Fiscal Redistribution to Combat Inequality and Poverty in Low and Middle Income Countries
CROP POVERTY BRIEF: By Nora Lustig (Tulane University, USA).
Based on the results of a study applying comparable fiscal incidence analysis to twenty-eight low and middle income countries, this Brief argues that:
Governments should design their tax and transfers system so that the poor do not end up as net payers.
Efficient regressive taxes when combined with well-targeted transfers can result in a net fiscal system that is equalizing.
To assess the impact of the fiscal system on people's standard of living, the effect of taxation and spending must be measured not only on inequality but also on poverty.