Impact of Fiscal Policy on Poverty and Inequality in Uganda: Fiscal Incidence Analysis Using the Unhs 2016/17

41 Pages Posted: 15 Nov 2019

See all articles by Carolina Mejia-Mantilla

Carolina Mejia-Mantilla

World Bank

Johanna Fajardo-Gonzalez

Independent Researcher; World Bank - Poverty and Equity Global Practice

Maya Scott Goldman

Tulane University - CEQ Institute

Jon Robbert Jellema

The Commitment to Equity Institute

Haley Renda

Tulane University - CEQ Institute

Date Written: October 30, 2019

Abstract

This study analyzes the incidence of public revenues (tax collection) and expenditures (including direct and indirect transfers, indirect subsidies, and in-kind transfers) on the level of poverty and inequality in Uganda, using the internationally recognized methodology developed by the Commitment to Equity institute. The results show that Uganda's fiscal policy is moderately equalizing and lowers the Gini coefficient by 3.2 points. The personal income tax, followed by education in-kind transfers, are the biggest contributors to reducing inequality. Although equalizing, fiscal policy is poverty-inducing in Uganda. Direct transfers are pro-poor in distribution but are not large enough to counteract the purchasing power reductions from indirect taxes; the poverty headcount ratio increases by 2.3 percentage points. Going forward, the combination of raising additional revenue by broadening the personal income tax base and removing valued-added tax exemptions while using the additional resources to increase the size and coverage of pro-poor direct transfers programs may alleviate poverty and reduce inequality.

Keywords: Inequality, Educational Sciences, Health Care Services Industry, Public Sector Economics, Public Finance Decentralization and Poverty Reduction, Economic Adjustment and Lending, Macro-Fiscal Policy, Hydrology

Suggested Citation

Mejia-Mantilla, Carolina and Fajardo-Gonzalez, Johanna and Goldman, Maya Scott and Jellema, Jon Robbert and Renda, Haley, Impact of Fiscal Policy on Poverty and Inequality in Uganda: Fiscal Incidence Analysis Using the Unhs 2016/17 (October 30, 2019). World Bank Policy Research Working Paper No. 9051, Available at SSRN: https://ssrn.com/abstract=3485935

Carolina Mejia-Mantilla (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Johanna Fajardo-Gonzalez

Independent Researcher ( email )

World Bank - Poverty and Equity Global Practice

1818 H Street NW
Washington, DC 20433
United States

Maya Scott Goldman

Tulane University - CEQ Institute

6823 St Charles Ave
New Orleans, LA 70118
United States

Jon Robbert Jellema

The Commitment to Equity Institute ( email )

6823 St Charles Ave
New Orleans, LA 70118
United States

HOME PAGE: http://www.commitmentoequity.org

Haley Renda

Tulane University - CEQ Institute

6823 St Charles Ave
New Orleans, LA 70118
United States

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