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Fiscal Incidence and Poverty Reduction: Evidence from Tunisia

Abebe Abebe (), Ahmed Moummi, Nizar Jouini () and Nora Lustig ()
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Ahmed Moummi: African Development Bank
Nizar Jouini: African Development Bank

No 38, Commitment to Equity (CEQ) Working Paper Series from Tulane University, Department of Economics

Abstract: Using the National Survey of Consumption and Household Living Standards for 2010,this paper estimates the incidence of the government’s taxation and spending in Tunisia. Taking into account the impact of direct taxes and transfers, indirect taxes and subsidies and the monetized value of in- kind transfers in education and health services, the Gini coefficient falls from 0.43 (before taxes and transfers) to 0.35 (after taxes and transfers), mainly due to taxes (30% of the decrease) and in-kind services (30% of the decrease). Most of the equalization is produced by personal income taxes and contributions to social security. Direct taxes are progressive and the VAT is regressive. Cash transfers contribute little to redistribution. While direct transfers are strongly progressive and equalizing, their share in the budget remains very limited (only 0.2%). Subsidies are equalizing, though much less so than cash transfers as benefits to the non-poor are higher than their population share (i.e., subsidies are progressive but only in relative terms). Primary and secondary education are strongly redistributive and equalizing while tertiary education is progressive only in relative terms since the poor still have limited access. Health spending is progressive.

Keywords: fiscal policy; fiscal incidence; social spending; inequality; poverty; taxes; Tunisia (search for similar items in EconPapers)
JEL-codes: H22 I38 D31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ara
Date: 2016-03
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Published in Commitment to Equity Institute March 2016, pages 1-19

Downloads: (external link) Revised version, 2017 (application/pdf)

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