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Analyzing the Potential Impact of Indirect Tax Reforms on Poverty with Limited Data: Niger

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  • Sehili, Saloua
  • Wodon, Quentin

Abstract

Many countries in sub-Saharan Africa are confronted with the need to raise tax revenues in order to be able to provide a range of services to their populations. Yet taxes and other government revenues as a proportion of GDP are lowest in the poorest countries that need to expand their services the most. In addition, because of high level of informality in their economies, very-low-income countries obtain a large share of tax revenues through consumption taxes which tend to be more regressive than taxes on incomes levied in richer countries. Such a situation poses a difficult dilemma. Very-low-income countries are trying to increase their tax revenues to provide better services to their populations in need, but at the same time a substantial part of the burden of increased taxation may fall on the poor. Furthermore, because the poor in very-low-income countries are often extremely poor, even small increases in the price of the goods they consume related to an increase in tax rates on those goods may have important negative implications for the households’ ability to meet their basic needs. This implies that government must be especially careful when raising taxes in order to provide social services. The type of household survey-based analysis that can be conducted to inform governments in this area is illustrated in this paper with a case study on Niger.

Suggested Citation

  • Sehili, Saloua & Wodon, Quentin, 2008. "Analyzing the Potential Impact of Indirect Tax Reforms on Poverty with Limited Data: Niger," MPRA Paper 11074, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:11074
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    File URL: https://mpra.ub.uni-muenchen.de/11074/1/MPRA_paper_11074.pdf
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    References listed on IDEAS

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    1. Yitzhaki, Shlomo & Lewis, Jeffrey D, 1996. "Guidelines on Searching for a Dalton-Improving Tax Reform: An Illustration with Data from Indonesia," World Bank Economic Review, World Bank Group, vol. 10(3), pages 541-562, September.
    2. Coady, David P. & Grosh, Margaret & Hoddinott, John, 2002. "Targeting outcomes redux," FCND discussion papers 144, International Food Policy Research Institute (IFPRI).
    3. Lanjouw, Peter & Ravallion, Martin, 1999. "Benefit Incidence, Public Spending Reforms, and the Timing of Program Capture," World Bank Economic Review, World Bank Group, vol. 13(2), pages 257-273, May.
    4. Kathy Hayes & Peter Lambert & Daniel Slottje, "undated". "Evaluating Impact Effects of Tax Reforms," Discussion Papers 93/10, Department of Economics, University of York.
    5. Makdissi, Paul & Wodon, Quentin, 2002. "Consumption dominance curves: testing for the impact of indirect tax reforms on poverty," Economics Letters, Elsevier, vol. 75(2), pages 227-235, April.
    6. Ajwad, Mohamed Ihsan & Wodon, Quentin, 2007. "Do local Governments maximize access rates to public services across areas?: A test based on marginal benefit incidence analysis," The Quarterly Review of Economics and Finance, Elsevier, vol. 47(2), pages 242-260, May.
    7. 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.
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    Cited by:

    1. Jaime Acosta-Margain, 2011. "Tax-benefit incidence of value added tax on food and medicine to fund progressive social expenditure," Working Papers 194, ECINEQ, Society for the Study of Economic Inequality.

    More about this item

    Keywords

    Indirect taxes; social services; poverty; Niger;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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