The Impact of Taxes, Transfers, and Subsidies on Inequality and Poverty in Uganda

43 Pages Posted: 9 Jan 2017

See all articles by Nora Lustig

Nora Lustig

Tulane University

Jon R. Jellema

University of California, Berkeley - Department of Economics

Astrid Haas

International Growth Center

Sebastian Wolf

London School of Economics & Political Science (LSE) - The International Growth Centre

Date Written: November 10, 2016

Abstract

This paper uses the 2012/13 Uganda National Household Survey to analyze the redistributive effectiveness and impact on poverty and inequality of Uganda’s revenue collection instruments and social spending programs. Fiscal policy – including many of its constituent tax and spending elements – is inequality-reducing in Uganda, but the reduction of inequality due to fiscal policy in Uganda is lower than other countries with similar levels of initial inequality, a result tied to low levels of spending in Uganda generally. The impact of fiscal policy on poverty is negligible, while the combination of very sparse coverage of direct transfer programs and nearly complete coverage of indirect tax instruments means that many poor households are net payers into, rather than net recipients from, the fiscal system. As Uganda looks ahead to increased revenues from taxation and concurrent investments in productive infrastructure, it should take care to protect the poorest households from further impoverishment from the fiscal system.

Keywords: Fiscal Incidence, Poverty, Inequality, Fiscal Policy, Uganda

JEL Classification: D31, D62, H22, H23, I38

Suggested Citation

Lustig, Nora Claudia and Jellema, Jon R and Haas, Astrid and Wolf, Sebastian, The Impact of Taxes, Transfers, and Subsidies on Inequality and Poverty in Uganda (November 10, 2016). Center for Global Development Working Paper No. 443, Available at SSRN: https://ssrn.com/abstract=2893765 or http://dx.doi.org/10.2139/ssrn.2893765

Nora Claudia Lustig (Contact Author)

Tulane University ( email )

6823 St Charles Ave
New Orleans, LA 70118
United States

Jon R Jellema

University of California, Berkeley - Department of Economics ( email )

549 Evans Hall #3880
Berkeley, CA 94720-3880
United States

Astrid Haas

International Growth Center ( email )

United Kingdom

Sebastian Wolf

London School of Economics & Political Science (LSE) - The International Growth Centre ( email )

32 Lincoln’s Inn Fields
Houghton Street
London, WC2A 2AE
United Kingdom

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