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不公平与财政政策

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不公平与财政政策 Centre for Research on Inequality, Human Security and Ethnicity University of Oxford Policy briefing www.crise.ox.ac.uk March 2009  CRISE Policy Briefing No. 2 Inequality and fiscal policy Properly designed, fiscal policies can be effective tools for redre...
不公平与财政政策
Centre for Research on Inequality, Human Security and Ethnicity University of Oxford Policy briefing www.crise.ox.ac.uk March 2009  CRISE Policy Briefing No. 2 Inequality and fiscal policy Properly designed, fiscal policies can be effective tools for redressing social and economic inequality. Frances Stewart and Rajesh Venugopal examine how. Fiscal policy—the level and composition of a government’s taxation and expenditure—can be used to address different kinds of inequality within a country: inequal- ity between individuals or households (vertical inequality) and inequality between groups (horizontal inequal- ity). Taxation is particularly relevant for addressing economic inequalities, and expenditure for social inequalities. The first step in devising appropri- ate fiscal policies is to gain an in-depth understanding of the status and dynam- ics of group identity and horizontal inequalities along various dimensions through a scoping study. The study should examine whether these groups are ranked hierarchically, how they are regionally distributed, and whether they are specialised in particular activities. Tax policy Tax policy in developing countries typically suffers from problems of level and composition: there is often weak revenue mobilisation and the system frequently fails to address inequality. The tax system can contribute to re- ducing inequalities directly by increas- ing its progressiveness, and indirectly by raising additional revenue to finance expenditure devoted to reducing in- equalities. Increasing the progressiveness of the tax structure This method works best where groups are hierarchical in terms of income such that horizontal inequalities (HIs) and vertical inequalities (VIs) overlap. Direct taxes on income, profits and capi- tal gains are usually the most progres- sive part of any developed country tax system. In addition, property taxes are also typically progressive because poor- er people (groups) have less property than richer ones. A simple approach to improving progressivity is to exempt all property below a certain value. The start-up costs of meeting data require- ments in the form of a cadastre may be onerous but have long-lasting benefits, including by improving the security of property rights. For developing coun- tries, on average, land taxes account for 0.5% of GDP and around 18% of local government revenue, but Indonesia has a much more extensive tax with higher rates which generate two-thirds of local governments’ own revenue (Bird and Slack 2006; Kelly 2004). Indirect taxes A value-added tax which has exemptions for basic necessities (in- cluding food) can be progressive. This is the situation, for example, in Kenya: according to estimates for 1997, VAT was progressive, allowing for exemp- tions and zero rating (Wanjala 2007). Almost half developing countries that adopt VAT exempt food (ibid). VAT could also incorporate higher rates u Three principles of tax design n Identity should not be used as the basis for tax liability as this goes against basic principles of tax equity. Rather, horizontal inequality should be addressed in an indirect way, e.g. by using geographical, income level or occupational criteria as a basis for taxation. n Redistribution is not the only goal of tax policy: other objectives should not be neglected. Where possible, taxes should be designed so as to ful- fil each of the objectives; where not, any tradeoff needs to be considered carefully. n There is no single, overarching policy framework: countries vary greatly and each case has to be exam- ined individually. Inequality and fiscal policy Policy Brief ing No. 2 Inequality and fiscal policy on luxuries, although multiple rates cause administrative complexity. An alternative is to levy particular excise taxes on luxuries. Other indirect taxes that are likely to improve VI and prob- ably HI would be heavy motor vehicle duties and taxes on airlines and flights. Fuel taxes can be differentiated so as to tax the sorts of fuels that richer people use and not poor people’s fuels. Similarly, food subsidies can improve distribution when specifically directed at staple foods. Tailoring taxes to group behaviour Privileged versus deprived groups can often be identified through their loca- tion, their productive activities and their consumption behaviour and taxes can then be designed so as to reduce group inequality: Location Decentralised administrations can devise revenue-sharing formulae to improve the position of poorer districts and ipso facto of poorer groups. This was attempted in Indonesia’s post-2001 ‘Big Bang’ decentralisation. Govern- ments can also use property taxes to differentiate between wealthier and poorer locations. Occupation Many HIs arise from differ- ential group concentrations in special- ised economic activities, such as export versus food crop producers; merchants versus farmers; or formal versus in- formal sector activities. This makes it possible to address HIs by differential taxation of exports, wholesale trade, or the formal sector. Consumption It is possible to target taxes towards forms of consump- tion that benefit wealthier groups. For example, taxes on alcohol would not affect Muslims, who form the relatively deprived groups in many societies. User fees that target services little used by poorer groups, such as higher education or heavy use of water (with appropriate exemptions), may yield beneficial results. Altering the regional balance of taxa- tion Regionally based HIs can be due to economic geography, as well as                                    political and historical factors, often including colonial policy. For unitary states, the main redistributionary con- tribution of taxes is to address VI, while raising revenues to finance HI reduc- tion through allocating expenditures disproportionately to poorer regions. A more federal or decentralised state can be directly responsive to regional HIs, by adjusting the regional