Efficiency and Equity of aMarginal Tax Reform - Income, Quality, and PriceElasticities for Mexico

Nicita, Alessandro

World Bank, Washington, D.C.

关键词: TAX REFORMS;    MARGINAL TAX RATES;    PRICE ELASTICITY;    INCOME ELASTICITY;    QUALITY STANDARDS;   

DOI  :  10.1596/1813-9450-3266
RP-ID  :  WPS3266

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

The author investigates the effects of amarginal tax reform on household welfare in Mexico. Heestimates the extent to which Mexican households react tochanges in prices, and uses the estimates to simulatechanges in social welfare resulting from marginal taxreform. Results indicate that poorer households tend to havesignificantly larger income and price elasticities. Hence,to correctly evaluate the effects of economic policies onthe poor, it is important to estimate elasticities thatreflect the behavioral responses of the poor rather than ofthe entire population. The results from the micro simulationsuggest that since poorer households rely mostly on maize,legumes, and vegetables to fulfill their caloric intake, anyprice reform that reduces the price of these products willhave a larger effect on the welfare of poor households. Inparticular, reducing the taxes on maize, alcoholicbeverages, and vegetables would be both more equitable andmore efficient in terms of social welfare. Meanwhile, areduction in the tax on legumes, sugar, and oils and fats,while inefficient, would contribute to reduce inequality.Finally, a decrease in the price of meat, wheat, and dairyproducts, while benefiting higher-income households, wouldhave only a marginal impact on poorer households.