Colombia’s 2012 Tax Reform : Poverty and Social Impact Analysis

This report summarizes the results of the PSIA and explains the three analyses used to determine the impact of the tax reform. The first analysis integrates data from administrative tax records with household statistics from the Gran Encuesta Integ...

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Main Author:	World Bank
Format:	Report
Language:	English en_US
Published:	World Bank, Washington, DC 2017
Subjects:	TAXATION TAX REFORM DISTRIBUTIONAL IMPACT POVERTY INEQUALITY VAT NEW ALTERNATIVE INCOME TAX LABOR MARKET
Online Access:	http://documents.worldbank.org/curated/en/224891505457246534/Colombia-s-2012-tax-reform-poverty-and-social-impact-analysis http://hdl.handle.net/10986/28530

id	okr-10986-28530
recordtype	oai_dc
spelling	okr-10986-285302021-04-23T14:04:48Z Colombia’s 2012 Tax Reform : Poverty and Social Impact Analysis World Bank TAXATION TAX REFORM DISTRIBUTIONAL IMPACT POVERTY INEQUALITY VAT NEW ALTERNATIVE INCOME TAX LABOR MARKET This report summarizes the results of the PSIA and explains the three analyses used to determine the impact of the tax reform. The first analysis integrates data from administrative tax records with household statistics from the Gran Encuesta Integrada de Hogares (GEIH) conducted by the Departamento Administrativo Nacional de Estadística (DANE) to correct for the problem of underrepresentation of high-income households that is typical of household surveys. The second analysis, which is based on consumption data from the Encuesta de Calidad de Vida (ENCV) also conducted by DANE, follows the LATAX micro-simulation technique and focuses on the effect of taxes on income distribution and on government revenues on the assumption that individuals’ purchasing habits remain the same. The third analysis uses a general equilibrium model of the labor market to estimate the impact of the tax reforms on the labor market and on informality. The first analysis shows that the effects of Colombia’s income tax reform serve the intended purpose of reducing income inequality. Results based on the constructed full income distribution, which uses administrative tax records and household survey data, indicate that the Gini coefficient decreases from 0.586 to 0.579. Considering that the average yearly reduction of the Gini coefficient in Latin America over the last 10 years was 0.51 percentage points, the estimated reduction in Colombia’s Gini coefficient is not trivial. These results also demonstrate the importance of using the full income distribution to calculate true inequality in a country. 2017-10-12T20:42:29Z 2017-10-12T20:42:29Z 2014-11 Report http://documents.worldbank.org/curated/en/224891505457246534/Colombia-s-2012-tax-reform-poverty-and-social-impact-analysis http://hdl.handle.net/10986/28530 English en_US CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Economic & Sector Work :: Other Poverty Study Economic & Sector Work Latin America & Caribbean Colombia
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	TAXATION TAX REFORM DISTRIBUTIONAL IMPACT POVERTY INEQUALITY VAT NEW ALTERNATIVE INCOME TAX LABOR MARKET
spellingShingle	TAXATION TAX REFORM DISTRIBUTIONAL IMPACT POVERTY INEQUALITY VAT NEW ALTERNATIVE INCOME TAX LABOR MARKET World Bank Colombia’s 2012 Tax Reform : Poverty and Social Impact Analysis
geographic_facet	Latin America & Caribbean Colombia
description	This report summarizes the results of the PSIA and explains the three analyses used to determine the impact of the tax reform. The first analysis integrates data from administrative tax records with household statistics from the Gran Encuesta Integrada de Hogares (GEIH) conducted by the Departamento Administrativo Nacional de Estadística (DANE) to correct for the problem of underrepresentation of high-income households that is typical of household surveys. The second analysis, which is based on consumption data from the Encuesta de Calidad de Vida (ENCV) also conducted by DANE, follows the LATAX micro-simulation technique and focuses on the effect of taxes on income distribution and on government revenues on the assumption that individuals’ purchasing habits remain the same. The third analysis uses a general equilibrium model of the labor market to estimate the impact of the tax reforms on the labor market and on informality. The first analysis shows that the effects of Colombia’s income tax reform serve the intended purpose of reducing income inequality. Results based on the constructed full income distribution, which uses administrative tax records and household survey data, indicate that the Gini coefficient decreases from 0.586 to 0.579. Considering that the average yearly reduction of the Gini coefficient in Latin America over the last 10 years was 0.51 percentage points, the estimated reduction in Colombia’s Gini coefficient is not trivial. These results also demonstrate the importance of using the full income distribution to calculate true inequality in a country.
format	Report
author	World Bank
author_facet	World Bank
author_sort	World Bank
title	Colombia’s 2012 Tax Reform : Poverty and Social Impact Analysis
title_short	Colombia’s 2012 Tax Reform : Poverty and Social Impact Analysis
title_full	Colombia’s 2012 Tax Reform : Poverty and Social Impact Analysis
title_fullStr	Colombia’s 2012 Tax Reform : Poverty and Social Impact Analysis
title_full_unstemmed	Colombia’s 2012 Tax Reform : Poverty and Social Impact Analysis
title_sort	colombia’s 2012 tax reform : poverty and social impact analysis
publisher	World Bank, Washington, DC
publishDate	2017
url	http://documents.worldbank.org/curated/en/224891505457246534/Colombia-s-2012-tax-reform-poverty-and-social-impact-analysis http://hdl.handle.net/10986/28530
_version_	1764467080318418944

Colombia’s 2012 Tax Reform : Poverty and Social Impact Analysis

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