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Fiscal Incidence in Tanzania

Author

Listed:
  • Stephen D. Younger

    (Department of Economics, Ithaca College.)

  • Flora Myamba

    (REPOA)

  • Kenneth Mdadila

    (Department of Economics, University of Dar es Salaam)

Abstract

We use methods developed by the Commitment to Equity and data from the 2011/12 Household Budget Survey to assess the effects of government taxation, social spending, and indirect subsidies on poverty and inequality in Tanzania. We also simulate several policy reforms to assess their distributional consequences. We find that Tanzania redistributes more than expected given its relatively low income and inequality, largely because both direct and indirect taxes are more excellent targeting mechanism. If the program were expanded to a size that is typical for lower-middle income countries, it could reduce poverty significantly. On the other hand, electricity subsidies are regressive despite attempts to make them more pro-poor with a lifeline tariff.

Suggested Citation

  • Stephen D. Younger & Flora Myamba & Kenneth Mdadila, 2016. "Fiscal Incidence in Tanzania," Commitment to Equity (CEQ) Working Paper Series 36, Tulane University, Department of Economics.
    • Handle: RePEc:tul:ceqwps:36
    as

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    File URL: http://repec.tulane.edu/RePEc/ceq/ceq36.pdf
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    References listed on IDEAS

    as
    1. Stephen D. Younger & Eric Osei-Assibey & Felix Oppong, 2015. "Fiscal Incidence in Ghana," Commitment to Equity (CEQ) Working Paper Series 1335, Tulane University, Department of Economics.
    2. David K. Evans & Stephanie Hausladen & Katrina Kosec & Natasha Reese, 2014. "Community-Based Conditional Cash Transfers in Tanzania : Results from a Randomized Trial," World Bank Publications - Books, The World Bank Group, number 17220, December.
    3. Mr. David E. Sahn & Mr. Stephen D. Younger, 1999. "Dominance Testing of Social Sector Expenditures and Taxes in Africa," IMF Working Papers 1999/172, International Monetary Fund.
    4. Stephen D. Younger & Eric Osei-Assibey & Felix Oppong, 2015. "Fiscal Incidence in Ghana," Commitment to Equity (CEQ) Working Paper Series 35, Tulane University, Department of Economics.
    5. Karla Breceda & Jamele Rigolini & Jaime Saavedra, 2009. "Latin America and the Social Contract: Patterns of Social Spending and Taxation," Population and Development Review, The Population Council, Inc., vol. 35(4), pages 721-748, December.
    Full references (including those not matched with items on IDEAS)

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    1. repec:bla:afrdev:v:29:y:2017:i:s1:p:1-14 is not listed on IDEAS
    2. Jon Jellema & Nora Lustig & Astrid Haas & Sebastian Wolf, 2016. "The Impact of Taxes, Transfers, and Subsidies on Inequality and Poverty in Uganda," Commitment to Equity (CEQ) Working Paper Series 53, Tulane University, Department of Economics.
    3. Jose Cuesta & Jon Jellema & Lucia Ferrone, 2021. "Fiscal Policy, Multidimensional Poverty, and Equity in Uganda: A Child-Lens Analysis," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 33(3), pages 427-458, June.
    4. Nora Lustig, 2017. "Fiscal Policy, Income Redistribution and Poverty Reduction in Low and Middle Income Countries," Commitment to Equity (CEQ) Working Paper Series 54, Tulane University, Department of Economics.
    5. Stephen Younger, 2016. "The Impact of Reforming Energy Subsidies, Cash Transfers, and Taxes on Inequality and Poverty in Ghana and Tanzania," Commitment to Equity (CEQ) Working Paper Series 1355, Tulane University, Department of Economics.
    6. Nora Lustig, 2016. "Fiscal Policy, Inequality and the Poor in the Developing World," Working Papers 1612, Tulane University, Department of Economics, revised Aug 2017.
    7. Haydeeliz Carrasco & Hamidou Jawara & Moritz Meyer, 2022. "The Effects Of Fiscal Policy On Inequality And Poverty In The Gambia," Commitment to Equity (CEQ) Working Paper Series 117, Tulane University, Department of Economics.
    8. Nora Lustig, 2016. "Commitment to Equity Handbook. A Guide to Estimating the Impact of Fiscal Policy on Inequality and Poverty," Commitment to Equity (CEQ) Working Paper Series 01, Tulane University, Department of Economics.
    9. Stephen Younger, 2016. "The Impact of Reforming Energy Subsidies, Cash Transfers, and Taxes on Inequality and Poverty in Ghana and Tanzania," Commitment to Equity (CEQ) Working Paper Series 55, Tulane University, Department of Economics.
    10. Steve Muchiri & Sun‐Ki Choi, 2021. "Evaluating the significance of cash transfers on household consumption," African Development Review, African Development Bank, vol. 33(4), pages 662-673, December.
    11. Jose Cuesta & Jon Jellema & Lucia Ferrone, 0. "Fiscal Policy, Multidimensional Poverty, and Equity in Uganda: A Child-Lens Analysis," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 0, pages 1-32.
    12. Nora Lustig, 2016. "Fiscal policy, inequality, and the poor in the developing world," WIDER Working Paper Series 164b (Revised version May, World Institute for Development Economic Research (UNU-WIDER).
    13. Dale, Elina & Evans, David B. & Gopinathan, Unni & Kurowski, Christoph & Norheim, Ole F. & Ottersen, Trygve & Voorhoeve, Alex, 2023. "Open and inclusive: fair processes for financing universal health coverage," LSE Research Online Documents on Economics 119795, London School of Economics and Political Science, LSE Library.
    14. Languille, Sonia, 2019. "The politics of the education budget: Financing mass secondary education in Tanzania (2004–2012)," International Journal of Educational Development, Elsevier, vol. 66(C), pages 96-104.
    15. Nora Lustig, 2017. "Fiscal Policy, Income Redistribution and Poverty Reduction in Low and Middle Income Countries," Commitment to Equity (CEQ) Working Paper Series 1354, Tulane University, Department of Economics.
    16. Vanesa Jorda & Jose M. Alonso, 2020. "What works to mitigate and reduce relative (and absolute) inequality?: A systematic review," WIDER Working Paper Series wp-2020-152, World Institute for Development Economic Research (UNU-WIDER).

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    More about this item

    Keywords

    fiscal incidence; poverty; inequality; fiscal policy; Tanzania;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality

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