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An Application of the CEQ Effectiveness Indicators: The Case of Iran

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  • Ali Enami

    (Stone Center for Latin American Studies, Department of Economics, Tulane University. Commitment to Equity Institute (CEQI).)

Abstract

This paper introduces two new Commitment to Equity (CEQ) indexes to assess the effectiveness of taxes and transfers in reducing inequality and poverty: the Impact and Spending Effectiveness indicators. The Spending Effectiveness indicator has an additional interpretation as a measure of efficiency. These effectiveness indicators are used in this paper to rank taxes and transfers in Iran. In addition, I estimate the Fiscal Impoverishment and Fiscal Gains to the Poor Effectiveness indicators, which have also been developed by the CEQ Institute. The results show that in this case study, taxes and transfers are similarly effective in achieving their inequality-reducing potential. The income tax is the most effective intervention on the revenue side, achieving 40 percent of its inequality-reducing potential. On the spending side, social assistance transfers are the most effective, achieving 45 percent of their potential. Taxes are especially effective in raising revenue without causing poverty to rise, indicating that the poor are largely spared from taxation. In contrast, transfers are not very effective because the majority of them are not targeted to the poor: the most effective transfers achieve 21 percent of their poverty reduction potential.

Suggested Citation

  • Ali Enami, 2016. "An Application of the CEQ Effectiveness Indicators: The Case of Iran," Commitment to Equity (CEQ) Working Paper Series 58, Tulane University, Department of Economics.
    • Handle: RePEc:tul:ceqwps:58
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    File URL: http://repec.tulane.edu/RePEc/ceq/ceq58.pdf
    File Function: Revised version, 2017
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    References listed on IDEAS

    as
    1. Ali Enami, 2017. "Measuring the Effectiveness of Taxes and Transfers in Fighting Inequality and Poverty," Commitment to Equity (CEQ) Working Paper Series 64, Tulane University, Department of Economics.
    2. Fellman, Johan & Jantti, Markus & Lambert, Peter J, 1999. " Optimal Tax-Transfer Systems and Redistributive Policy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 101(1), pages 115-126, March.
    3. Ali Enami & Nora Lustig & Alireza Taqdiri, 2019. "Fiscal policy, inequality, and poverty in Iran: assessing the impact and effectiveness of taxes and transfers," Middle East Development Journal, Taylor & Francis Journals, vol. 11(1), pages 49-74, January.
    4. Ali Enami & Nora Lustig & Rodrigo Aranda, 2016. "Analytic Foundations: Measuring the Redistributive Impact of Taxes and Transfers," Commitment to Equity (CEQ) Working Paper Series 25, Tulane University, Department of Economics.
    5. Ali Enami , Nora Lustig and Alireza Taqdiri, 2016. "Fiscal Policy, Inequality and Poverty in Iran: Assessing the Impact and Effectiveness of Taxes and Transfers the Poor in the Developing World - Working Paper 442," Working Papers 442, Center for Global Development.
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    Cited by:

    1. Ali Enami, 2017. "Measuring the Effectiveness of Taxes and Transfers in Fighting Inequality and Poverty," Commitment to Equity (CEQ) Working Paper Series 64, Tulane University, Department of Economics.

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    More about this item

    Keywords

    Inequality; poverty; fiscal incidence; marginal contribution; effectiveness indicator; policy simulation; Iran;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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