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31. The Economic growth and income distribution implications of public spending and tax decisions

Author:
Zsolt Darvas
Publication Date:
10-2020
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
The level and composition of public expenditures and revenues both have implications for economic development, as shown by the ‘fiscal multiplier’ and the ‘quality of public finance’ literature. Public finance decisions also influence the distribution of income. Based on a review of the literature, I argue for a fair distribution of income as reflected in low-income inequality, not particularly because of the impact of income inequality on long-term growth (which is a controversial issue), but primarily because income inequality typically implies inequality of opportunity. European Union countries have very diverse public finance structures and different levels of effectiveness and there is room for improvement in the growth and equality impacts in all countries. A general guideline would be that the most effective approach comprises progressive taxes and inheritance taxes, spending on education, health and public infrastructure, and better government effectiveness. At the height of the 2008 global crisis and the subsequent European financial and economic crises, the fiscal consolidation strategies of EU countries largely relied on cutting public investment and social spending (except pensions), which is the opposite of what is suggested in the literature. Better fiscal rules and good fiscal institutions are needed to safeguard growth- and distribution-friendly expenditures in a crisis.
Topic:
Governance, European Union, Inequality, Income Inequality, Tax Systems, Macroeconomics, Economic Development, and Public Spending
Political Geography:
Europe

32. Distributional Effects of Reducing Energy Subsidies: Evidence from Recent Policy Reform in Argentina

Author:
Fernando Giuliano, Maria Ana Lugo, Ariel Masut, and Jorge Puig
Publication Date:
09-2020
Content Type:
Working Paper
Institution:
Center for Distributive, Labor and Social Studies (CEDLAS)
Abstract:
We analyze the distributional effects of the reduction in energy subsidies in Ar- gentina since 2016. As the policy reform also includes the introduction of a scheme to protect less well-off families (social tariff), we also review how well the targeting mechanism works. We apply traditional benefit-incidence analysis using household surveys and administrative data, focusing on residential subsidies to natural gas and electricity in the Buenos Aires Metropolitan Area. We find that the social tariff is relatively pro-poor, with significantly higher coverage among the poorest households. There are some exclusion errors in the low-income deciles and large inclusion errors in the medium- and high-income deciles. The distributive incidence of subsidies does not appear to have changed substantially. Energy subsidies in Argentina (lower in aggregate terms) continue to be, although progressive, pro-rich. The distributional effect is explained by the fact that generalized subsidies to all categories of consumption coexist with a relatively well targeted social tariff. Re- garding energy budget shares, monthly spending on electricity has increased from 1.1 percent of total household income to 3.4 percent. Monthly spending on piped gas rose from 1.3 percent to 3.3 percent. These shares are in line with many other countries in the region. Naturally, there has been a convergence of tariffs toward service provision costs.
Topic:
Energy Policy, Reform, Subsidies, and Public Spending
Political Geography:
Argentina and South America

33. Designing inclusive public finance policies in developing countries: Five key issues and solutions

Author:
Jukka Pirttilä and Finn Tarp
Publication Date:
07-2020
Content Type:
Policy Brief
Institution:
United Nations University
Abstract:
Taxation, and public sector matters more generally, are high on the agenda for the international development community. This is clearly reflected in the Sustainable Development Goals (SDGs). SDG17 stipulates the need for improving domestic resource mobilization directly, and most of the other SDGs cannot be achieved without adequate tax and spending policies.
Topic:
Developing World, Sustainable Development Goals, Tax Systems, Public Spending, and Inclusion
Political Geography:
Global Focus

