| Abstract: | The evidence presented in this paper suggests that moderate, once-only pro-poor fiscal reallocations may have significant effects on both poverty incidence and inequality. The paper simulates the effects of hypothetical reallocations of the total tax burden away from taxes falling heavily on the poor (indirect taxes in general) and towards those falling predominantly on the rich (direct taxes, especially the personal income tax). It performs a similar exercise for hypothetical reallocations of expenditures and for changes in the overall size of taxes and expenditures, deriving the effects that these reallocations have on both poverty incidence (headcount measure) and inequality (Gini coefficient). |
