The Effects of Fiscal Policy on Inequality and Poverty in Iraq

Beenish Amjad, Maynor Vinicio Cabrera and Lokendra Phadera

No 10588, Policy Research Working Paper Series from The World Bank

Abstract: This study assesses the distributional impacts of public expenditures and taxes on poverty and inequality in the Republic of Iraq. The analysis uses the Commitment to Equity methodology and is based on the survey and government fiscal administrative data for fiscal year 2017. Results from the analysis show that Iraq’s fiscal policy is modestly progressive. It reduces short-term inequality by 6.7 and 3.0 Gini points with and without including public spending on education and health services. Both results are less than the global and upper-middle-income country averages. However, driven by direct transfers from poverty targeted social safety net cash transfers and generous pension allowances, the fiscal system reduces short-term poverty by 5 percentage points when evaluated using the international poverty line of US$5.5. This is one of the largest in the global and upper-middle-income country databases. These positive short-term results are achieved primarily because households pay almost no taxes. Iraq’s tax revenues are far lower than even the lower-income countries’ average. Unlike in most countries, Iraqi households in all quintiles, even the richest, are net beneficiaries of the fiscal policy. Given oil price volatility and the global movement away from fossil fuels, the high oil dependence and lack of a broader revenue base pose a significant fiscal sustainability challenge in Iraq.

Date: 2023-10-10
New Economics Papers: this item is included in nep-ara
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
http://documents.worldbank.org/curated/en/09975651 ... 5bf0a11c7abd8ae4.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:10588

Access Statistics for this paper

More papers in Policy Research Working Paper Series from The World Bank 1818 H Street, N.W., Washington, DC 20433. Contact information at EDIRC.
Bibliographic data for series maintained by Roula I. Yazigi ().