Fiscal Policy, Inequality, and the Ethnic Divide in Guatemala

38 Pages Posted: 27 Jun 2015

Date Written: March 25, 2015

Abstract

Guatemala is one of the most unequal countries in Latin America and has the highest incidence of poverty. The indigenous population is more than twice as likely to be poor than the nonindigenous group. Fiscal incidence analysis based on the 2009-2010 National Survey of Family Income and Expenditures shows that taxes and transfers do almost nothing to reduce inequality and poverty overall or along ethnic and rural-urban lines. Persistently low tax revenues are the main limiting factor. Tax revenues are not only low but also regressive. Consumption taxes are regressive enough to offset the benefits of cash transfers: poverty after taxes and cash transfers is higher than market income poverty.

Keywords: inequality, poverty, ethnic divide, fiscal incidence, taxes, social spending, Guatemala

JEL Classification: D31, H22, I14

Suggested Citation

Cabrera, Maynor and Lustig, Nora Claudia and Moran Samayoa, Hilcias Estuardo, Fiscal Policy, Inequality, and the Ethnic Divide in Guatemala (March 25, 2015). Center for Global Development Working Paper No. 397. Available at SSRN: https://ssrn.com/abstract=2623122 or http://dx.doi.org/10.2139/ssrn.2623122

Maynor Cabrera (Contact Author)

Wilson Center ( email )

Washington DC
United States

Nora Claudia Lustig

Tulane University ( email )

6823 St Charles Ave
New Orleans, LA 70118
United States

Hilcias Estuardo Moran Samayoa

Banco de Guatemala ( email )

7a. Av. 22-01
Zona 1
Guatemala City
Guatemala

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