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CEQ Working Paper No 3: The Impact of Taxes and Social Spending on Inequality and Poverty in Argentina, Bolivia, Brazil, Mexico and Peru: A Synthesis of Results


Commitment to Equity: Diagnostic Questionnaire
Working Paper No. 3

A working document by:
Nora Lustig
Samuel Z. Stone Professor of Latin American Economics, Tulane University and Non-resident Senior Fellow at the Center for Global Development and Inter-American Dialogue
George Gray-Molina
United Nations Development Programme
Sean Higgins
Doctoral student of PhD in Economics, Tulane University
Miguel Jaramillo
GRADE
Wilson Jiménez
Instituto Alternativo
Veronica Paz
Instituto Alternativo
Claudiney Pereira
Tulane University
Carola Pessino
CGD and Universidad del CEMA
John Scott
CIDE and CONEVAL
Ernesto Yañez
Instituto Alternativo

Abstract
We apply a standard tax and benefit incidence analysis to estimate the impact on inequality and poverty of direct taxes, indirect taxes and subsidies, and social spending (cash and food transfers and in-kind transfers in education and health). The extent of inequality reduction induced by direct taxes and transfers is rather small (2 percentage points on average) especially when compared with that found in Western Europe (15 percentage points on average). What prevents Argentina, Bolivia and Brazil from achieving similar reductions in inequality is not the lack of revenues but the fact that they spend less on cash transfers – especially transfers that are progressive in absolute terms—as a share of GDP. Indirect taxes result in that net contributors to the fiscal system start at the fourth, third and even second decile on average, depending on the country. When in-kind transfers in education and health are added, however, the bottom six deciles are net recipients. The impact of transfers on inequality and poverty reduction could be higher if spending on direct cash transfers that are progressive in absolute terms is increased, leakages to the nonpoor are reduced and coverage of the extreme poor by direct transfer programs is expanded.

Access the working document here:
Updated August 2012
CEQ Working Paper No 3: The Impact of Taxes and Social Spending on Inequality and Poverty in Argentina, Bolivia, Brazil, Mexico and Peru: A Synthesis of Results

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Latin American Graduate Oraganization (LAGO) 2018 Conference: Call for Proposals

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The Latin American Graduate Organization will be hosting its 2018 Latin American Studies Conference titled Thinking of the Future: Expanding the possible in the Americas (Pensando en el porvenir: Expandiendo lo posible en las Américas) February 23 – 25, 2018, at Tulane University, in New Orleans, Louisiana.

This year, the conference topic is meant to challenge academics and activists to move beyond critiques and recommendations of how to address modern days issues, and instead articulate a vision of and for the future.

The LAGO Conference welcomes all disciplines and all approaches, as long as the project attempts to grapple with the idea of building something better. This is a Latin American Studies Conference, but creative writers, journalists, artists, performers, organizers, lawyers and healthcare providers as well as graduate students and other academics are welcome. Proposals are accepted in Spanish, Portuguese, Haitian Creole, and English.

Deadlines: Abstracts of papers and projects are due November 25, 2017. Abstracts of papers or project descriptions must not exceed 300 words.

Please contact lago.tulane@gmail.com with questions. For more information, visit the official conference website.