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Pro-Poor Tax Reforms, with an Application to Mexico

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Author Info

  • Duclos, Jean-Yves

    () (Université Laval)

  • Makdissi, Paul

    () (University of Ottawa)

  • Araar, Abdelkrim

    () (Université Laval)

Abstract

This paper proposes a methodology for testing for whether tax reforms are pro-poor. This is done by extending stochastic dominance techniques to help identify tax reforms that will necessarily be deemed absolutely or relatively pro-poor by a wide spectrum of poverty analysts. The statistical properties of the various estimators are also derived in order to make the method implementable using survey data. The methodology is used to assess the pro-poorness of possible reforms to Mexico’s indirect tax system. This leads to the identification of several possible pro-poor tax reforms in that country. It also shows how the pro-poorness of a tax reform depends on one’s conception of poverty as well as on the revenue and efficiency impact of the reform.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4511.

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Length: 39 pages
Date of creation: Oct 2009
Date of revision:
Publication status: forthcoming in: International Tax and Public Finance
Handle: RePEc:iza:izadps:dp4511

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Keywords: stochastic dominance; pro-poor changes; tax reforms; Mexico;

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  8. Duclos, Jean-Yves & Makdissi, Paul, 2003. "Restricted and Unrestricted Dominance for Welfare, Inequality and Poverty Orderings," Cahiers de recherche 0303, CIRPEE.
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  23. Makdissi, Paul & Wodon, Quentin, 2002. "Consumption dominance curves: testing for the impact of indirect tax reforms on poverty," Economics Letters, Elsevier, vol. 75(2), pages 227-235, April.
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Cited by:
  1. Wasiu Adekunle Are, 2012. "Poverty-Reducing Directions of Indirect Marginal Tax Reforms in Ireland," Working Papers 201230, School Of Economics, University College Dublin.

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