The Distributive Impact of Taxes and Expenditures in Colombia
Colombia has reduced extreme poverty in the past 16 years by almost half, moderate poverty by 22 percentage points, and made more than four million Colombians jump the threshold of multidimensional poverty. However, it remains one of the most unequ...
| Main Authors: | , , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2020
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/486571583244394872/The-Distributive-Impact-of-Taxes-and-Expenditures-in-Colombia http://hdl.handle.net/10986/33414 |
| Summary: | Colombia has reduced extreme poverty in
the past 16 years by almost half, moderate poverty by 22
percentage points, and made more than four million
Colombians jump the threshold of multidimensional poverty.
However, it remains one of the most unequal countries in the
region, after Brazil and Panama. Fiscal policy is one of the
instruments that allow governments to speed up the decline
in inequality levels and reduce poverty. This study presents
an exhaustive and comprehensive analysis of the
distributional impacts of taxes and expenditures in Colombia
in 2017. It makes a methodological comparison with the
Commitment to Equity, which was previously implemented, and
includes multiple improvements in the methodology. The
results suggest that the combined effect of taxes and social
spending in Colombia contributes to poverty reduction
between 0.3 and 2.6 percentage points for US$5.5 and US$3.2
per day per person respectively, while inequality is reduced
by almost one Gini point. Taxes and direct transfers, as
well as indirect transfers, are progressive and pro-poor,
while indirect taxes are regressive and contribute to an
increase in inequality. Finally, transfers in-kind for
education and health services are progressive and contribute
to the reduction of inequality. |
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