Fiscal Policy and Equity: Vietnam 2018 Fiscal Incidence Analysis

Laura Kiku Rodriguez Takeuchi, Kajetan Wladyslaw Trzcinski and Matthew Grant Wai-Poi

No 10538, Policy Research Working Paper Series from The World Bank

Abstract: This paper examines the distributive and poverty reducing effects of Vietnam’s fiscal system in 2018. The paper looks at the incidence across the distribution and the effect of (direct and indirect) taxes, subsidies, and social spending (in cash and in-kind) on inequality and poverty in Vietnam using the Commitment to Equity methodology. The overall pattern of taxes and transfers in Vietnam is moderately progressive, but most households pay more in taxes and co-payments than what they receive in cash benefits, and the fiscal system results in a small increase in poverty. The progressivity of the fiscal system and its inequality-reduction impact mostly comes from in-kind health and education spending. This reduction in inequality is about average for lower-middle-income countries, but Vietnam could do more to increase the progressivity of its fiscal system.

Date: 2023-08-07
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