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Tax Incidence in Madagascar: An Analysis Using Household Data

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  • Younger, Stephen D, et al

Abstract

This article discusses tax incidence in Madagascar and asks who pays the taxes that finance government spending. Its main concern is to identify the progressivity of different taxes levied in Madagascar, based on the consumption and income patterns found in the 1994 Enquete Permanente aupres des Menages, a nationally representative survey. The results suggest that most taxes are progressive, meaning that wealthy households pay proportionately more of these taxes relative to their expenditures than do poor households. Two notable exceptions are taxes on kerosene and export duties on vanilla, both of which are regressive. These results are consistent with those of a study of Ghana, the only other comparable research on tax incidence in Africa. That study found taxes on kerosene and cocoa exports to be the most regressive taxes in Ghana. Making firm policy recommendations for tax reform would require an analysis of the economic efficiency and administrative efficacy of different taxes to complement this article's work on their equity implications. Nevertheless, the results suggest that the movement away from trade taxes, especially export duties, and toward broadly based value added or income taxes would be more equitable and more economically efficient. The only legitimate impediment to such reforms in Madagascar is administrative, that is, the government's ability to collect different taxes effectively. Although administrative efficiency may be a problem for value added or income taxes, taxes on petroleum products (except kerosene) are highly progressive and provide a good tax handle. Copyright 1999 by Oxford University Press.

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Bibliographic Info

Article provided by World Bank Group in its journal World Bank Economic Review.

Volume (Year): 13 (1999)
Issue (Month): 2 (May)
Pages: 303-31

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Handle: RePEc:oup:wbecrv:v:13:y:1999:i:2:p:303-31

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Cited by:
  1. Jorge Martinez-Vazquez, 2001. "The Impact of Budgets on the Poor: Tax and Benefit," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0110, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  2. Osei, Robert & Quartey, Peter, 2005. "Tax Reforms in Ghana," Working Paper Series RP2005/66, World Institute for Development Economic Research (UNU-WIDER).
  3. Norman Gemmell & Richard Kneller, 2003. "Fiscal Policy, Growth and Convergence in Europe," Treasury Working Paper Series 03/14, New Zealand Treasury.
  4. Andrew McKay, 2009. "Assessing the Impact of Fiscal Policy on Poverty," Working Papers id:2230, eSocialSciences.
  5. Saadia Refaqat, 2003. "Social Incidence of the General Sales Tax in Pakistan," IMF Working Papers 03/216, International Monetary Fund.
  6. Ajitava Raychaudhuri & Sudip Kumar Sinha & Poulomi Roy, 2007. "Is the Value Added Tax Reform in India Poverty-Improving? An Analysis of Data from Two Major States," Working Papers PMMA 2007-18, PEP-PMMA.
  7. Saadia Refaqat, 2005. "Redistributive Impact of GST Tax Reform: Pakistan, 1990-2001," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 44(4), pages 841-862.
  8. Brenner, Mark & Riddle, Matthew & Boyce, James K., 2007. "A Chinese sky trust?: Distributional impacts of carbon charges and revenue recycling in China," Energy Policy, Elsevier, vol. 35(3), pages 1771-1784, March.
  9. Christian E. Weller & Manita Rao, 2008. "Can Progressive Taxation Contribute to Economic Development?," Working Papers wp176, Political Economy Research Institute, University of Massachusetts at Amherst.
  10. James Boyce & Matthew Riddle & Mark D. Brenner, 2005. "A Chinese Sky Trust? Distributional Impacts of Carbon charges and Revenue Recycling in China," Working Papers wp_brenner_riddle_boyce, Political Economy Research Institute, University of Massachusetts at Amherst.

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