A missing target in the SDGs: Tax systems should not reduce the income of the poor

A new blog post on the International Growth Center‘s website outlines why the Sustainable Development Goals needs to take what the net effect of all governments taxing and spending has on the poor. In many cases, the poor are left worse off by tax and transfer programs. “As it stands, the SDGs list of targets would not alert us of such a perverse outcome. Under Goal One on poverty reduction, there should be a Target 1.6: “By 2020 to ensure that the tax system does not reduce the income of the poor.”

Read the full post here

Center for Global Development Publishes CEQ Working Paper

Fiscal Policy, Inequality, and the Ethnic Divide in Guatemala – Working Paper 397

by Maynor Cabrera, Nora Lustig and Hilcías Moran

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.

The National Treasury of South Africa / World Bank Workshop: “Fiscal Policy and Redistribution in an Unequal Society”

All presentations from the workshop on the relationship between fiscal sustainability, redistribution, and social spending are now available online at the National Treasury’s website. The workshop opened by the Minister of Finance and held in Pretoria, South Africa on November 5th, sought to inform discussion about South Africa’s fiscal choices as it implements the National Development Plan (NDP). The five presentations, including the one given by Professor Lustig, can be viewed and downloaded here.