The redistributive power of cash transfers vs VAT exemptions: A multi-country study

Warwick, Ross; Harris, Tom; Phillips, David; Goldman, Maya; Jellema, Jon; Inchauste, Gabriela; Goraus-Tańska, Karolina

doi:10.1016/j.worlddev.2021.105742

Cited by 16 publications

(14 citation statements)

References 40 publications

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“…Evidence suggests that in some contexts they pay less in consumption taxes than high-income households, because the former are more likely to purchase their goods from smaller retailers that do not pay taxes (Bachas et al 2020). This is in line with evidence that suggests that, while preferential VAT rates reduce poverty, they are often not well-targeted towards poor households overall (Warwick et al 2022). More generally, the dominant advice from international organisations has been to limit multiple rates -they are not considered efficient, and complicate the administration of VAT.…”

Section: Indirect Taxessupporting

confidence: 89%

“…More fundamentally, there is a risk that such an approach distracts from other policies that might have a greater gender impact, and may be more likely to benefit poor women. 9 An alternative approach, in line with good tax policy, would be to leave VAT alone and provide more generous direct transfers to poor households, which can support several gender-policy goals simultaneously (Coelho et al 2022;Warwick et al 2022).…”

Section: Indirect Taxesmentioning

confidence: 99%

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Engendering Taxation: a Research and Policy Agenda

Joshi,

Kangave,

van den Boogaard

2024

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Increased attention has been paid to the gender dimensions of taxation in recent years, though there has been limited research on the subject – particularly in lower-income contexts. Understanding how tax policies might affect women in lower-income countries is important at the current time, when governments are looking for new ways to increase domestic revenue – particularly through expanding the tax base. Given that women have historically represented only a small part of the formal workforce in these contexts, a shift towards indirect taxes and taxing the informal economy are likely to have a disproportionate effect on poorer households, and women in particular. Understanding whether, and in what specific ways, tax policy in lower-income countries affects the ability of women to participate in the workforce and carry out their caring responsibilities within households is critical for ensuring development with gender justice. This paper reviews the existing literature and related debates on gender and tax in lower income countries. It identifies knowledge gaps, and maps broader issues that are relevant for understanding the gendered impact of taxation. The paper makes four broad observations. First, existing research focuses on formal direct taxes that are less relevant for women in lower-income contexts, given their high participation rates in the informal economy. Instead, presumptive taxes, user fees and informal taxes place a disproportionate burden on low income women. Second, there needs to be greater attention paid to the ways in which women in senior and junior positions in tax administration can affect how taxpayers interact with tax authorities. Third, any assessment of tax policy’s impact on gender needs to consider revenue and expenditure together to ensure that the positive effects of tax policies are not undermined by budgets, or vice versa. Finally, we show that there has been insufficient gender-disaggregated data collection and analysis, which is required to draw generalizable conclusions about the gendered impact of tax policy. We argue that tax specialists need to think about research questions that address these gaps, and simultaneously address methodological challenges by gender disaggregation in data collection, as well as impact evaluation of tax policy implementation and innovation. Our overall conclusions are that tax policies can be made gender-neutral by paying careful attention to where they affect women differentially. There are opportunities for governments to explore policies that positively discriminate as a way to address structural gendered inequities. At the same time we recognise that, barring a few exceptions, tax policy and administration is often an unwieldy instrument to address gender equity directly. Instead other policies relating to labour markets, social protection and public services are better placed to be gender-transformative.

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Section: Indirect Taxessupporting

confidence: 89%

Section: Indirect Taxesmentioning

confidence: 99%

Engendering Taxation: a Research and Policy Agenda

Joshi,

Kangave,

van den Boogaard

2024

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“…The changes in VAT policy have brought an impact to the poverty and inequality. Through the microsimulation model method which previously conducted by Amlani (2019), Gcabo et al (2019), andWarwick et al (2022) found the connection relates to the increase in government revenue which resulting from tax reform can be redistributed to targeting lower income groups in the form of social spending. They simulate tax changes and the best compensation (social spending) policy options which designed to address the poverty and inequality impacts of these policies, especially for relatively poorer groups.…”

Section: A Introductionmentioning

confidence: 98%

Revocation of Vat Exemption for Electricity and Water and Its Impact Analysis

Trisandi,

Nasrudin

2023

DiA

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Covid-19 pandemic has brought an impact on global economy which turn down the ranked of Indonesia from a country with upper middle income to lower middle income. In response to this matter, the Indonesian government has been issued several policies to increase the acceleration in economic and support economic recovery in order to optimize the state revenues which can be done by revoking of VAT exemptions on electricity and water. This research aims to explore further regarding the effect of poverty and inequality which arise from this revoking policy. The analysis conducted by microsimulation model method to measure poverty and inequality based on individual/household gains or losses caused by taxes policy. Main data obtained from national socio-economic survey data which submitted by BPS. Broadly speaking, these simulation results are indicates that this policy had slightly increases poverty rate, but did not affect on inequality. Through this research it was found an alternative way to compensate with assumption that this costs are source of additional revenue obtained from this imposition of normal VAT rates on electricity and water for households, so its distribution through cash transfers could be an effective way to fixes the poverty levels and inequality.

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“…The relative merits of different types of benefit arrangements have been extensively discussed in the literature, including in Brown et al (2018), Gentilini et al (2020), Hanna and Olken (2018), Lustig et al (2021), and Warwick et al (2022). These studies have focused on comparing poverty reductions in a normal, steady-state situation.…”

Section: Introductionmentioning

confidence: 99%