| By: |
Joaquim Bento de Souza Ferreira Filho;
Carliton Vieira dos Santos;
Sandra Maria do Prado Lima |
| Abstract: |
This paper analyses the impacts of three different indirect tax policies on
the Brazilian economy: reduction of indirect taxes over the main household
consumption products: reduction of indirect taxes over the main inputs used in
agriculture; and the reduction of indirect taxes over all products in a
specific region (Sao Paulo State) in Brazil. The analysis was carried out with
the aid of an inter-regional static general equilibrium model of the country
that was linked to a micro-simulation model used for poverty and income
distribution analysis. The first two simulations showed that the policies have
potential to improve income distribution, mainly benefiting the lower income
families in the poorest regions. The reduction of indirect taxes over goods
and services in Sao Paulo state shows that this state would benefit more
compared to the other states, an example of the so called "fiscal war". This
policy also points to some regressive effects of the tax policies on income
distribution, since it disproportionately benefits the higher income groups
located in the Sao Paulo state. The strong fall significant drop in tax
collection should be taken as a sign for restraining policy implementation. |
| Keywords: |
Poverty, Income Distribution, General Equilibrium Models, Micro-simulation, Indirect Tax, Fiscal Policy, Brazil |
| JEL: |
C68 H23 I32 |
| Date: |
2007 |
| URL: |
http://d.repec.org/n?u=RePEc:lvl:mpiacr:2007-26&r=lam |