Publication: Price and Tax Subsidies : Effectiveness and Challenges
Many governments use price and tax subsidization to meet social protection objectives. They endeavor to reduce the cost of living for their population-or for a subset of the population-by subsidizing the price of goods or services in lieu of, or in addition to, direct income transfers. While these subsidies may distort production incentives, subsidize the non-poor more than the poor, and limit consumer choice, there are reasons why a government may choose to use some forms of pricing policy rather than make income transfers to help the poor.
“Mackintosh, Fiona; del Ninno, Carlo. 2003. Price and Tax Subsidies : Effectiveness and Challenges. Social Safety Nets Primer Notes; No. 4. © World Bank, Washington, DC. http://openknowledge.worldbank.org/handle/10986/11822 License: CC BY 3.0 IGO.”