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The impact of taxes and social spending on inequality and poverty in El Salvador

Listed author(s):
  • Margarita Beneke

    ()

    (FUSADES, El Salvador)

  • Nora Lustig

    ()

    (Department of Economics, Tulane University)

  • Jose Andres Oliva

    ()

    (FUSADES, El Salvador)

Registered author(s):

    We conducted a fiscal impact study to estimate the effect of taxes, social spending, and subsidies on inequality and poverty in El Salvador, using the CEQ methodology. Taxes are progressive, but given their volume, their impact is limited. Direct transfers are concentrated on poor households, but their budget is small so their effect is limited; a significant portion of the subsidies goes to households in the upper income deciles, so although their budget is greater, their impact is low. The component that has the greatest effect on inequality is spending on education and health. Therefore, the impact of fiscal policy is limited and low when compared with other countries with a similar level of per capita income. There is room for improvement using current resources.

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    File URL: http://econ.tulane.edu/RePEc/pdf/tul1709.pdf
    File Function: First Version, August 2017
    Download Restriction: no

    Paper provided by Tulane University, Department of Economics in its series Working Papers with number 1709.

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    Date of creation: Aug 2017
    Handle: RePEc:tul:wpaper:1709
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    1. Vito Tanzi, 2013. "Tax reform in Latin America: a long term assessment," Commitment to Equity (CEQ) Working Paper Series 15, Tulane University, Department of Economics.
    2. Nora Lustig, 2013. "Commitment to Equity: Diagnostic Questionnaire," Commitment to Equity (CEQ) Working Paper Series 1302, Tulane University, Department of Economics.
    3. Lambert, Peter J, 1985. "On the Redistributive Effect of Taxes and Benefits," Scottish Journal of Political Economy, Scottish Economic Society, vol. 32(1), pages 39-54, February.
    4. Beckerman, W, 1979. "The Impact of Income Maintenance Payments on Poverty in Britain, 1975," Economic Journal, Royal Economic Society, vol. 89(354), pages 261-279, June.
    5. Vito Tanzi, 2013. "Tax reform in Latin America: a long term assessment," Commitment to Equity (CEQ) Working Paper Series 1315, Tulane University, Department of Economics.
    6. Nora Lustig, 2013. "Commitment to Equity: Diagnostic Questionnaire," Commitment to Equity (CEQ) Working Paper Series 02, Tulane University, Department of Economics.
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