Fiscal Policy, Inequality and Poverty in Iran: Assessing the Impact and Effectiveness of Taxes and Transfers

Ali Enami, Nora Lustig and Alireza Taqdiri ()
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Alireza Taqdiri: Department of Economics, University of Akron

No 1605, Working Papers from Tulane University, Department of Economics

Abstract: 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.

Keywords: : Incidence analysis; marginal contribution; effectiveness; energy subsidy reform; Iran. (search for similar items in EconPapers)
JEL-codes: D31 H22 I38 (search for similar items in EconPapers)
Date: 2016-07, Revised 2017-09
New Economics Papers: this item is included in nep-cmp, nep-cse, nep-dev, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://repec.tulane.edu/RePEc/pdf/tul1605r.pdf Revised Version, September 2017 (application/pdf)

Related works:
Journal Article: Fiscal policy, inequality, and poverty in Iran: assessing the impact and effectiveness of taxes and transfers (2019)
Working Paper: Fiscal Policy, Inequality and Poverty in Iran: Assessing the Impact and Effectiveness of Taxes and Transfer (2017)
Working Paper: Fiscal policy, inequality and poverty in Iran: Assessing the impact and effectiveness of taxes and transfers (2016)
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