CIPR | Center For Inter-American Policy & Research

Tulane University

Social Spending, Taxes and Income Redistribution in Uruguay

Working Document: Social Spending, Taxes and Income Redistribution in Uruguay
Marisa Bucheli, Nora Lustig, Maximo Rossi and Florencia Amábile
August 31, 2012

Abstract
How much redistribution does Uruguay accomplish through social spending and taxes? How progressive are revenue collection and social spending? A standard fiscal incidence analysis shows that Uruguay achieves a nontrivial reduction in inequality and poverty when all taxes and transfers are combined. In comparison with other five countries in Latin America, it ranks first (poverty reduction) and second (inequality reduction), and first in terms of poverty reduction effectiveness and third in terms of overall (including transfers in kind) inequality reduction effectiveness. Direct taxes are progressive and indirect taxes are regressive. Social spending on direct transfers, contributory pensions, education and health is quite progressive in absolute terms except for tertiary education, which is almost neutral in relative terms.

Social Spending, Taxes and Income Redistribution in Uruguay

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