Publication: Fiscal Policy in Colombia: Tapping Its Potential for a More Equitable Society
Date
2012
ISSN
Published
2012
Author(s)
Moller, Lars Christian
Abstract
Colombia has the seventh highest Gini
coefficient of income inequality in the world. The Santos
Administration is aware of this challenge and has taken
important steps to reduce disparities. The Government is
also aspiring to join the OECD, which exhibits much lower
income disparities, mainly as a result of effective policies
of fiscal redistribution. In Colombia, meanwhile, direct
taxes, indirect taxes, and monetary transfers hardly dent
the high Gini coefficient. To reduce income inequality,
Colombian policy makers could consider introducing a more
progressive tax-transfer system. This paper ranks
alternative inequality-reducing fiscal policy options based
on their effectiveness. It argues that there are potentially
important redistributive potential gains available from tax
reforms if combined with good spending decisions. It
presents an illustrative reform package that would be
sufficient for Colombia to reach levels of inequality
similar to Chile or Costa Rica in a fiscally neutral manner.
Nonetheless, further analysis is needed to explore all
available policy options and identify those that are best
suited for Colombia.
Citation
“Moller, Lars Christian. 2012. Fiscal Policy in Colombia : Tapping Its Potential for a More Equitable Society. © World Bank, Washington, DC. http://openknowledge.worldbank.org/handle/10986/26883 License: CC BY 3.0 IGO.”