The Distributional Impact of Serbia’s Taxes and Social Spending
In the context of economic recovery and structural reforms to boost Serbia’s living standards, understanding the impact of fiscal policy on inequality and poverty is key to inform policy choices. This paper’s key research question is to analyze the redistributive effect of fiscal policy on income distribution and poverty in Serbia. It advances on the previous literature by comprehensively assessing the individual and combined effects of taxes and social spending on both inequality and poverty in Serbia, using the Commitment to Equity Assessment approach. The findings suggest that Serbia’s fiscal system is redistributive, reducing the Gini coefficient of income once taxes, transfers, and in-kind benefits in education and health are taken into account. However, the inequality-reducing impact of the fiscal system in Serbia is somewhat smaller than what is observed in other countries in Central and Eastern Europe and Latin America, where similar analysis has been applied. Moreover, and like in some other countries in Europe and Central Asia, the fiscal system increases poverty. Direct social transfers in Serbia are pro-poor and inequality reducing, but their impacts are not large enough to fully offset those of taxation since spending on these programs is small. This analysis of fiscal incidence in Serbia provides a useful basis for assessing the impacts of potential changes in taxes or benefits, which can inform options to mitigate short-term adverse impacts and build support for reforms.
| Main Authors: | , , , |
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| Format: | Working Paper biblioteca |
| Language: | English en_US |
| Published: |
Washington, DC : World Bank
2022-06
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| Subjects: | TAXES, SOCIAL SPENDING, DISTRIBUTIONAL IMPACT, FISCAL POLICY, INEQUALITY, POVERTY REDUCTION, TRANSFERS, ADVERSE IMPACT MITIGATION, |
| Online Access: | http://documents.worldbank.org/curated/en/099106106272228881/IDU0e578c4e8060090423d0aae20e008077dd662 http://hdl.handle.net/10986/37636 |
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| Summary: | In the context of economic recovery
and structural reforms to boost Serbia’s living standards,
understanding the impact of fiscal policy on inequality and
poverty is key to inform policy choices. This paper’s key
research question is to analyze the redistributive effect of
fiscal policy on income distribution and poverty in Serbia.
It advances on the previous literature by comprehensively
assessing the individual and combined effects of taxes and
social spending on both inequality and poverty in Serbia,
using the Commitment to Equity Assessment approach. The
findings suggest that Serbia’s fiscal system is
redistributive, reducing the Gini coefficient of income once
taxes, transfers, and in-kind benefits in education and
health are taken into account. However, the
inequality-reducing impact of the fiscal system in Serbia is
somewhat smaller than what is observed in other countries in
Central and Eastern Europe and Latin America, where similar
analysis has been applied. Moreover, and like in some other
countries in Europe and Central Asia, the fiscal system
increases poverty. Direct social transfers in Serbia are
pro-poor and inequality reducing, but their impacts are not
large enough to fully offset those of taxation since
spending on these programs is small. This analysis of fiscal
incidence in Serbia provides a useful basis for assessing
the impacts of potential changes in taxes or benefits, which
can inform options to mitigate short-term adverse impacts
and build support for reforms. |
|---|