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Distributive impacts of alternative tax structures. The case of Uruguay

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Author Info

  • Verónica Amarante

    ()
    (Instituto de Economía, Facultad de Ciencias Económicas y de Administración, Universidad de la República)

  • Marisa Bucheli

    ()
    (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República)

  • Cecilia Olivieri

    ()
    (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República)

  • Ivone Perazzo

    (Instituto de Economía, Facultad de Ciencias Económicas y de Administración, Universidad de la República)

Abstract

This article considers the distributional impact of different changes in Uruguayan tax system, using a static micro-simulation framework based on the combination of data from household and expenditure surveys. On the indirect taxes side, we consider two alternatives that imply the same reduction in tax revenue: a general reduction of 2 points in the VAT basic rate, and a selective reduction in the VAT rate applied to specific goods that make up a large share of consumption of low income population. In relation to direct taxes, we consider the effects of increasing the upper limit of the tax free zone of the labor component of the dual income tax. We analyze separately the impact of each of these changes, and we also simulate a joint scenario including changes in direct and indirect taxes. Our results indicate that redistribution through the analyzed modifications in direct and indirect taxes in Uruguay is limited.

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File URL: http://www.fcs.edu.uy/archivos/0911.pdf
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Bibliographic Info

Paper provided by Department of Economics - dECON in its series Documentos de Trabajo (working papers) with number 0911.

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Length: 23 pages
Date of creation: Jun 2011
Date of revision:
Handle: RePEc:ude:wpaper:0911

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Keywords: Retail; fiscal redistribution; income inequality; taxes;

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References

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  1. Suits, Daniel B, 1977. "Measurement of Tax Progressivity," American Economic Review, American Economic Association, vol. 67(4), pages 747-52, September.
  2. Formby, John P & Seaks, Terry G & Smith, W James, 1981. "A Comparison of Two New Measures of Tax Progressivity [Measurement of Tax Progressivity: An International Comparison]. [Measurement of Tax Progressivity]," Economic Journal, Royal Economic Society, vol. 91(364), pages 1015-19, December.
  3. Kakwani, Nanok C, 1977. "Measurement of Tax Progressivity: An International Comparison," Economic Journal, Royal Economic Society, vol. 87(345), pages 71-80, March.
  4. François Bourguignon & Amadéo Spadaro, 2005. "Microsimulation as a tool for evaluating redistribution policies," PSE Working Papers halshs-00590863, HAL.
  5. Eduardo Engel & Alexander Galetovic & Claudio Raddatz, 1998. "Reforma tributaria y distribución del ingreso en Chile," Documentos de Trabajo 40, Centro de Economía Aplicada, Universidad de Chile.
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Cited by:
  1. Marisa Bucheli & Nora Lustig & Máximo Rossi & Florencia Amábile, 2014. "Social Spending, Taxes, and Income Redistribution in Uruguay," Public Finance Review, , vol. 42(3), pages 413-433, May.
  2. Amarante, Veronica & Vigorito, Andrea, 2011. "Uruguayâ..s Income Inequality and Political Regimes during 1981â..2010," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).

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