The Distributional Impact of Taxes and Social Spending in Croatia

Comboni, Maria Gabriela Inchauste; Rubil, Ivica

doi:10.1596/1813-9450-8203

Cited by 11 publications

(22 citation statements)

References 3 publications

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“…35 For Poland, see Goraus and Inchauste (2016). For Croatia, see Inchauste and Rubil (2017 The poverty effect shows a mixed picture across countries. In countries like Chile, Mexico, Russia and Colombia the fiscal system results in a reduction in income poverty.…”

Section: Results: Distributional Impact Of the Net Fiscal System Imentioning

confidence: 99%

“…We will see later that in-kind transfers, namely public spending in health and education, have an important and positive redistributive effect in Albania.4 In Croatia, the analysis captures 83 percent of tax revenue and 65 percent of government spending(Inchauste and Rubil, 2017). In Poland, it captures 62 percent of tax revenue and 51 percent of government spending.…”

mentioning

confidence: 99%

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The Distributional Impact of the Fiscal System in Albania

Dávalos¹,

Robayo-Abril²,

Shehaj³

et al. 2018

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In a context of fiscal consolidation and the need to deliver on a structural reform agenda, policy makers in Albania must not lose sight of the critical redistributive role of the fiscal system, particularly its impact on poverty and inequality. Using household survey data, this paper estimates the redistributive effect of fiscal policy on income distribution and poverty in Albania, assessing the individual and combined effects of taxes and public social spending. The findings show that the fiscal system in Albania plays a positive role in reducing inequality. Yet, it has a moderate poverty-increasing effect. Specifically, taxes and social protection contributions have a poverty-increasing effect; indirect taxes, particularly the value-added tax, account for the largest increases in poverty. This effect is somewhat compensated by direct government transfers, which are pro-poor and equalizing, but are not large enough to offset fully the negative impact on the taxation side. Ongoing reforms aimed at improving the efficiency and targeting of social assistance can contribute to enhancing the pro-poor impact of the fiscal system.

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Section: Results: Distributional Impact Of the Net Fiscal System Imentioning

confidence: 99%

mentioning

confidence: 99%

The Distributional Impact of the Fiscal System in Albania

Dávalos¹,

Robayo-Abril²,

Shehaj³

et al. 2018

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“…Growing literature for developing countries on the effect of tax relief allowances and deductions on equity and income redistribution argues that lump sum tax relief deduction tends to mainly favour rich taxpayers, and hence worsen equity and redistribution of income. Although tax relief and deductions are introduced and driven by equity objectives, to help improve the welfare of individuals in the low-income class, extant empirical studies (Avram 2017;Cano 2017;Inchauste and Rubil 2017) reveal that the relief deductions mainly benefit the individual taxpayers at the top of the income class, relative to the taxpayers in the low-income category. The current study examined this issue, for the first time in the context of Nigeria, by looking at the counterfactual 2 simulated effect of the recently introduced lump sum relief allowance (₦200,000 plus 28 per cent of income) on the equity and redistribution of the income tax policy tool.…”

Section: Introductionmentioning

confidence: 99%

“…Sarah and Kasirye (2015) also uncovered that the Uganda 2012/2013 income tax reform enhanced the progressivity of Pay As You Earn (PAYE) in the country. Inchauste and Rubil (2017) report that the recent changes in income taxes (e.g. increased threshold for the top rate and increased personal allowance) in Croatia made the policy instrument more progressive in relative terms in 2017 compared to 2014, as poorer households paid lower taxes as a share of their incomes.…”

