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The Impact of Brazil´s Tax-Benefit System on Inequality and Poverty

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Author Info

  • Herwig Immervoll

    ()
    (European Centre for Social Welfare Policy and Research, Vienna and OECD, Paris)

  • Horacio Levy

    ()
    (Universitat Autònoma de Barcelona)

  • José Ricardo Nogueira

    ()
    (Universidade Federal de Pernambuco, Recife)

  • Cathal O´Donoghue

    ()
    (National University of Ireland and IZA, Bonn)

  • Rozane Bezerra de Siqueira

    ()
    (Universidade Federal de Pernambuco)

Abstract

The Brazilian government raises an amount of taxes that represents 35% of GDP and spends more than two-thirds of this on social programmes. These shares are in pair with the OECD averages and well in excess of Latin America averages. However, while the tax-benefit system in OECD countries notably reduces market inequality, in Brazil the government has not been able to significantly alleviate inequality and poverty. This paper investigates the impact of the government budget, particularly taxes and cash transfers, on income distribution in Brazil, and evaluates its efficiency and effectiveness in reducing inequality and poverty. The analysis also illustrates how microsimulation is a useful and powerful method for evaluating the impact of policy on income distribution.

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Bibliographic Info

Paper provided by Ibero-America Institute for Economic Research in its series Ibero America Institute for Econ. Research (IAI) Discussion Papers with number 117.

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Length: 23 pages
Date of creation: 21 Oct 2005
Date of revision:
Handle: RePEc:got:iaidps:117

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References

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  1. Rodolfo Hoffmann, 2003. "Inequality in Brazil: The Contribution of Pensions," Revista Brasileira de Economia, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil), vol. 57(4), pages 755-773, October.
  2. Sutherland, Holly & Immervoll, Herwig & O'Donoghue, Cathal, 1999. "An introduction to EUROMOD," EUROMOD Working Papers EM0/99, EUROMOD at the Institute for Social and Economic Research.
  3. Immervoll, Herwig & Levy, Horacio & Lietz, Christine & Mantovani, D. & O'Donoghue, Cathal & Sutherland, Holly & Verbist, Gerlinde, 2005. "Household incomes and redistribution in the European Union: quantifying the equalising properties of taxes and benefits," EUROMOD Working Papers EM9/05, EUROMOD at the Institute for Social and Economic Research.
  4. O'Donoghue, Cathal & Baldini, Massimo & Mantovani, Daniela, 2004. "Modelling the redistributive impact of indirect taxes in Europe: an application of EUROMOD," EUROMOD Working Papers EM7/01, EUROMOD at the Institute for Social and Economic Research.
  5. David Piachaud & Holly Sutherland & UNICEF Innocenti Research Centre, 2000. "How Effective is the British Government's Attempt to Reduce Child Poverty?," Innocenti Working Papers inwopa00/6, UNICEF Innocenti Research Centre.
  6. Buhmann, Brigitte, et al, 1988. "Equivalence Scales, Well-Being, Inequality, and Poverty: Sensitivity Estimates across Ten Countries Using the Luxembourg Income Study (LIS) Database," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 34(2), pages 115-42, June.
  7. Ernesto Schiefelbein, 1997. "School-related Economic Incentives in Latin America: Reducing drop-out and repetition and combating child labour," Innocenti Occasional Papers, Child Rights Series iopcrs97/5, UNICEF Innocenti Research Centre.
  8. Podder, Nripesh, 1993. "The Disaggregation of the Gini Coefficient by Factor Components and Its Applications to Australia," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 39(1), pages 51-61, March.
  9. Atkinson, Tony, et al, 2002. "Microsimulation of Social Policy in the European Union: Case Study of a European Minimum Pension," Economica, London School of Economics and Political Science, vol. 69(274), pages 229-43, May.
  10. José Ricardo Nogueira & Rozane Bezerra de Siqueira & Evaldo Santana de Souza, 2001. "A Incidência Final dos Impostos Indiretos no Brasil: Efeitos da Tributação de Insumos," Revista Brasileira de Economia, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil), vol. 55(4), pages 513-544, October.
  11. Sutherland, Holly, 2001. "EUROMOD: an integrated European benefit-tax model: final report," EUROMOD Working Papers EM9/01, EUROMOD at the Institute for Social and Economic Research.
  12. Chu, K.-y. & Davoodi, H. & Gupta, S., 2000. "Income Distribution and Tax, and Government Social Spending Policies in Developing Countries," Research Paper 214, World Institute for Development Economics Research.
  13. Rozane Bezerra de Siqueira & José Ricardo Nogueira & Cathal O'Donoghue, 2003. "Simulating Brazil Tax-Benefit System Using Brahms, the Brazilian Household Microsimulation Model," Anais do XXXI Encontro Nacional de Economia [Proceedings of the 31th Brazilian Economics Meeting] b50, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
  14. Creedy, J., 1997. "Evaluating Income Tax Changes and the Choice of Income Measures," Department of Economics - Working Papers Series 577, The University of Melbourne.
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Cited by:
  1. Chung Tran & Juergen Jung, 2007. "The Extension of Social Security Coverage in Developing Countries," Caepr Working Papers 2007-026, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington.
  2. Nora Lustig & Carola Pessino & John Scott, 2013. "The Impact of Taxes and Social Spending on Inequality and Poverty in Argentina, Bolivia, Brazil, Mexico, Peru and Uruguay: An Overview," Working Papers 1313, Tulane University, Department of Economics.
  3. Nora Lustig & George Gray-Molina & Sean Higgins & Miguel Jaramillo & Wilson Jiménez & Veronica Paz & Claudiney Pereira & Carola Pessino & John Scott & Ernesto Yañez, 2012. "The Impact of Taxes and Social Spending on Inequality and Poverty in Argentina, Bolivia, Brazil, Mexico and Peru: A Synthesis of Results," Working Papers 264, ECINEQ, Society for the Study of Economic Inequality.
  4. Olivier Bargain & Prudence Kwenda, 2009. "The Informal Sector Wage Gap: New Evidence Using Quantile Estimations on Panel Data," Working Papers 200916, Geary Institute, University College Dublin.
  5. Gerhard Glomm & Juergen Jung & Chung Tran, 2006. "Macroeconomic Implications of Early Retirement in the Public Sector: The Case of Brazil," Caepr Working Papers 2006-008, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington.
  6. Sean Higgins & Nora Lustig & Whitney Ruble & Timothy Smeeding, 2013. "Comparing the incidence of taxes and social spending in Brazil and the United States," Working Papers 316, ECINEQ, Society for the Study of Economic Inequality.
  7. Nora Lustig & Sean Higgins, 2012. "Commitment to Equity Assessment (CEQ): Estimating the Incidence of Social Spending, Subsidies and Taxes Handbook," Working Papers 1219, Tulane University, Department of Economics.
  8. Levy, Horacio & Nogueira, José Ricardo & Bezerra de Siqueira, Rozane & Immervoll, Herwig & O’Donoghue, Cathal, 2008. "Simulating the impact of inflation on the progressivity of personal income tax in Brazil," LATINMOD Working Papers Series 2008-01, Tecnológico de Monterrey, Campus Ciudad de México.
  9. Olivier Bargain & Prudence Kwenda, 2009. "The Informal Sector Wage Gap: New Evidence Using Quantile Regressions on Panel Data," CEDI Discussion Paper Series 09-06, Centre for Economic Development and Institutions(CEDI), Brunel University.

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