What Are the Poverty and Inequality Impacts of Fiscal Policy in Turkey?

Fiscal policy is central to not only macroeconomic stability and growth, but also to poverty and inequality reduction. This paper provides the most comprehensive assessment of the distributional incidence of Turkey’s fiscal policy to date. It analy...

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Main Authors:	Cuevas, P. Facundo, Lucchetti, Leonardo, Nebiler, Metin
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2020
Subjects:	FISCAL POLICY POVERTY INEQUALITY FISCAL INCIDENCE SOCIAL SPENDING TRANSFERS TAXES DISTRIBUTIONAL IMPACT INDIRECT TAX
Online Access:	http://documents.worldbank.org/curated/en/785891593010082785/What-Are-the-Poverty-and-Inequality-Impacts-of-Fiscal-Policy-in-Turkey http://hdl.handle.net/10986/33995

id	okr-10986-33995
recordtype	oai_dc
spelling	okr-10986-339952022-09-20T00:11:32Z What Are the Poverty and Inequality Impacts of Fiscal Policy in Turkey? Cuevas, P. Facundo Lucchetti, Leonardo Nebiler, Metin FISCAL POLICY POVERTY INEQUALITY FISCAL INCIDENCE SOCIAL SPENDING TRANSFERS TAXES DISTRIBUTIONAL IMPACT INDIRECT TAX Fiscal policy is central to not only macroeconomic stability and growth, but also to poverty and inequality reduction. This paper provides the most comprehensive assessment of the distributional incidence of Turkey’s fiscal policy to date. It analyzes the combined and individual incidence of direct and indirect taxes, transfers, and social spending and benchmarks Turkey’s achievements against peer countries. The results show that fiscal policy significantly reduces income inequality in Turkey, driven by social spending on education and health, and complemented by direct taxes and transfer schemes that countervail the inequality-increasing impact of indirect taxes. At the bottom of the income distribution, targeted transfers are insufficient to compensate for the effect of taxes, resulting in net increases in poverty. In the context of upper-middle-income countries, Turkey’s performance is below the median. This is driven by the relatively larger negative impacts of indirect taxes and the more limited positive impacts of direct transfers and taxes. From a policy perspective, the paper contributes to identifying entry points for improving the equity impact of the fiscal package. Among these, targeting the minimum subsistence allowance (AGI) program toward the poor could be an efficient way forward. More broadly, the study represents a platform to simulate the distributional implications of a variety of fiscal changes to inform stakeholders and the policy debate. 2020-06-25T16:03:58Z 2020-06-25T16:03:58Z 2020-06 Working Paper http://documents.worldbank.org/curated/en/785891593010082785/What-Are-the-Poverty-and-Inequality-Impacts-of-Fiscal-Policy-in-Turkey http://hdl.handle.net/10986/33995 English Policy Research Working Paper;No. 9300 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Europe and Central Asia Turkey
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	FISCAL POLICY POVERTY INEQUALITY FISCAL INCIDENCE SOCIAL SPENDING TRANSFERS TAXES DISTRIBUTIONAL IMPACT INDIRECT TAX
spellingShingle	FISCAL POLICY POVERTY INEQUALITY FISCAL INCIDENCE SOCIAL SPENDING TRANSFERS TAXES DISTRIBUTIONAL IMPACT INDIRECT TAX Cuevas, P. Facundo Lucchetti, Leonardo Nebiler, Metin What Are the Poverty and Inequality Impacts of Fiscal Policy in Turkey?
geographic_facet	Europe and Central Asia Turkey
relation	Policy Research Working Paper;No. 9300
description	Fiscal policy is central to not only macroeconomic stability and growth, but also to poverty and inequality reduction. This paper provides the most comprehensive assessment of the distributional incidence of Turkey’s fiscal policy to date. It analyzes the combined and individual incidence of direct and indirect taxes, transfers, and social spending and benchmarks Turkey’s achievements against peer countries. The results show that fiscal policy significantly reduces income inequality in Turkey, driven by social spending on education and health, and complemented by direct taxes and transfer schemes that countervail the inequality-increasing impact of indirect taxes. At the bottom of the income distribution, targeted transfers are insufficient to compensate for the effect of taxes, resulting in net increases in poverty. In the context of upper-middle-income countries, Turkey’s performance is below the median. This is driven by the relatively larger negative impacts of indirect taxes and the more limited positive impacts of direct transfers and taxes. From a policy perspective, the paper contributes to identifying entry points for improving the equity impact of the fiscal package. Among these, targeting the minimum subsistence allowance (AGI) program toward the poor could be an efficient way forward. More broadly, the study represents a platform to simulate the distributional implications of a variety of fiscal changes to inform stakeholders and the policy debate.
format	Working Paper
author	Cuevas, P. Facundo Lucchetti, Leonardo Nebiler, Metin
author_facet	Cuevas, P. Facundo Lucchetti, Leonardo Nebiler, Metin
author_sort	Cuevas, P. Facundo
title	What Are the Poverty and Inequality Impacts of Fiscal Policy in Turkey?
title_short	What Are the Poverty and Inequality Impacts of Fiscal Policy in Turkey?
title_full	What Are the Poverty and Inequality Impacts of Fiscal Policy in Turkey?
title_fullStr	What Are the Poverty and Inequality Impacts of Fiscal Policy in Turkey?
title_full_unstemmed	What Are the Poverty and Inequality Impacts of Fiscal Policy in Turkey?
title_sort	what are the poverty and inequality impacts of fiscal policy in turkey?
publisher	World Bank, Washington, DC
publishDate	2020
url	http://documents.worldbank.org/curated/en/785891593010082785/What-Are-the-Poverty-and-Inequality-Impacts-of-Fiscal-Policy-in-Turkey http://hdl.handle.net/10986/33995
_version_	1764479960064458752

What Are the Poverty and Inequality Impacts of Fiscal Policy in Turkey?

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