IDEAS home Printed from https://ideas.repec.org/p/lvl/pmmacr/2006-16.html
   My bibliography  Save this paper

The Distributive Impact of Fiscal Policy in Cameroon: Tax and Benefit Incidence

Author

Listed:
  • Tabi Atemnkeng Johannes
  • Tafah Akwi
  • Peter Etoh Anzah

Abstract

Most 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.

Suggested Citation

  • Tabi Atemnkeng Johannes & Tafah Akwi & Peter Etoh Anzah, 2006. "The Distributive Impact of Fiscal Policy in Cameroon: Tax and Benefit Incidence," Working Papers PMMA 2006-16, PEP-PMMA.
    • Handle: RePEc:lvl:pmmacr:2006-16
    as

    Download full text from publisher

    File URL: https://portal.pep-net.org/documents/download/id/13554
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Atkinson, Anthony B., 2000. "Increased Income Inequality in OECD Countries and the Redistributive Impact of the Government Budget," WIDER Working Papers 295534, United Nations University, World Institute for Development Economic Research (UNU-WIDER).
    2. van de Ven, Justin & Creedy, John & Lambert, Peter J, 2001. "Close Equals and Calculation of the Vertical, Horizontal and Reranking Effects of Taxation," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(3), pages 381-394, July.
    3. Mr. Ke-young Chu & Mr. Hamid R Davoodi & Mr. Sanjeev Gupta, 2000. "Income Distribution and Tax and Government Social Spending Policies in Developing Countries," IMF Working Papers 2000/062, International Monetary Fund.
    4. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-766, May.
    5. Mr. John J Matovu & Duanjie Chen & Ritva Reinikka-Soininen, 2001. "A Quest for Revenue and Tax Incidence in Uganda," IMF Working Papers 2001/024, International Monetary Fund.
    6. Aaron, Henry & McGuire, Martin, 1970. "Public Goods and Income Distribution," Econometrica, Econometric Society, vol. 38(6), pages 907-920, November.
    7. Chu, Ke-Young & Davoodi, Hamid & Gupta, Sanjeev, 2000. "Income Distribution and Tax, and Government Social Spending Policies in Developing Countries," WIDER Working Papers 295547, United Nations University, World Institute for Development Economic Research (UNU-WIDER).
    8. Yitzhaki, Shlomo & Slemrod, Joel, 1991. "Welfare Dominance: An Application to Commodity Taxation," American Economic Review, American Economic Association, vol. 81(3), pages 480-496, June.
    9. Gertler, Paul & Glewwe, Paul, 1990. "The willingness to pay for education in developing countries : Evidence from rural Peru," Journal of Public Economics, Elsevier, vol. 42(3), pages 251-275, August.
    10. Justin Van De Ven & John Creedy & Peter J. Lambert, 2001. "Close Equals and Calculation of the Vertical, Horizontal and Reranking Effects of Taxation," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(3), pages 381-394, July.
    11. Ke-Young Chu & Hamid Davoodi & Sanjeev Gupta, 2000. "Income Distribution and Tax, and Government Social Spending Policies in Developing Countries," WIDER Working Paper Series wp-2000-214, World Institute for Development Economic Research (UNU-WIDER).
    12. Younger, Stephen D, et al, 1999. "Tax Incidence in Madagascar: An Analysis Using Household Data," The World Bank Economic Review, World Bank, vol. 13(2), pages 303-331, May.
    13. David E. Sahn & Stephen D. Younger, 2000. "Expenditure incidence in Africa: microeconomic evidence," Fiscal Studies, Institute for Fiscal Studies, vol. 21(3), pages 329-347, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ivica Urban, 2009. "Kakwani decomposition of redistributive effect: Origins, critics and upgrades," Working Papers 148, ECINEQ, Society for the Study of Economic Inequality.
    2. Daniel Abraham Mengistu, 2014. "The Impact of Fiscal Policy on Poverty in Ethiopia: a Computable General Equilibrium Microsimulation Analysis," Ethiopian Journal of Economics, Ethiopian Economics Association, vol. 22(1), November.
    3. Essama-Nssah, B., 2008. "Assessing the redistributive effect of fiscal policy," Policy Research Working Paper Series 4592, The World Bank.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jorge Martinez-Vazquez, 2001. "The Impact of Budgets on the Poor: Tax and Benefit," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0110, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    2. Iris Claus & Jorge Martinez-Vazquez & VIoleta Vulovic, 2012. "Government Fiscal Policies and Redistribution in Asian Countries," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1213, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    3. Jorge Martinez-Vazquez, 2007. "Budget Policy and Income Distribution," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0707, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    4. Hamid R. Davoodi & Erwin R Tiongson & Sawitree Sachjapinan Asawanuchit, 2010. "Benefit Incidence of Public Education and Health Spending Worldwide: Evidence From A New Database," Poverty & Public Policy, John Wiley & Sons, vol. 2(2), pages 5-52, May.
