Abstract
We empirically assess the impact of tax reforms on income distribution in developing countries. We apply the local projection method to a new “narrative” database of tax reforms covering 45 emerging and low-income countries. Reforms of the personal income or strengthening of the revenue administration lower the disposable Gini and increase the bottom income share. This result does not hold for sub-Saharan Africa. To reduce inequality at a faster pace, it would be more effective to implement tax reforms when the economy is growing relatively slowly. Finally, the smaller the government spending envelope and the smaller the tax system, the larger the beneficial impact of tax reforms on inequality.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.