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An application of the CEQ Effectiveness indicators: The case of Iran


  • Ali Enami

    () (Department of Economics, Tulane University)


This chapter provides an application of the new CEQ effectiveness indicators for the case of Iran. The Impact and Spending Effectiveness indicators are used to assess the performance of the taxes and transfers in reducing inequality while Fiscal Impoverishment and Gains Effectiveness indicator is utilized to measure the performance of the components of the Iran's fiscal system with regard to the reduction in poverty (or not exacerbating it in the case of taxes). I find that in the case of Iran, transfers are relatively more effective in reducing inequality than taxes. For example, direct transfers together realize about 40% of their potential to reduce inequality while direct taxes together only realize about 20% of their potential. Direct and indirect taxes are especially effective in raising revenue without causing poverty to rise, a desirable property of fiscal systems. While transfers are not targeted toward the poor, they reduce poverty significantly. The main driver is the Targeted Subsidy Program (TSP), a universal cash transfer program implemented in 2010 to compensate individuals for the elimination of energy subsidies. In spite of its large poverty reducing impact, the effectiveness of TSP is rather low because of its universality.

Suggested Citation

  • Ali Enami, 2017. "An application of the CEQ Effectiveness indicators: The case of Iran," Working Papers 1712, Tulane University, Department of Economics.
  • Handle: RePEc:tul:wpaper:1712

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    References listed on IDEAS

    1. Ali Enami & Nora Lustig & Alireza Taqdiri, 2016. "Fiscal Policy, Inequality and Poverty in Iran: Assessing the Impact and Effectiveness of Taxes and Transfer," Commitment to Equity (CEQ) Working Paper Series 48, Tulane University, Department of Economics, revised Jun 2017.
    2. Ali Enami, 2017. "Measuring the Effectiveness of Taxes and Transfers in Fighting Inequality and Poverty," Commitment to Equity (CEQ) Working Paper Series 64, Tulane University, Department of Economics.
    3. Fellman, Johan & Jantti, Markus & Lambert, Peter J, 1999. " Optimal Tax-Transfer Systems and Redistributive Policy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 101(1), pages 115-126, March.
    4. Ali Enami & Nora Lustig & Rodrigo Aranda, 2016. "Analytic Foundations: Measuring the Redistributive Impact of Taxes and Transfers," Commitment to Equity (CEQ) Working Paper Series 25, Tulane University, Department of Economics.
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    1. Ali Enami, 2017. "Measuring the Effectiveness of Taxes and Transfers in Fighting Inequality and Poverty," Commitment to Equity (CEQ) Working Paper Series 64, Tulane University, Department of Economics.

    More about this item


    Inequality; poverty; fiscal incidence; marginal contribution; effectiveness indicator; Iran;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • 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

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