The Distributional Impact of the Fiscal System in Albania
In a context of fiscal consolidation and the need to deliver on a structural reform agenda, policy makers in Albania must not lose sight of the critical redistributive role of the fiscal system, particularly its impact on poverty and inequality. Us...
| Main Authors: | , , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2018
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/602351521551184290/The-distributional-impact-of-the-fiscal-system-in-Albania http://hdl.handle.net/10986/29496 |
| Summary: | In a context of fiscal consolidation and
the need to deliver on a structural reform agenda, policy
makers in Albania must not lose sight of the critical
redistributive role of the fiscal system, particularly its
impact on poverty and inequality. Using household survey
data, this paper estimates the redistributive effect of
fiscal policy on income distribution and poverty in Albania,
assessing the individual and combined effects of taxes and
public social spending. The findings show that the fiscal
system in Albania plays a positive role in reducing
inequality. Yet, it has a moderate poverty-increasing
effect. Specifically, taxes and social protection
contributions have a poverty-increasing effect; indirect
taxes, particularly the value-added tax, account for the
largest increases in poverty. This effect is somewhat
compensated by direct government transfers, which are
pro-poor and equalizing, but are not large enough to offset
fully the negative impact on the taxation side. Ongoing
reforms aimed at improving the efficiency and targeting of
social assistance can contribute to enhancing the pro-poor
impact of the fiscal system. |
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