Social protection and tax policy are commonly examined separately, yet
they are strongly linked. Tax revenue levels and ‘mix’ matter to the
resources available for social protection financing and to their
sustainability over time; they also matter to the net incidence and
distributional impact of fiscal policy.
If poverty and inequality reduction are central public policy concerns,
then a more careful consideration of taxes and transfers and the ways in
which they operate jointly is warranted. For example, expanding income
concepts beyond market and disposable income definitions that take
direct taxes and transfers into account is especially important if
tax-transfer distributional analysis is to be meaningful for low-income
and medium-income countries, where there has been a significant
expansion in social protection over the last two decades.
This paper aims to contribute to efforts to include tax considerations
in social protection analysis and design by discussing the key
methodological issues in carrying out joint distributional analysis,
reviewing the evidence on the incidence and distributional impact of
taxes and transfers and discussing alternative tax revenue sources and
their implications for social protection financing and sustainability.
Bastagli, F. Bringing taxation into social protection analysis and planning. ODI, London, UK (2015) 48 pp.
Bringing taxation into social protection analysis and planning