Section: Introductionmentioning

confidence: 99%

Assessing the Equity and Redistributive Effects of Taxation Reforms in Nigeria

Edeh¹

2021

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Achieving the Sustainable Development Goals (SDGs) of poverty and inequality reduction through redistribution have indeed become critical concerns in many low- and middle-income countries, including Nigeria. Although redistribution results from the effect of tax revenue collections, micro household-level empirical analyses of the distributional effect of personal income tax (PIT) and value added tax (VAT) reforms in Nigeria have been scarcely carried out. This study for the first time quantitatively assessed both the equity and redistributive effects of PIT and VAT across different reform scenarios in Nigeria. Data used in this study was mainly drawn from the most recent large scale nationally representative Nigeria Living Standard Survey, conducted in 2018/2019. The Kakwani Index was used to calculate and compare the progressivity of PIT and VAT reforms. A simple static micro-simulation model was employed in assessing the redistributive effect of PIT and VAT reforms in the country. After informality has been accounted for, the PIT was found to be progressive in the pre- 2011 tax scheme, but turned regressive in the post-2011 tax scheme. It was also discovered that the newly introduced lump sum relief allowance in the post-2011 PIT scheme accrues more to the high-income than to the low-income taxpayers – confirming the regressivity of the current PIT scheme. However, the study further shows (through counterfactual simulations) that excluding the relatively high-income taxpayers from sharing in the variable part of the lump sum relief allowance makes PIT progressive in the post-2011 scheme. The VAT was uncovered to be regressive both in the pre-2020 scheme, and in the current VAT reform scheme. Further, after putting informality into consideration, the PIT was found to marginally reduce inequality but increase poverty in the pre-2011 scheme. The post-2011 PIT scheme reduced inequality and increased poverty, but by a smaller proportion – confirming a limited redistribution mainly resulting from the concentration of the lump sum relief allowance at the top of the distribution. However, if the variable part of the lump sum relief allowance is provided for ‘only’ the low-income taxpayers below a predefined income threshold, the post-2011 PIT scheme becomes largely redistributive. VAT was uncovered to marginally increase inequality and poverty in the pre-2020 scheme. Though the current VAT scheme slightly increased inequality, it considerably increased poverty in the country. It is therefore suggested that a better tax reform, with well-regulated relief allowance and differentiated VAT rates, will help to enhance the equity and redistribution capacity of the Nigeria tax system.

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“…It has been available since 2016, and the tax-benefit rules for 2011 through 2015 were modelled in it, while the latest available rules are those pertaining to 2018 (Urban et al, 2017). Another recent model was developed by Inchauste and Rubil (2017) for the purpose of a detailed incidence analysis of taxes and social spending in Croatia in 2014. 1 The model uses the Income and Living Conditions Survey (ILCS) data, which is used in the present paper as well, 2 and the HBS data.…”

Section: Introductionmentioning

confidence: 99%

Making work pay in Croatia: An exante evaluation of two in-work benefits using miCROmod

Bezeredi¹,

Ledić²,

Rubil³

et al. 2018

IJM

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The aim of this paper is twofold. First, we introduce miCROmod, the most recent and comprehensive tax-benefit microsimulation model for Croatia. The focus of this paper is on its behavioural component, a structural labour supply model. Unlike in the standard discrete choice models, where labour supply follows from the agent's choice of work/leisure hours only, in our model, labour supply follows from the agent's choice from a set of jobs, which are characterised by work hours and a set of non-pecuniary job attributes that are unobserved by the researcher. In addition to the budget constraint, the agent faces constraints in the form of labour market opportunities. Second, we use the behavioural tax-benefit model to simulate the effects on the labour supply of couples and the income distribution of the introduction of in-work benefits-transfers conditional on working a certain number of hours. The following two benefits are considered: a family-based benefit imported from the UK, which is income-tested at the family level, and an individual-based benefit from Slovakia, which is income-tested at the individual level. According to the results, both are redistributive towards the needy. However, while the individual-based benefit increases the labour supply, the family-based benefit reduces it, contrary to its very purpose. An implication is that countries considering introducing an in-work benefit and that have most of their social transfers income-tested at the family level should be aware that family-level income-testing of in-work benefits might not improve work incentives, or might even harm them, especially if the benefits are generous.

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The Distributional Impact of Taxes and Social Spending in Croatia

Cited by 11 publications

References 3 publications

The Distributional Impact of the Fiscal System in Albania

The Distributional Impact of the Fiscal System in Albania

Assessing the Equity and Redistributive Effects of Taxation Reforms in Nigeria

Making work pay in Croatia: An exante evaluation of two in-work benefits using miCROmod

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