Publication: Poverty and Distributional Impact of Fiscal Policy in Dominican Republic
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2023-11-28
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2023-11-28
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This report assesses the impact of fiscal policy, both revenue and expenditure, on inequality and poverty in the Dominican Republic. On the revenue side, the analysis focuses on the personal income tax, the value added tax (tax on the transfer of industrialized goods and services, known as ITBIS in the Dominican Republic for its initials in Spanish) and excise taxes on alcoholic beverages, cigarettes, fuel products and telecommunication services. These taxes combined accounted for 7.8 percent of GDP in 2018, equivalent to 60 percent of total tax revenues. On the expenditure side, the analysis focuses on social protection benefits like direct cash and near-cash transfers (e.g., the school food-program and the school uniforms and supplies program), indirect subsidies (energy, water, and public transport), and in-kind benefits on education and health, which together account for 39.2 percent of total government expenditures and 85.9 percent of social expenditures. The remainder of this report is organized as follows: Section II describes the Dominican Republic’s tax systems and government spending in 2018 and compares them with those of selected Latin American countries. Section III includes a description of the data, methodology and assumptions made in carrying out the analysis in this report. The main results are provided in Section IV, starting with fiscal policy’s net impact on inequality, followed by its impact on poverty incidence. A comparison with other countries is then provided. Section IV also includes a detailed analysis of the distributional impact of taxes, social spending, and subsidies, to demonstrate their impact on the welfare of the poor. The report’s main conclusions are presented in Section V.
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“World Bank. 2023. Poverty and Distributional Impact of Fiscal Policy in Dominican Republic. © World Bank. http://hdl.handle.net/10986/40655 License: CC BY-NC 3.0 IGO.”
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