Fiscal Policy in Colombia : Tapping Its Potential for a More Equitable Society

Colombia has the seventh highest Gini coefficient of income inequality in the world. The Santos Administration is aware of this challenge and is taking important measures to reduce disparities. The government is also aspiring to join the OECD, which exhibits much lower income disparities, mainly as a result of effective policies of fiscal redistribution. In Colombia, meanwhile, direct taxes, indirect taxes, and monetary transfers hardly dent the high Gini coefficient. To reduce income inequality, Colombian policy makers could consider introducing a more progressive tax-transfer system. This paper ranks alternative inequality-reducing fiscal policy options based on their effectiveness. It argues that there are potentially important redistributive potential gains available from tax reforms if combined with good spending decisions. It presents an illustrative reform package that would be sufficient for Colombia to reach levels of inequality similar to Chile or Costa Rica in a fiscally neutral manner. Nonetheless, further analysis is needed to explore all available policy options and identify those best suited for Colombia.

Bibliographic Details

Main Author:	Moller, Lars Christian
Format:	Policy Research Working Paper biblioteca
Language:	English
Published:	World Bank, Washington, DC 2012-06
Subjects:	ACCOUNTING, AGRICULTURE, BANK POLICY, BENEFICIARIES, BENEFICIARY, BENEFIT INCIDENCE, CASH TRANSFER, CASH TRANSFERS, CENTRAL GOVERNMENT, CENTRAL GOVERNMENT SPENDING, COEFFICIENTS, COMMODITIES, CONSTITUTIONAL COURT, CONSUMERS, COST EFFECTIVENESS, DEBT, DERIVATIVE, DERIVATIVES, DEVELOPING COUNTRIES, DEVELOPMENT POLICY, DISPOSABLE INCOME, DISTRIBUTION OF INCOME, ECONOMIC DEVELOPMENT, EFFICIENCY IMPACT, EMERGING MARKET, EMERGING MARKET ECONOMIES, ESTIMATED TAX, FINANCIAL SERVICES, FINANCIAL TRANSACTION, FISCAL BALANCE, FISCAL DEFICIT, FISCAL IMPACT, FISCAL POLICY, FISCAL SAVINGS, FISCAL SPACE, FISCAL SUSTAINABILITY, FOOD PRICES, FOREIGN DIRECT INVESTMENT, GDP, GINI COEFFICIENT, GLOBAL STANDARDS, GOVERNMENT INTERVENTION, HOLDING, HOUSEHOLD INCOME, HOUSEHOLD INCOMES, HUMAN DEVELOPMENT, INCOME GROUP, INCOME INEQUALITY, INCOME LEVELS, INCOME SUBSIDY, INCOME TAX EXEMPTION, INCOME TAX REFORM, INDIRECT SUBSIDY, INDIRECT TAXATION, INFLATION, INSURANCE, INTEREST INCOME, INTEREST PAYMENTS, INTERNATIONAL BANK, INVENTORY, LABOR MARKET, LEGAL CONSTRAINTS, LEVY, LIVING STANDARDS, MARKET TRANSACTIONS, MIDDLE INCOME COUNTRIES, MIDDLE INCOME COUNTRY, MINISTRY OF FINANCE, MONETARY FUND, MORTGAGE, MORTGAGE INTEREST, NATIONAL DEVELOPMENT, NATURAL RESOURCE, NET BENEFITS, NET REVENUE, NUMERICAL VALUE, OPTIMAL TAXATION, PAYROLL TAX, PAYROLL TAXES, PENSION, PENSION CONTRIBUTIONS, PENSION REFORM, PENSION SYSTEM, PENSIONS, PERSONAL INCOME, PERSONAL INCOME TAX, PERSONAL INCOME TAXES, POLICY ALTERNATIVES, POLICY INSTRUMENT, POLICY MAKERS, POLICY OBJECTIVES, POLICY RECOMMENDATIONS, POLICY REFORM, POLICY REFORMS, POLITICAL ECONOMY, PROGRESSIVE TAX, PROGRESSIVE TAXATION, PROTECTIONISM, PUBLIC CREDIT, PUBLIC EXPENDITURE, PUBLIC OUTLAYS, PUBLIC PENSION, PUBLIC POLICY, PUBLIC SPENDING, REAL ESTATE, REDISTRIBUTION, REDISTRIBUTIVE EFFECTS, REDISTRIBUTIVE IMPACT, REDISTRIBUTIVE POLICIES, REGRESSIVE TAX, REMOTE AREAS, REPLACEMENT RATES, RETURN, RETURNS, REVENUE GAINS, REVENUE MOBILIZATION, REVENUE SOURCE, SAVINGS ACCOUNT, SAVINGS ACCOUNTS, SECTORAL COMPOSITION, SOCIAL PROTECTION, SPECIAL SAVINGS, SUBNATIONAL, SUBNATIONAL ENTITIES, TAX, TAX AUTHORITY, TAX BASE, TAX BREAKS, TAX BURDEN, TAX CONTRIBUTIONS, TAX EXEMPTION, TAX EXEMPTIONS, TAX EXPENDITURE, TAX EXPENDITURES, TAX INCENTIVES, TAX PAYERS, TAX PAYMENTS, TAX POLICY, TAX RATE, TAX REFORM, TAX REFORMS, TAX REVENUE, TAX REVENUES, TAX SIDE, TAX SYSTEM, TAX SYSTEMS, TAX TREATMENT, TAXABLE INCOME, TAXATION, TAXATION POLICY, TOTAL EMPLOYMENT, TRANSACTION, TREASURY, UNEMPLOYMENT, VALUE ADDED, VALUE ADDED TAX, VALUE ADDED TAXES, WEALTH, WEALTH TAX, WEALTH TAXES,
Online Access:	http://documents.worldbank.org/curated/en/2012/06/16383116/fiscal-policy-colombia-tapping-potential-more-equitable-society http://hdl.handle.net/10986/9323
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