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JT03333267Complete document available on OLIS in its original format This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. ECO/WKP(2013) The equity implications of fiscal consolidationIn several OECD countries, ongoing fiscal consolidation might have a negative impact on the static income distribution. However, this conclusion should be treated only as an approximate first step in the analysis. A full assessment of distributional effects of consolidation packages would need to consider dynamic measures, such as life-time income distribution and the equality of opportunity, along with behavioural responses and interactions with other policies. In any case, there is scope to balance current consolidation efforts in favour of more equity with only limited adverse impact on potential growth. In particular, relatively little weight has been given to reducing tax expenditures and raising taxes on immovable property. A number of consolidation instruments are consistent with equity goals while doing little or no harm to potential growth: increases in the effective retirement age, raising efficiency in the education and health care systems, cutting certain tax expenditures, hiking taxes on immovable property and broadly-based consumption taxes. Increases in capital income taxes would also be equitable but need to be well designed to avoid being distortive. Calculations based on simplifying assumptions indicate that increasing household direct taxes would reduce income inequality, while cutting transfers by the same amount would have a larger and opposite effect on inequality. However, raising progressive labour income taxes could have adverse effects on long-run growth. Cuts in government wages and employment can yield fast consolidation gains but need to be accompanied by increases in efficiency of service delivery to avoid that reductions in public services mainly hit the poor. Cuts in unemployment-related and disability benefits will likely hit poorer people in the first place but may have less adverse effects on inequality in the long run once employment increases in response to a better incentive structure. JEL classification codes: H2; H23 ; H3 ; H53 ; I3 ; I38Keywords: Fiscal consolidation; income inequality; taxes; transfers; welfare systems; redistribution ********* Assainissement budgétaire et l'équitéDans plusieurs pays de l'OCDE, l'assainissement actuel des finances publiques aurait un impact negatif sur la distribution statique des revenus. Cette conclusion doite être pourtant considérée uniquement comme une première étape approximative de l'analyse. Une évaluation complète des effets de distribution de consolidation fiscale nécessiterait de prendre en compte des mesures dynamiques, comme la distribution du revenu tout au long de la vie et l'égalité des chances ainsi que les réactions comportementales et les interactions avec d'autres pol...

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