Social Spending, Taxes, and Income Redistribution in Uruguay

Abstract

How much redistribution does Uruguay accomplish through social spending and taxes? How progressive are revenue collection and social spending? What could be done to further increase redistribution and improve redistributional effectiveness? A standard fiscal incidence analysis shows that Uruguay achieves a nontrivial reduction in inequality and poverty when all taxes and transfers are combined. Direct taxes are progressive and indirect taxes are practically neutral. Social spending on direct transfers, contributory pensions, education, and health is quite progressive in absolute terms except for tertiary education, which is almost neutral in relative terms. Specific suggestions for improving the effectiveness are suggested.

Fuel subsidies and income redistribution in Ecuador

“…Another CGE modeling study by Yusuf and Resosudarmo (2008) look at mitigating the distribution of reducing fuel subsidies and suggest that the distribution of fuel subsidies could be more progressive if urban and rural cash transfers are differentiated. For Latin America, recent studies, like Lustig (2017) and Bucheli et. al (2013), have used simulation approaches where information about the quantity of different types of fuels consumed in household survey data has been used to analyse the redistributive impact of fuel subsidies, together with that of other policy instruments.…”

Fiscal policy, inequality, and the poor in the developing world

“…As for the impact of specific instruments on inequality, direct taxes are equalizing except in Colombia, Ghana and Tanzania, direct transfers are always equalizing, indirect taxes are equalizing (which may come 1 Argentina (Rossignolo, 2018), Armenia (Younger and Khachatryan, 2016), Bolivia (Paz-Arauco et al, 2014a), Brazil (Higgins and Pereira, 2014), Chile (Martinez-Aguilar et al, 2018), Colombia (Lustig and Melendez, 2016), Costa Rica (Sauma and Trejos, 2014a), Dominican Republic (Aristy-Escuder et al, 2018), Ecuador (Llerena et al, 2015), El Salvador (Beneke et al, 2018), Ethiopia (Hill et al, 2017), Georgia (Cancho and Bondarenko, 2017), Ghana (Younger et al, 2017), Guatemala (Cabrera, Lustig, and Moran, 2015), Honduras (Icefi, 2017), Indonesia (Afkar et al, 2017), Jordan (Alam et al, 2017), Mexico (Scott, 2014), Peru (Jaramillo, 2014), Russia (Lopez-Calva et al, 2017), South Africa (Inchauste et al, 2017), Sri Lanka (Arunatilake et al, 2017), Tanzania (Younger et al, 2016a), Tunisia (Shimeles et al, 2018), and Uruguay (Bucheli et al, 2014). 2 The World Bank classifies countries as follows.…”

Commitment to Equity Assessment (CEQ): Estimating the Incidence of Social Spending, Subsidies, and Taxes - Handbook

“…CEQ is among the first efforts to comprehensively assess the tax/benefit system in developing countries (including indirect subsidies and taxes and in-kind benefits in the form of free education and health care) and to make the assessment comparable across countries and over time. Applications of CEQ can be found in, for example, Bucheli et al (2012) and .…”