    5. Cont, Walter & Porto, Alberto, 2014. "Personal and regional redistribution through public finance in a federal setting," The Quarterly Review of Economics and Finance, Elsevier, vol. 54(4), pages 563-578.
    6. Andy McKay, 2002. "Assessing the Impact of Fiscal Policy on Poverty," WIDER Working Paper Series DP2002-43, World Institute for Development Economic Research (UNU-WIDER).
    7. Mr. Erwin H Tiongson & Mr. Hamid R Davoodi & Sawitree S. Asawanuchit, 2003. "How Useful Are Benefit Incidence Analyses of Public Education and Health Spending," IMF Working Papers 2003/227, International Monetary Fund.
    8. Giovanni Andrea Cornia, 2005. "Policy Reform and Income Distribution," Working Papers 3, United Nations, Department of Economics and Social Affairs.
    9. Ramanjini & Karnam Gayithri, 2019. "Who benefits from higher education expenditure? Evidence from recent household survey of India," Working Papers 454, Institute for Social and Economic Change, Bangalore.
    10. Martin Rama & Tara Béteille & Yue Li & Pradeep K. Mitra & John Lincoln Newman, 2015. "Addressing Inequality in South Asia," World Bank Publications - Books, The World Bank Group, number 20395, December.
    11. Herwig Immervoll & Horacio Levy & José Ricardo Nogueira & Cathal O´Donoghue & Rozane Bezerra de Siqueira, 2005. "The Impact of Brazil´s Tax-Benefit System on Inequality and Poverty," Ibero America Institute for Econ. Research (IAI) Discussion Papers 117, Ibero-America Institute for Economic Research.
    12. Marina Dodlova & Anna Gioblas, 2017. "Regime type, inequality, and redistributive transfers in developing countries," WIDER Working Paper Series wp-2017-30, World Institute for Development Economic Research (UNU-WIDER).
    13. Kalle Hirvonen & Giulia Mascagni & Keetie Roelen, 2018. "Linking taxation and social protection: Evidence on redistribution and poverty reduction in Ethiopia," International Social Security Review, John Wiley & Sons, vol. 71(1), pages 3-24, January.
    14. Palić Irena & Hodžić Sabina & Dumičić Ksenija, 2019. "Personal Income Taxation Determinants in Federation of Bosnia and Herzegovina," Business Systems Research, Sciendo, vol. 10(1), pages 153-163, April.
    15. Sonali Jain-Chandra & Tidiane Kinda & Kalpana Kochhar & Shi Piao & Johanna Schauer, 2019. "Sharing the Growth Dividend: Analysis of Inequality in Asia," Journal of Banking and Financial Economics, University of Warsaw, Faculty of Management, vol. 2(12), pages 5-28, September.
    16. Conrad Scheibe, 2016. "Fiscal Consolidations and Their Effects on Income Inequality," UCL SSEES Economics and Business working paper series 2016-4, UCL School of Slavonic and East European Studies (SSEES).
    17. James Scott, 2012. "Squeezing the state: tariff revenue, state capacity and the WTO’s Doha Round," Global Development Institute Working Paper Series 16912, GDI, The University of Manchester.
    18. Rodrigo Cubero & Ivanna Vladkova Hollar, 2010. "Equity and Fiscal Policy: The Income Distribution Effects of Taxation and Social Spending in Central America," IMF Working Papers 2010/112, International Monetary Fund.
    19. Hillman, Arye L., 2002. "The World Bank and the persistence of poverty in poor countries," European Journal of Political Economy, Elsevier, vol. 18(4), pages 783-795, November.
    20. Wolf, Rayan & Mohamed, Abdoulaye Aboubacari & Gomes, Fabrício Sepulveda & Gurgel, Angelo Costa & Teixeira, Erly c., 2021. "Impacts of a Tax Elimination on Consumption of Food and Agricultural Products in Brazil," 2021 Conference, August 17-31, 2021, Virtual 314958, International Association of Agricultural Economists.

    More about this item

    Keywords

    Fiscal policy; taxes; public expenditures; incidence; inequality; poverty; Cameroon;
    All these keywords.

    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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:lvl:pmmacr:2006-16. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Manuel Paradis (email available below). General contact details of provider: https://edirc.repec.org/data/cdvlvca.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.