CIPR | Center For Inter-American Policy & Research

Tulane University

CEQ Working Paper No 13: The Impact of Taxes and Social Spending on Inequality and Poverty in Argentina, Bolivia, Brazil, Mexico, Peru and Uruguay: An Overview


The Impact of Taxes and Social Spending on Inequality and Poverty in Argentina, Bolivia, Brazil, Mexico, Peru and Uruguay: An Overview
Working Paper No. 13

A working document by:
Nora Lustig
Tulane University
Florencia Amábile
Universidad de la República in Uruguay
Marisa Bucheli
Universidad de la República in Uruguay
George Gray-Molina
United Nations Development Programme
Sean Higgins
Tulane University
Miguel Jaramillo
GRADE
Wilson Jiménez Pozo
Instituto Alternativo
Veronica Paz Arauco
Instituto Alternativo
Claudiney Pereira
Tulane University
Carola Pessino
CGD and Universidad del CEMA
Máximo Rossi
Universidad de la República in Uruguay
John Scott
CIDE and CONEVAL
Ernesto Yañez Aguilar
Instituto Alternativo

Abstract
How much redistribution and poverty reduction is being accomplished in Latin America through social spending, subsidies, and taxes? Standard fiscal incidence analyses applied to Argentina, Bolivia, Brazil, Mexico, Peru, and Uruguay using a comparable methodology yields the following results. Direct taxes and cash transfers reduce inequality and poverty by nontrivial amounts in Argentina, Brazil, and Uruguay but less so in Bolivia, Mexico, and Peru. While direct taxes are progressive, the redistributive impact is small because direct taxes as a share of GDP are generally low. Cash transfers are quite progressive in absolute terms, except in Bolivia where programs are not targeted to the poor. In Bolivia and Brazil, indirect taxes more than offset the poverty-reducing impact of cash transfers. When one includes the in-kind transfers in education and health, valued at government costs, they reduce inequality in all countries by considerably more than cash transfers, reflecting their relative size.

Access the working document here:
Updated August 2013
CEQ Working Paper No 13: The Impact of Taxes and Social Spending on Inequality and Poverty in Argentina, Bolivia, Brazil, Mexico, Peru and Uruguay: An Overview

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