Assessing the Impact of the 2007 Tax Reform on Povert and Inequality in Uruguay
In the context of a sharp rise in the incidence of poverty and increasing inequality since the end of the last decade, a major tax reform was put into place in mid-2007 with the explicit goals of promoting both greater efficiency and equity in the Uruguayan tax system. Overall, the reform substantially increased direct taxes on personal income by increasing marginal rates, lowered indirect taxes and direct taxes on firms, harmonized employer contributions to social security across sectors and eliminated some highly distortionary taxes. The joint effects of these changes on the macroeconomic equilibrium, labour markets, and poverty and inequality are assessed using a top-down static CGE, a microsimulation approach. It is shown that full implementation of the tax reform has substantial general equilibrium effects which generally strengthen the reduction of poverty incidences, poverty gaps and the severity of poverty exclusively due to the introduction of the personal income tax (without behavioural responses). Regarding poverty, the general equilibrium effects are significantly greater than the direct effects. Overall, we estimate a one-point reduction of the Gini index due to the reform.
|Date of creation:||2011|
|Contact details of provider:|| Postal: Pavillon J.A. De Seve, Québec, Québec, G1V 0A6|
Phone: 1-418-656-2131, ext. 2697
Web page: http://www.pep-net.org
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Blanchflower, David G & Oswald, Andrew J, 1990.
" The Wage Curve,"
Scandinavian Journal of Economics,
Wiley Blackwell, vol. 92(2), pages 215-35.
- Marisa Bucheli & Cecilia González, 2007.
"An estimation of the wage curve for Uruguay,"
Documentos de Trabajo (working papers)
1107, Department of Economics - dECON.
- Almeida dos Reis, Jose Guilherme & Paes de Barros, Ricardo, 1991. "Wage inequality and the distribution of education : A study of the evolution of regional differences in inequality in metropolitan Brazil," Journal of Development Economics, Elsevier, vol. 36(1), pages 117-143, July.
- Manuel Flores & Adriana Cassoni, 2010. "Armington Elasticities: Estimates for Uruguayan Manufacturing Sectors," Documentos de Trabajo (working papers) 0710, Department of Economics - dECON.
- Maria Ines Terra & Marisa Bucheli & Silvia Laens & Carmen Estrades, 2006.
"The Effects of Increasing Openness and Integration to the MERCOSUR on the Uruguayan Labour Market: a CGE Modelling Analysis,"
Working Papers MPIA
- Maria Inés Terra & Marisa Bucheli & Silvia Laens & Carmen Estrades, 2005. "The effects of increasing openness and integration to the MERCOSUR on the Uruguayan labour market. A CGE modeling analysis," Documentos de Trabajo (working papers) 1205, Department of Economics - dECON.
When requesting a correction, please mention this item's handle: RePEc:lvl:pmmacr:2011-14. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Manuel Paradis)
If references are entirely missing, you can add them using this form.