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Case Study: Tax reform, income distribution and poverty in Brazil: an applied general equilibrium analysis

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  • Joaquim B de Souza Ferreira Filho

    () (Escola Superior de Agricultura “Luiz de Queiroz”-ESALQ, University of São Paulo-USP. Dept. Economics, Managment and Sociology. Av. Pádua Dias, 11. Piracicaba, SP, Brazil.)

  • Carliton V dos Santos

    () (Universidade Estadual do Oeste do Paraná UNIOESTE. Colegiado de Economia. R. Universitária, 2069; Jd. Universitário. CEP: 85819-110. Cascavel – PR, Brazil)

  • Sandra M do Prado Lima

    () (Universidade Estadual de Londrina – UEL. Universidade Estadual de Londrina. Departamento de Economia. Rodovia Celso Garcia Cid. Pr 445 Km 380. Campus Universitário. Cx. Postal 6001. CEP 86051-990. Londrina – PR, Brazil)

Abstract

This case study considers two frequently advocated approaches to reducing indirect taxation in Brazil: reduction in taxes on food; reduction in taxes on intermediate inputs to agriculture. To asses the effects of both on income distribution poverty levels, a bottom-up general equilibrium model of Brazil (TERM-BR) is linked to a microsimulation model. It is shown that one of the favoured policies is more poverty reducing, the other more income inequality reducing. Perhaps even more importantly, the analysis demonstrates that the two policies lead to very different outcomes in terms of inter-state transfers; a major political barrier to reform in a federal state.

Suggested Citation

  • Joaquim B de Souza Ferreira Filho & Carliton V dos Santos & Sandra M do Prado Lima, 2010. "Case Study: Tax reform, income distribution and poverty in Brazil: an applied general equilibrium analysis," International Journal of Microsimulation, International Microsimulation Association, vol. 3(1), pages 114-117.
  • Handle: RePEc:ijm:journl:v:3:y:2010:i:1:p:114-117
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    File URL: http://ima.natsem.canberra.edu.au/IJM/V3_1/IJM_33.pdf
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    References listed on IDEAS

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    1. Ferreira Filho, Joaquim Bento de Souza & Horridge, Mark Jonathan, 2006. "Economic Integration, Poverty and Regional Inequality in Brazil," Revista Brasileira de Economia - RBE, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil), vol. 60(4), February.
    2. Joaquim Bento de Souza Ferreira Filho & Carliton Vieira dos Santos & Sandra Maria do Prado Lima, 2007. "Tax Reform, Income Distribution and Poverty in Brazil: an Applied General Equilibrium Analysis," Working Papers MPIA 2007-26, PEP-MPIA.
    3. Sergei Soares & Fernando Gaiger Silveira & Claudio Hamilton dos Santos & Fábio Monteiro Vaz & André Luis Souza, 2009. "O Potencial Distributivo do Imposto de Rendapessoa Física (IRPF)," Discussion Papers 1433, Instituto de Pesquisa Econômica Aplicada - IPEA.
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    Keywords

    CGE; inidrect tax; food; agriculture; regional; Brazil;

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