Universidad de Costa Rica

Pablo Sauma and Juan Diego Trejos
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Pablo Sauma: D
Juan Diego Trejos: Escuela de Economía de la Universidad de Costa Rica, Universidad Nacional, IICE.

No 18S, Commitment to Equity (CEQ) Working Paper Series from Tulane University, Department of Economics

Abstract: Costa Rica allocates 20% of its GDP to finance a broad range of social programs. Social spending is funded primarily through indirect taxes, as well as through specific social security contributions. Using market income as a reference, only direct taxes turn out to be clearly progressive, as opposed to indirect taxes and specific contributions to the social security system, which tend to be rather neutral in relative terms. Nonetheless, most social programs are progressive, in fact some of them are very progressive-especially cash transfers, which are highly focalized– resulting in reductions in poverty and, principally, inequality. The study highlights the enormous significance of increasing amount and progressiveness in the country’s taxes, to give sustainability to the social public expenditure as well as strengthening certain focalized programs with a great impact on the poorest. Resumen. Costa Rica destina el equivalente 20% de su PIB al financiamiento de una amplia gama de programas sociales públicos. Ese gasto social se financia principalmente con impuestos indirectos así como con las contribuciones específicas para la seguridad social. Cuando se considera el ingreso de mercado como referencia, solamente los impuestos directos resultan claramente progresivos, no así los impuestos indirectos ni las contribuciones a la seguridad social, que tienden a ser más neutrales en términos relativos. No obstante, la mayor parte de los programas sociales son progresivos, y algunos de ellos muy progresivos especialmente los de transferencias monetarias, que son altamente focalizados-, lo cual resulta en reducciones en la pobreza y, principalmente, la desigualdad. El estudio realizado hace evidente la enorme importancia de aumentar la magnitud y progresividad de los tributos, para darle sostenibilidad al gasto público social, así como fortalecer algunos programas focalizados que tienen un elevado impacto sobre los más pobres.

Keywords: social spending; taxes; inequality; poverty; Costa Rica (search for similar items in EconPapers)
Pages: 30 pages
Date: 2014-01
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Published in Commitment to Equity, January 2014, pages 1-30

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http://repec.tulane.edu/RePEc/ceq/ceq18S.pdf First version, 2014 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:tul:ceqwps:18s

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