Taxation and the urban poor in developing countries

Empirical evidence indicated that the poor, and particularly the urban poor, in developing countries pay a substantial part of their income as taxes. This paper examines critically the procedures employed in measuring the incidence of taxation in LDCs, with a particular emphasis on evidence concerning the tax burdens of the urban poor, and presents a summary of some empirical work in this area. It then provides a review and analysis of fiscal policies which at the margin can assist in improving the position of the urban poor by reducing the regressivity, and increasing the progressivity, of existing or potential revenue instruments, including public service prices, and by improving the fiscal position of the poor through expenditure programmes.