Reducing poverty and inequalitycontinues to be an important national priority in Namibia.Vision 2030 – the country’s guiding development strategy –has a subordinate vision that points to several goals:“Poverty is reduced to the minimum, the existing pattern ofincome-distribution is equitable and disparity is at theminimum.” Vision 2030 is being implemented via a series offive-year National Development Plans, with the currentNational Development Plan IV (NDP4) covering 2012 through to2017. NDP4 sets specific numerical targets. One is reducingthe incidence of extreme poverty to less than 10 percent ofindividuals by the end of FY2016/17, measured at thenational lower bound poverty line of N$277.54 in 2009/10.This report demonstrates that Namibia’s progressive incometax and generous social spending programs substantiallyreduce poverty and inequality, but the analysis alsounderscores the limits of what redistributive fiscalmeasures alone can accomplish. The economy must ultimatelycreate more jobs for the poorest members of society tochange the underlying distribution of what might be called“pre-fiscal” income; i.e., the income before households paytaxes and receive benefits from social programs. This willrequire structural transformation through greater investmentin activities that create employment for unskilled workersand offer the potential for continuous productivityincreases. This report aims to measure the effectiveness ofthese efforts and draws comparisons to the experiences ofother countries. It estimates how major taxes and socialspending programs affect individual incomes. It thenassesses who benefits from or bears the burden of eachinstrument and by how much. This way, the analysis estimatesthe contribution of each instrument to reducing the povertyheadcount and the Gini coefficient, a standard measure ofinequality. The analysis provides evidence that can shapepublic debates over government spending and the design ofsocial programs.
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