Moller, Lars Christian2012-06-292012-06-292012-06https://hdl.handle.net/10986/9323Colombia has the seventh highest Gini coefficient of income inequality in the world. The Santos Administration is aware of this challenge and is taking important measures 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 best suited for Colombia.CC BY 3.0 IGOACCOUNTINGAGRICULTUREBANK POLICYBENEFICIARIESBENEFICIARYBENEFIT INCIDENCECASH TRANSFERCASH TRANSFERSCENTRAL GOVERNMENTCENTRAL GOVERNMENT SPENDINGCOEFFICIENTSCOMMODITIESCONSTITUTIONAL COURTCONSUMERSCOST EFFECTIVENESSDEBTDERIVATIVEDERIVATIVESDEVELOPING COUNTRIESDEVELOPMENT POLICYDISPOSABLE INCOMEDISTRIBUTION OF INCOMEECONOMIC DEVELOPMENTEFFICIENCY IMPACTEMERGING MARKETEMERGING MARKET ECONOMIESESTIMATED TAXFINANCIAL SERVICESFINANCIAL TRANSACTIONFISCAL BALANCEFISCAL DEFICITFISCAL IMPACTFISCAL POLICYFISCAL SAVINGSFISCAL SPACEFISCAL SUSTAINABILITYFOOD PRICESFOREIGN DIRECT INVESTMENTGDPGINI COEFFICIENTGLOBAL STANDARDSGOVERNMENT INTERVENTIONHOLDINGHOUSEHOLD INCOMEHOUSEHOLD INCOMESHUMAN DEVELOPMENTINCOME GROUPINCOME INEQUALITYINCOME LEVELSINCOME SUBSIDYINCOME TAX EXEMPTIONINCOME TAX REFORMINDIRECT SUBSIDYINDIRECT TAXATIONINFLATIONINSURANCEINTEREST INCOMEINTEREST PAYMENTSINTERNATIONAL BANKINVENTORYLABOR MARKETLEGAL CONSTRAINTSLEVYLIVING STANDARDSMARKET TRANSACTIONSMIDDLE INCOME COUNTRIESMIDDLE INCOME COUNTRYMINISTRY OF FINANCEMONETARY FUNDMORTGAGEMORTGAGE INTERESTNATIONAL DEVELOPMENTNATURAL RESOURCENET BENEFITSNET REVENUENUMERICAL VALUEOPTIMAL TAXATIONPAYROLL TAXPAYROLL TAXESPENSIONPENSION CONTRIBUTIONSPENSION REFORMPENSION SYSTEMPENSIONSPERSONAL INCOMEPERSONAL INCOME TAXPERSONAL INCOME TAXESPOLICY ALTERNATIVESPOLICY INSTRUMENTPOLICY MAKERSPOLICY OBJECTIVESPOLICY RECOMMENDATIONSPOLICY REFORMPOLICY REFORMSPOLITICAL ECONOMYPROGRESSIVE TAXPROGRESSIVE TAXATIONPROTECTIONISMPUBLIC CREDITPUBLIC EXPENDITUREPUBLIC OUTLAYSPUBLIC PENSIONPUBLIC POLICYPUBLIC SPENDINGREAL ESTATEREDISTRIBUTIONREDISTRIBUTIVE EFFECTSREDISTRIBUTIVE IMPACTREDISTRIBUTIVE POLICIESREGRESSIVE TAXREMOTE AREASREPLACEMENT RATESRETURNRETURNSREVENUE GAINSREVENUE MOBILIZATIONREVENUE SOURCESAVINGS ACCOUNTSAVINGS ACCOUNTSSECTORAL COMPOSITIONSOCIAL PROTECTIONSPECIAL SAVINGSSUBNATIONALSUBNATIONAL ENTITIESTAXTAX AUTHORITYTAX BASETAX BREAKSTAX BURDENTAX CONTRIBUTIONSTAX EXEMPTIONTAX EXEMPTIONSTAX EXPENDITURETAX EXPENDITURESTAX INCENTIVESTAX PAYERSTAX PAYMENTSTAX POLICYTAX RATETAX REFORMTAX REFORMSTAX REVENUETAX REVENUESTAX SIDETAX SYSTEMTAX SYSTEMSTAX TREATMENTTAXABLE INCOMETAXATIONTAXATION POLICYTOTAL EMPLOYMENTTRANSACTIONTREASURYUNEMPLOYMENTVALUE ADDEDVALUE ADDED TAXVALUE ADDED TAXESWEALTHWEALTH TAXWEALTH TAXESWorld Bank10.1596/1813-9450-6092