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The impact of indirect tax on income distribution and poverty in Tanzania

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  • Asiya Maskaeva
  • Zanda Bochkaeva
  • Joel Mmasa
  • Mgeni Msafiri

Abstract

This paper analyzes the impacts of indirect tax benefits policy reforms on income distribution and poverty in Tanzania by applying a standard static microsimulation model TAZMOD v1.8. The simulations model two indirect tax reforms involving changes to the excise duty and value‐added tax rates on alcoholic beverages and tobacco products, and changes to employers’ and employees’ contributions to the National Health Insurance Fund. The results of the first reform find a positive effect on government tax revenue and a neutral effect on income distribution and poverty. The results of the second reform find a positive effect on household income distribution and consumption. The findings show that, despite increasing unequal income distribution, poverty indicators fell.

Suggested Citation

  • Asiya Maskaeva & Zanda Bochkaeva & Joel Mmasa & Mgeni Msafiri, 2022. "The impact of indirect tax on income distribution and poverty in Tanzania," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 93(1), pages 103-128, March.
    • Handle: RePEc:bla:annpce:v:93:y:2022:i:1:p:103-128
    DOI: 10.1111/apce.12319
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    References listed on IDEAS

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    1. Bird,Richard M., 2015. "Tobacco and alcohol excise taxes for improving public health and revenue outcomes : marrying sin and virtue ?," Policy Research Working Paper Series 7500, The World Bank.
    2. Pia Rattenhuber & Maria Jouste, 2018. "A role for universal pension? Simulating universal pensions in Ecuador, Ghana, Tanzania, and South Africa," WIDER Working Paper Series 023, World Institute for Development Economic Research (UNU-WIDER).
    3. Dominic Haazen, 2012. "Making Health Financing Work for Poor People in Tanzania," World Bank Publications - Books, The World Bank Group, number 2240.
    4. Kidane, Asmerom & Hepelwa, Aloyce & Mdadila, Kenneth & Ngeh, Ernest & Hu, Teh Wei, 2017. "The demand for cigarette in Tanzania: A temporal approach," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 45, pages 136-143.
    5. Pia Rattenhuber & Maria Jouste, 2018. "A role for universal pension? : Simulating universal pensions in Ecuador, Ghana, Tanzania, and South Africa," WIDER Working Paper Series wp-2018-23, World Institute for Development Economic Research (UNU-WIDER).
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