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Fiscal Incidence and Poverty Reduction: Evidence from Tunisia

Author

Listed:
  • Abebe Shimeles

    (African Development Bank)

  • Ahmed Moummi

    (African Development Bank)

  • Nizar Jouini

    (African Development Bank)

  • Nora Lustig

    (Stone Center for Latin American Studies, Department of Economics, Tulane University. Commitment to Equity Institute (CEQI).)

Abstract

Using the National Survey of Consumption and Household Living Standards for 2010,this paper estimates the incidence of the government’s taxation and spending in Tunisia. Taking into account the impact of direct taxes and transfers, indirect taxes and subsidies and the monetized value of in- kind transfers in education and health services, the Gini coefficient falls from 0.43 (before taxes and transfers) to 0.35 (after taxes and transfers), mainly due to taxes (30% of the decrease) and in-kind services (30% of the decrease). Most of the equalization is produced by personal income taxes and contributions to social security. Direct taxes are progressive and the VAT is regressive. Cash transfers contribute little to redistribution. While direct transfers are strongly progressive and equalizing, their share in the budget remains very limited (only 0.2%). Subsidies are equalizing, though much less so than cash transfers as benefits to the non-poor are higher than their population share (i.e., subsidies are progressive but only in relative terms). Primary and secondary education are strongly redistributive and equalizing while tertiary education is progressive only in relative terms since the poor still have limited access. Health spending is progressive.

Suggested Citation

  • Abebe Shimeles & Ahmed Moummi & Nizar Jouini & Nora Lustig, 2016. "Fiscal Incidence and Poverty Reduction: Evidence from Tunisia," Commitment to Equity (CEQ) Working Paper Series 38, Tulane University, Department of Economics.
    • Handle: RePEc:tul:ceqwps:38
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    File URL: http://repec.tulane.edu/RePEc/ceq/ceq38.pdf
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    References listed on IDEAS

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    1. Inchauste, Gabriela & Lustig, Nora & Maboshe, Mashekwa & Purfield, Catriona & Woolard, Ingrid, 2015. "The distributional impact of fiscal policy in South Africa," Policy Research Working Paper Series 7194, The World Bank.
    2. Gabriela Inchauste & Nora Lustig & Mashekwa Maboshe & Catriona Purfield & Ingrid Woolard, 2015. "Distributional Impact of Fiscal Policy in South Africa," Commitment to Equity (CEQ) Working Paper Series 1329, Tulane University, Department of Economics.
    3. Sean Higgins & Claudiney Pereira, 2014. "The Effects of Brazil’s Taxation and Social Spending on the Distribution of Household Income," Public Finance Review, , vol. 42(3), pages 346-367, May.
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    Cited by:

    1. Jon Jellema & Nora Lustig & Astrid Haas & Sebastian Wolf, 2016. "The Impact of Taxes, Transfers, and Subsidies on Inequality and Poverty in Uganda," Commitment to Equity (CEQ) Working Paper Series 53, Tulane University, Department of Economics.
    2. Nora Lustig, 2016. "Fiscal policy, inequality and the poor in the developing world," Working Papers 418, ECINEQ, Society for the Study of Economic Inequality.
    3. Nora Lustig, 2017. "Fiscal Policy, Income Redistribution and Poverty Reduction in Low and Middle Income Countries," Commitment to Equity (CEQ) Working Paper Series 54, Tulane University, Department of Economics.
    4. Nora Lustig, 2016. "The Sustainable Development Goals, Domestic Resource Mobilization and the Poor," Commitment to Equity (CEQ) Working Paper Series 61, Tulane University, Department of Economics.
    5. Higgins, Sean & Lustig, Nora, 2016. "Can a poverty-reducing and progressive tax and transfer system hurt the poor?," Journal of Development Economics, Elsevier, vol. 122(C), pages 63-75.
    6. Nora Lustig, 2016. "Fiscal Policy, Inequality and the Poor in the Developing World," Working Papers 1612, Tulane University, Department of Economics, revised Aug 2017.
    7. Nora Lustig, 2017. "Fiscal Policy, Income Redistribution and Poverty Reduction in Low and Middle Income Countries," Commitment to Equity (CEQ) Working Paper Series 1354, Tulane University, Department of Economics.

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    More about this item

    Keywords

    fiscal policy; fiscal incidence; social spending; inequality; poverty; taxes; Tunisia;
    All these keywords.

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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