taxes on price competitiveness; in the long term which was reinforced by the variance components’ analysis and response function’s test. Results also showed an insignificant impact of direct and indirect taxes on price competitiveness; in the short term. Research, Practical & Social implications: Demonstrating the impact of taxes on prices and production in Jordan. As well as, discussing the governmental tax and income. Originality/value: The importance of study stems from research topic, since taxes have multiple effects on various areas in society which can be divided into scientific and practical importance.
The Kakwani index of progressivity is commonly used to establish whetherthe effect of a specific tax or transfer is equalizing. In the presence ofreranking or Lambert’s conundrum, however, a progressive tax could beunequalizing. While it is mathematically possible for counter-intuitiveresults to occur, how common are they in actual fiscal systems? Using anovel dataset that includes fiscal-incidence results for 39 countries, we findthat the likelihood of the Kakwani index to be progressive (regressive),while the tax or transfer is unequalizing (equalizing), is minimal, except inthe case of indirect taxes: in roughly 25 per cent of our sample, regressiveindirect taxes are equalizing (sign-inconsistent cases). Additionally, thelikelihood that the Kakwani index ranks the magnitude of the impact of atax or transfer wrongly also exists but it too is small. Finally, usingregression analysis, we find that increasing the size or progressivity of aprogressive tax or transfer is equalizing and statistically robust forsign-consistent cases. For sign-inconsistent cases, the coefficient for theKakwani index is not statistically significant. In sum, although theKakwani index could yield interpretations that are inaccurate in actualfiscal systems, the risk seems small, except for indirect taxes.
Özet
Bu çalışmada, 2019 yılına ait Hanehalkı Bütçe Araştırması ile Hanehalkı Gelir ve Yaşam Koşulları Araştırması veri setleri kullanılarak maliye politikası araçlarının Türkiye'deki gelir eşitsizliği ve yoksulluk üzerindeki etkileri incelenmiştir. Çalışma kapsamında maliye politikası araçları altında yer alan doğrudan ve dolaylı vergiler, sosyal transferler ve harcamaların her birinin gelir eşitsizliği ve yoksulluk üzerinde oluşturduğu etkiler detaylı bir şekilde ele alınmıştır. Çalışmanın sonuçlarına göre, devlet tarafından yapılan mali müdahaleler eşitsizlik üzerinde önemli ölçüde iyileştirici bir işlev üstlenirken gelir eşitsizliğinin azaltılmasına en büyük katkı devlet ayni eğitim ve sağlık harcamalarından gelmektedir. Doğrudan vergiler ve sosyal transferler gelir eşitsizliğini azaltıcı yönde etki eden diğer araçlar olurken dolaylı vergiler gelir eşitsizliğini artırıcı yönde etki etmektedir. Ayrıca, devlet mali müdahalelerinin eşitsizliği azaltıcı yönde yaptığı iyileştirici etki yoksulluğu azaltmada etkin bir yapıya sahip değildir.
Abstract
In this study, the effects of fiscal policy instruments on income inequality and poverty in Turkey were examined using the 2019 Household Budget and Household Income and Living Conditions Survey datasets. Within the scope of the study, the effects of direct and indirect taxes, social transfers and expenditures on income inequality and poverty are discussed in detail. According to the results of the study, while the government fiscal interventions have a significant improvement function on inequality, the major contribution to reducing income inequality comes from government in-kind education and health expenditures. While direct taxes and social transfers are other tools that reduce income inequality, indirect taxes increase income inequality. Additionally, the positive contribution of government fiscal interventions to reduce inequality does not have an effective structure in reducing poverty.
The paper examines perceptions of the fairness of income distribution in Serbia from a comparative perspective. The analysis is based on data collected under Round 9 of the European Social Survey in 2018/2019. Perceptions of the fairness of personal income in Serbia are compared with those from three post- Yugoslav countries (Montenegro, Croatia and Slovenia) and three developed capitalist countries (Germany, Sweden and the United Kingdom). The research findings indicate that the vast majority of Serbian citizens perceive their personal income (gross and net pay, pensions and social benefits) as being unfairly low. From a comparative perspective, it is noticeable that the perceived fairness of income distribution is influenced by a contextual variable that combines the effects of economic development, degree of income inequality and path dependency. Income from work (gross and net pay) is more often perceived as unfairly low in the post-Yugoslav countries of the Western Balkans (Serbia and Montenegro) than in the post-Yugoslav countries that are members of the European Union (Croatia and Slovenia). When it comes to perceptions of the fairness of pensions and social benefits, the two groups of the post-Yugoslav countries do not differ from each other. All types of income are more likely to be perceived as unfairly low in the Western Balkan states than in the developed capitalist countries.
Este artículo presenta resultados sobre el impacto de la política fiscal en la desigualdad y la pobreza en dieciséis países de América Latina para alrededor del año 2010. Los países que más redistribuyen son Argentina, Brasil, Costa Rica y Uruguay, y los que menos, Guatemala, Honduras y Perú. A mayor gasto social, mayor redistribución pero países con un nivel de gasto social similar muestran diferentes niveles de redistribución lo cual sugiere que otros factores tales como la composición y focalización del gasto intervienen en determinar el efecto redistributivo más allá del tamaño. La política fiscal reduce la pobreza extrema en doce países.. Sin embargo, la incidencia de la pobreza después de impuestos, subsidios y transferencias monetarias es mayor que la incidencia para el ingreso de mercado en Bolivia, Guatemala, Honduras y Nicaragua, aun cuando la política fiscal reduce la desigualdad. Además, aun cuando la incidencia de la pobreza y la desigualdad se reducen, con la nueva medida de Empobrecimiento Fiscal se puede observar que en Brasil y México un tercio de la población pobre medida con el ingreso consumible fue empobrecida: es decir, pasó de pobre a ser más pobre o de no pobre a ser pobre. El gasto en educación pre-escolar y primaria es igualador y pro-pobre en todos los países. El gasto en educación secundaria es igualador en todos los países y también pro-pobre en algunos pero no en todos. El gasto en educación terciaria nunca es pro-pobre pero es igualador a excepción de Guatemala, donde es regresivo y desigualador y en Venezuela, donde su efecto redistributivo es cero. El gasto en salud siempre es igualador pero es pro-pobre solamente en Argentina, Brasil, Chile, Costa Rica, Ecuador, República Dominicana, Uruguay y Venezuela.
ResearchGate has not been able to resolve any references for this publication.