The Distributive Impact of Fiscal Policy in Cameroon: Tax and Benefit Incidence
AbstractMost fiscal incidence studies neither analyze simultaneously the tax and benefit indicence (simply known as net fiscal incidence) nor actually relate poverty indices to fiscal impact. This paper jointly and separately examines the redistributive and poverty effects of the tax and transfer (education and health) systems in Cameroon. Broadly speaking, the tax system is generally progressive but less so when compared with the benefits of education and health. The net tax system is found to reduce inequality. Interestingly, while overall public spending on education and health are most progressive in rural areas, followed by semi-urban and urban areas, the opposite is true for tax incidence. Tax burden weighs more on the urban, followed by the rural and semi-urban, population. When we consider the two sets of policies together, they are found to mainly reflect fiscal policies in that they are more progressive and poverty-reducing when we use relative poverty lines in rural areas, followed by semi-urban and urban areas, respectively. Though we also realized a poverty-increasing effect of the net tax system using absolute poverty lines, the poverty impact still remains minimal in the rural areas where poverty is high and inequality actually increased between 1996 and 2001 than in urban areas. Overall, the current government policy can help, however, by making sure that the tax burdens of the poor are nil or very low and that the composition and direction of public expenditures on education and health favor the poor.
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Bibliographic InfoPaper provided by PEP-PMMA in its series Working Papers PMMA with number 2006-16.
Date of creation: 2006
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Fiscal policy; taxes; public expenditures; incidence; inequality; poverty; Cameroon;
Find related papers by JEL classification:
- F15 - International Economics - - Trade - - - Economic Integration
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
- H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
- H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
- H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
- I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
- I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-07-02 (All new papers)
- NEP-PBE-2006-07-02 (Public Economics)
- NEP-PUB-2006-07-02 (Public Finance)
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