The Effects of Fiscal Policy on Inequality and Poverty in The Gambia
The overall objective of this study is to assess the impact of the fiscal system on poverty and inequality in The Gambia as of 2015. The study presents the first empirical evidence on the distributional impacts of taxes and social spending on house...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2022
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/099605003102232996/P16447401a6bc80b0afaa0a627a3b0fa38 http://hdl.handle.net/10986/37187 |
| Summary: | The overall objective of this study
is to assess the impact of the fiscal system on poverty and
inequality in The Gambia as of 2015. The study presents the
first empirical evidence on the distributional impacts of
taxes and social spending on households in The Gambia.
Furthermore, it also evaluated the distributional effects of
recent fiscal policy reforms in The Gambia. The assessment
was based on the Commitment to Equity (CEQ) Methodology with
data from the Integrated Household Survey of 2015 and fiscal
administrative data from various government ministries,
departments, and agencies. The analyses show that while the
fiscal system in The Gambia reduces inequality by 1.2 Gini
points, it increases the national poverty headcount by 5.3
percentage points as all households (including the poor) are
net payers into the fiscal system. Most of the inequality
reduction is due to primary education benefits, with a
marginal contribution of 0.44 Gini points, and most of the
poverty increase is due to custom duties and VAT with
marginal contributions of -2.63 percentage points and -2.07
percentage points, respectively. Simulating the effect of
changes in the structure of personal income tax (PIT) and
the government’s ongoing absorption of the School Feeding
Program indicate that these changes reduce inequality but do
not offset the impoverishing effect of the fiscal system.
Hence, more cashable transfer programs targeted to the poor
are needed to offset the impoverishing effect of indirect
taxes and make the fiscal system more pro-poor. |
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