Social Impact of a Tax Reform [electronic resource] : The Case of Ethiopia / Sònia Muñoz.
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TextSeries: IMF Working Papers; Working Paper ; No. 03/232Publication details: Washington, D.C. : International Monetary Fund, 2003Description: 1 online resource (39 p.)ISBN: 1451875584 :ISSN: 1018-5941Subject(s): Economywide Country Studies: Africa | Equity | Expenditure | Expenditures | Fiscal Policies and Behavior of Economic Agents: Household | Incidence Analysis | EthiopiaAdditional physical formats: Print Version:: Social Impact of a Tax Reform : The Case of EthiopiaOnline resources: IMF e-Library | IMF Book Store Abstract: This paper provides an assessment of the poverty and social impact of replacing Ethiopia's sales tax with a value-added tax (VAT). The results indicate that this reform has not had a major adverse effect on the poorest 40 percent of the population. The VAT is progressive in its incidence, and the higher revenues brought about by the VAT can provide additional funds for poverty-reducing spending, including primary education. At the same time, there is significant scope for making education spending more pro-poor by increasing the access of low-income households to schools.
This paper provides an assessment of the poverty and social impact of replacing Ethiopia's sales tax with a value-added tax (VAT). The results indicate that this reform has not had a major adverse effect on the poorest 40 percent of the population. The VAT is progressive in its incidence, and the higher revenues brought about by the VAT can provide additional funds for poverty-reducing spending, including primary education. At the same time, there is significant scope for making education spending more pro-poor by increasing the access of low-income households to schools.
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