Samuel Z. Stone Professor of Latin American Economics, Tulane University Nonresident Fellow, Center for Global Development
President, Center for Global Development
Director of Global Health Policy and Senior Fellow, Center for Global Development
Consumption taxes for goods and services—sometimes called Value Added Taxes or VAT—are a common and effective revenue-raising tool used in many developing countries. But in some low- and middle-income countries, all but the poorest 10% of the population pay more in such taxes than they receive in cash transfers—even to the extent of worsening poverty levels. This has occurred in countries as varied as Armenia, Bolivia, Brazil, Colombia, Ethiopia and Sri Lanka. Lustig will draw on new research from the Commitment to Equity (CEQ) project to show how replacing external aid with domestic resources generated through consumption taxes could have onerous consequences for the poor.
Lustig directs the Commitment to Equity (CEQ), a partnership with Tulane University, the Inter-American Dialogue, and CGD. The CEQ offers research and analysis on the equity impact of taxes and transfers in an effort to support governments, multilateral institutions, and nongovernmental organizations in their efforts to build more equitable societies.
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Consumption Taxes, Inequality and the Poor