Bringing Taxation into Social Protection Analysis and Planning

Organization(s): ODI
Author: Francesca Bastagli
Year: 2015
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The expansion of social protection in low- and middle-income countries over the last two decades has been accompanied by a growing number of studies on the distributional impact of social protection spending. When such analyses consider social protection separately from tax policy, they provide a partial picture of the poverty and inequality impact of fiscal policy. In addition to determining the net distributional impact of fiscal policy, tax revenue levels and ‘mix’ matter to the resources available for social protection financing and its sustainability over time. Efforts to support and increase social protection spending in a sustainable fashion to meet poverty and inequality reduction goals are increasingly looking at options to increase revenue through taxation. This paper contributes to efforts to include tax considerations in social protection analysis and design by discussing the key methodological issues in carrying out joint distributional analysis, reviewing the evidence on the incidence and distributional impact of taxes and transfers and discussing alternative tax revenue sources and their implications for social protection financing and sustainability.

Social Protection and Human Rights