Abstract
ABSTRACTUsing the Iranian Household Expenditure and Income Survey for 2011/12, we estimate the impact and effectiveness of various components of Iran’s fiscal system on reducing inequality and poverty. We utilize the marginal contribution analysis to determine the impact of each component, and we introduce newly developed indicators of effectiveness to calculate how well various taxes and transfers are operating to reduce inequality and poverty. We find that the fiscal system reduces the poverty-head-count-ratio by 10.5 percentage points and inequality by 0.0854 Gini points. Transfers are generally more effective in reducing inequality than taxes while taxes are especially effective in raising revenue without causing poverty to rise. Although transfers are not targeted toward the poor, they reduce poverty significantly. The main driver is the Targeted Subsidy Program (TSP), and we show through simulations that the poverty reducing impact of TSP could be enhanced if resources were more targeted to the bottom deciles.
Highlights
In December 2010, Iran’s government replaced its energy and bread subsidies with a lump-sum cash transfer known as the Targeted Subsidy Program (TSP) (Guillaume, Farzin, & Zytek, 2011).1 The removal of subsidies resulted in an increase of about 21% in prices
For example, that despite its relatively large effect on poverty and inequality, TSP is relatively less effective compared to some other components of the fiscal system in Iran
We first analyze each component of the fiscal system and evaluate its marginal contribution to reducing inequality and poverty, as well as its effectiveness in doing so. we focus on the ‘Targeted Subsidy Program,’ and evaluate how much it would contribute to the change in poverty and inequality and its effectiveness in different policy scenarios
Summary
In December 2010, Iran’s government replaced its energy and bread subsidies with a lump-sum cash transfer known as the Targeted Subsidy Program (TSP) (Guillaume, Farzin, & Zytek, 2011). The removal of (mainly, energy) subsidies resulted in an increase of about 21% in prices. In December 2010, Iran’s government replaced its energy and bread subsidies with a lump-sum cash transfer known as the Targeted Subsidy Program (TSP) (Guillaume, Farzin, & Zytek, 2011).. The removal of (mainly, energy) subsidies resulted in an increase of about 21% in prices. Had the reforms stopped there, the poor would have been hurt. To garner political support for the reform, the nonpoor had to be awarded a certain degree of protection A. From the rise in prices of previously subsidized goods. The rationale for a universal cash transfer rather than a targeted one (Guillaume et al, 2011; Mostafavi-Dehzooei & Salehi-Isfahani, 2017; Salehi-Isfahani, Stucki, & Deutschmann, 2015).
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: 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.