distribution of revenue and expenditure to benefit poorer regions. In Nigeria, for example, the 1989 formula for the allocation of central revenues to the states was 30% equally distributed among the states, 40% according to population, 15% (in- versely) for social development, and 5% for local tax effort. Raising revenue In addition to increasing the progressiv- ity of the tax system to reduce inequal- ity, a major contribution of the tax sys- tem is in raising revenues to undertake HI-reducing expenditures. Where total revenues are low, raising tax revenues is an important part of policy towards HI. Most low-income countries have a low tax base (average 10.4% of GDP), and need to focus on increasing rev- enues. Key areas to be addressed are low tax rates, weak administration and low compliance. Low tax rates By comparing rates and revenue raised from different types of taxation in relation to GDP in the country with the average in a compara- ble set of countries, particularly low tax rates can be identified where rises in rates would be warranted. Administration and compliance Weak- nesses in administration can be overcome by reforms and technical assistance. Low compliance is partly a matter of the nature of the tax admin- istration: effective tax administration requires well-trained officials and low levels of corruption. Compliance is also affected by the prevalent culture: if it is believed that few comply then low levels of compliance are likely. Donors and central governments can introduce incentives for greater compliance by making matching contributions. Durand and Thorp’s (1998) study of the suc- cessful case of Peru, in which reforms of the administration greatly increased revenue, identifies three necessary conditions for success: political support from on top; ongoing bureaucratic re- generation; and general improvements in the relationship of state and society. Expenditure policy The impact of government expenditure on HIs can be analysed in relation to Selected developing countries 2005 Government revenue (excluding grants) as a percentage of GDP Source: WDI, World Bank *2002 *                                * Inequality and fiscal policy Inequality and fiscal policy Policy Brief ing No. 2 three distinct types of expenditure: (a) infrastructure investment (the government accounts for over three- quarters of investment in poor coun- tries); (b) contracts and employment (the public sector typically accounts for half of formal sector employment); and (c) service provision (the provision of health and education, important in themselves, and they contribute to improved incomes). Evidence suggests that there is often inequality in the distribution in each of the types across racial, reli- gious, ethnic or geographical groups. It is essential to ensure appropriate group participation in each of the three types of government expenditure. Most attention is generally paid to the distributional implications of the third type (service provision), whereas the first two are often more important in their impact on HIs and, in particular, the visible and felt impact. At a mini- mum this implies anti-discrimination legislation and monitoring, but in some contexts it may also be appropriate to introduce positive discrimination. Such policies towards the allocation of both government contracts and govern- ment employment have been adopted in quite a large number of countries, including Canada, Malaysia, South Africa, Northern Ireland and the US. They include: n Anti-discrimination employment legislation. n Guidelines for all public decision makers. n Setting targets and quotas. n Careful monitoring of progress. n Competitive and transparent bid- ding procedures for contracts. n Incentives and penalties, including allocating contracts only to firms where fair employment practices are being followed. n Providing set asides for contracts for businesses controlled by particular groups, or preferences for such groups. The third category of expenditure, government-provided goods and serv- ices, can be categorised in the follow- ing way: (a) goods with non-allocable benefits (e.g. defence expenditure or debt servicing); (b) goods with alloca- ble benefits across groups but not by region (e.g. expenditure on national television which benefits only those with TV sets; or patronage of a particu- lar religion); (c) goods with allocable benefits across regions but not intra- regionally (e.g. expenditure to limit environmental damage); (d) goods with allocable inter-regional and intra- regional benefits—this includes much government expenditure, e.g. expendi- ture on social services and economic infrastructure; and (e) transfer pay- ments, which include direct payments to communities or households or individuals administered according to particular criteria. These can be al- located among individuals and groups according to their design. Each of these categories of spend- ing affects HIs to a different degree, and can hence be used to remedy them in distinct ways. Broadly speaking, the last two categories—goods and services the benefits of which are directly allocable, and transfer payments—are the most useful for addressing VIs and can also be designed to address HIs. To summarise, with respect to gov- ernment expenditure, improvements in HI can be achieved via reallocation in the production, running and consump- tion of publicly funded services: n By a policy towards participation in government contracts for the construc- tion of public facilities, and in employ- ment in the public sector. n By a focus on pro-poor public goods and those that favour particular groups, e.g. subsidising radio not tel- evision, bus transport not air travel; and supporting the language and religion of poor groups. n By locating a higher proportion of public goods in regions where poor groups are concentrated; and within regions in specific locations where poorer groups are concentrated. For example, in Lima, the white elite live in one area and indigenous migrants in another. Schools, transport, sanitation, and housing located in the slum areas of Lima would benefit indigenous peo- ple, not the white population. Any such improvements in HI would, of course, also improve VI. n By appropriately designed transfer payments which can improve both VI and HI significantly. u n Government expenditure