Fiscal reforms and income inequalities in Senegal and Burkina Faso: a comparative study

Abstract

There have been income and welfare redistribution in Burkina and Senegal produced by fiscal reforms undertaken within the context of the West African Economic and Monetary Union where a unique VAT tax and common tariffs harmonization were adopted. The measure of redistributive effects and the costs of the horizontal iniquity generated by the new taxations shows that, although the reform is deemed positive for both countries, Burkina has more benefited from it. This is mainly explained by the relatively important place of fiscal evasion, by selfconsumption and the informal sector, and by the fact that most of the goods consumed by the poor households are not liable of taxation. The performances of tax systems have been improved, with an appreciable growth of the equality in the two countries, particularly for Burkina. The excess of fiscal revenues is more important after the reform, either for Senegal as for the Burkina.