The distributional impact of tax and benefit systems in five African countries
International Journal of Sociology and Social Policy
ISSN: 0144-333X
Article publication date: 29 July 2021
Issue publication date: 8 March 2022
Abstract
Purpose
The paper aims to assess the effects of taxes and benefits on inequality and poverty in five African countries: Ghana, Mozambique, South Africa, Uganda and Zambia.
Design/methodology/approach
The authors use newly developed micro-simulation models to analyse the distribution and composition of incomes.
Findings
The study's results suggest that income-based measures result in higher levels of poverty and inequality than consumption-based measures. The country with the most effective system in terms of reducing income inequality and poverty is South Africa; in Ghana, the tax-benefit system was found to have the smallest impact on inequality. The systems of Uganda, Mozambique and Zambia were estimated to have no poverty-reducing properties; many individuals remain largely unaffected by them as they are too poor to pay direct taxes, and benefits are very modest and narrowly targeted.
Originality/value
While consumption data are crucial for measuring poverty, income data are becoming vital for assessing the extent to which tax-benefit policies achieve redistribution in economies where own-consumption is becoming less significant and the share of people in employment is increasing. To the best of the authors' knowledge, this is the first study where poverty and inequality are measured in both terms, for several African countries in a common framework.
Keywords
Acknowledgements
The authors are grateful to Xavier Jara, Faith Masekesa, David McLennan, Jukka Pirttilä, Pia Rattenhuber and the reviewers for valuable comments and suggestions. We are indebted to the many people who have contributed to the development of SOUTHMOD, especially our local partners in the five African countries. With the exception of SAMOD, the Country Models are developed/maintained/managed by UNU-WIDER in collaboration with the EUROMOD team at University of Essex, SASPRI, and local partners. SAMOD is developed/maintained/managed by SASPRI. The results and their interpretation presented in this publication are solely the authors' responsibility.
Funding: This paper carries acknowledgement of UNU-WIDER in Helsinki which originally commissioned the study within the research project on “SOUTHMOD – Simulating Tax and benefit policies for development”, which is part of the larger UNU-WIDER research project on “The economics and politics of taxation and social protection”. A previous version of this work has been published as a WIDER working paper (Gasior et al., 2018).
Citation
Gasior, K., Leventi, C., Noble, M., Wright, G. and Barnes, H. (2022), "The distributional impact of tax and benefit systems in five African countries", International Journal of Sociology and Social Policy, Vol. 42 No. 1/2, pp. 92-105. https://doi.org/10.1108/IJSSP-01-2021-0008
Publisher
:Emerald Publishing Limited
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