is often progressive, benefiting the poor more than the rich, at least in proportion to their original incomes. It follows that in so far as taxes raised are neutral vis-à-vis income distribution, even if not progressive, higher revenue and expenditure will improve income distribution. n It is politically much easier to achieve redirection of expenditure towards particu- lar groups if this is through extra expenditure, rather than if it involves taking some benefits away from existing groups. n Raising taxes also plays a political role which is especially important in post- conflict countries: those who pay taxes have a perception of having a stake in the government, particularly representative government. As Ross (2004) has argued, turning around a one-time rallying cry, there is ‘no representation without taxation’. His evidence demonstrates that the greater the proportion of government expendi- ture financed by taxation the more representative the forms of government, suggest- ing that raising revenue would contribute to reduced political HIs. Why is raising government revenue important for redistribution? Inequality and fiscal policy Policy Brief ing No. 2 Data A first requirement in designing fiscal policies to reduce HIs is to identify the nature of the HIs in the country. Data on HIs can be difficult to find as household surveys often do not include questions on ethnicity or religion, sometimes because of their political sensitivity. The first need in a country is to conduct an inventory of available data, and of urgent data needs. Working with re- cipient countries to develop appropriate data collection tools is then important. In the short term, it is often possible to get sufficient data using shortcut methods. One possibility is to take some other characteristic as a proxy for ethno-cultural difference, for example data by region or by the language spo- ken, which are often more readily avail- able than socio-cultural data. The de- gree to which regional data are useful, however, depends on how far identity groups are geographically segregated. As a rule of thumb, region is a useful proxy for measurement and policy if more than half the members of the deprived group, and less than half of the privileged group, are concentrated in the targeted region. In many African countries, ethnic and religious groups are regionally concentrated so regional inequality may be a suitable proxy for ethnic or religious inequality and in some cases region itself defines group identities. Another proxy for ethnicity is the use of a language variable, which is sometimes available where ethnic vari- ables are not—as in Indonesian surveys in the New Order period. Imaginative use of existing data generally contributes considerably. Possible data sources include: Census data, where ethnic or language data are often included, and sometimes religion. Centre for Research on Inequality, Human Security and Ethnicity (CRISE) Oxford Department of International Development (Queen Elizabeth House) University of Oxford 3 Mansfield Road Oxford OX1 3TB, UK Tel +44 1865 281810, Fax +44 1865 281801 The Demographic and Health Surveys (DHS), many of which include ethnic identification, as well as information on access to social services and ownership of domestic assets. Living Standards Measurement Surveys (LSMS) which sometimes include eth- nic variables. Regional data from household surveys, the census and sometimes public ex- penditure accounts. Specific sectoral data (e.g. from schools and hospitals) which often contain eth- nic and regional information. Where there remain major gaps, small household surveys can be rapidly conducted to supplement existing data, including a limited number of basic variables (e.g. asset ownership; nature of employment; incomes; educational attainments; and anthropometric data). The role of aid-givers A first requirement is to promote awareness of the need for such policies and their nature. Opportunities for this arise where aid donors are involved in general policy discussions, for example in association with public expenditure reviews, or the Poverty Reduction Strat- egy Papers, or economic policy reform and adjustment more generally. In each case, donors should include discus- sions about the need to review HIs and to use fiscal policy to correct them where they are high. Donors can provide technical as- sistance in data analysis and support for supplementary surveys as judged necessary. Donors can assist governments in policies to raise revenues, including supporting improvements in tax ad- ministration, and in compliance, and in identifying which tax rates are relatively low and might be increased. This policy briefing is based on CRISE Working Paper 65: The Implications of Horizontal and Vertical Inequalities for Tax and Expenditure Policies by Frances Stewart, Graham Brown and Alex Cobham. Available to download at www.crise.ox.ac. uk/pubs/workingpaper65.pdf Donors can also assist in identify- ing types of expenditure that would reduce inequalities, drawing on avail- able data. Where governments are unwilling to correct sharp HIs, donors may themselves contribute to reducing HIs through the distribution of aid; they may work with NGOs to promote ex- penditures reducing HIs; and they may try to change government policy via policy dialogue and conditionality. n References Bird, Richard, and Enid Slack. 2006. The role of the property tax in financing rural local gov- ernments in developing countries. Internation- al Tax Program Paper 0608. International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto. Durand, Francisco and Rosemary Thorp. 1998. Reforming the state: a study of the Peruvian tax reform. Oxford Development Studies 26 (2): 133–151. Kelly, Roy. 2004. Property taxation in Indonesia. In Richard Bird and Enid Slack (eds), Interna- tional Handbook of Land and Property Taxa- tion. Northampton, MA: Edward Elgar. Ross, M. 2004. Does taxation lead to represen- tation? British Journal of Political Science 34: 229–249. Wanjala, Bernadette. 2007. Design and per- formance of Kenya’s tax system: an inequal- ity perspective. In Society for International Development (SID), Readings on Inequality in Kenya: Sectoral Dynamics and Perspectives. Nairobi: SID. www.crise.ox.ac.uk Read more…
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