Commitment to Equity Handbook

By Nora Lustig. 2018

115 citations recorded by the source corpus.

To analyze antipoverty policies in tandem with the taxes used to pay for them, comparisons of poverty before and after taxes and transfers are often used. We show that these comparisons, as well as mea sures of horizontal equity and progressivity, can fail to capture an impor tant aspect: that a substantial proportion of the poor are made poorer (or nonpoor made poor) by the tax and transfer system. We illustrate with data from seventeen developing countries: in fifteen, the fiscal system is povertyreducing and progressive, but in ten of these at least onequarter of the poor pay more in taxes than they receive in transfers. We call this fiscal impoverishment, and axiomatically derive a mea sure of its extent. An analogous mea sure of fiscal gains of the poor is also derived, and we show that changes in the poverty gap can be decomposed into our axiomatic mea sures of fiscal impoverishment and gains.

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