34. Constraints to Enhanced Revenue Mobilization and Spending Quality in Kenya

Author:
Nelson H.W. Wawire
Publication Date:
01-2020
Content Type:
Research Paper
Institution:
Center for Global Development (CGD)
Abstract:
This study addresses constraints to enhanced revenue mobilization and spending quality in Kenya. The structure and growth of Kenya’s economy and spending quality have a bearing on its taxable capacity. Constraints to enhancement of revenue mobilization and spending quality include the existence of a large informal sector; inadequate information on property ownership; perceived corruption; inefficient use of public resources; political interference; volatile election cycles; abuse of tax incentives; uneven transfer pricing; illicit financial flows; and untaxed online businesses, coupled with poor administrative capacity and tax policy design. Policy implications on revenue performance are (1) the National Treasury and Kenya Revenue Authority (KRA) should focus on property taxes and capital gains taxes to expand the tax base; (2) development partners are needed to direct technical assistance to the informal sector, to aid with transfer pricing, to monitor illicit financial flows, and to properly tax online businesses; (3) greater use of technology is needed to increase efficiency; (4) intervention by the Geospatial Information System is needed to link data on land and property ownership with tax information in the existing database; (5) a pay-for-results model needs to be deployed; (6) need to reduce tax expenditures; and policy reforms to be initiated in the agricultural sector. The policy implications on expenditure are (1) the need for efficient utilization of tax revenues; (2) the need for implementation of digital technologies; (3) the need to revisit an integrated financial management information system (IFMIS) configuration; (4) the need to adhere to long-term planning; and (5) adoption of the GFS 2014 reporting standard. Overall, an independent entity needs to be established that will set budget ceilings, monitor budget implementation, and carry out audits.
Topic:
Governance, Revenue Management, Public Spending, and Mobilization
Political Geography:
Kenya and Africa

35. Review of Gender Budgeting at Sub-National Level in Uganda: Insights from Mbarara, Mukono and Soroti Districts

Author:
Elijah Mushemeza, Daniel Lukwago, and George Bogere
Publication Date:
01-2019
Content Type:
Research Paper
Institution:
Advocates Coalition for Development and Environment (ACODE)
Abstract:
These are the fi ndings of the study that analysed gender responsiveness in budgeting at sub-national level in Uganda. It studied how gender was mainstreamed in the budgets for health and agriculture in three districts, namely, Mukono, Soroti, and Mbarara. The study found that mainstreaming gender into budgets at sub-national level was minimal. Focus was largely on budget formulation with little emphasis on stages of budget execution, evaluation and audition. At the same time, mainstreaming gender at budget formulation stage was beset by signifi cant limitations. Thus, gender responsiveness of budgets at sub-national level remains low. This paused serious challenges in efforts to alleviate the plight of women who were faced with various forms of marginalisation, calling for gender mainstreaming in budgeting. The fi ndings underscore the implications of overdependence of districts on conditional grants from central government for Gender Responsive Budgeting (GRB) in Uganda. The common view among respondents was that, sub-national governments do not have suffi cient discretion to implement GRB. Also, stringent fi nancing of local governments made undertaking participatory processes untenable further constraining GRB at subnational level. Furthermore, the guidelines and information for GRB at district level were inadequate. Nevertheless, the meager information available, such as, sex-disaggregated data, was hardly used in planning and budgeting at that level. On a positive note, the study found that there was a high level of awareness of guidelines for GRB among respondents and were highly appreciative of gender inequality as an important development issue at district level. There was also a good understanding of gender issues in the agriculture and health sectors at that level, in conformity with the National Development Plan (NDP II), and the gender compacts for agriculture and heath sectors.
Topic:
Governance, Public Spending, Gender, and Budgeting
Political Geography:
Uganda and Africa

36. Assessing Budget Credibility: Paraguay Food Program for School (PAEP)

Author:
Fernando Ovando and Verónica Serafini
Publication Date:
04-2019
Content Type:
Special Report
Institution:
Centro de Análisis y Difusión de la Economía Paraguaya (CADEP)
Abstract:
Budget credibility refers to the capacity of governments to fully execute resources allocated through the national budget, in terms of expenditures and revenues. When this execution is not accomplished, there should be valid arguments for explaining this limitation. A budget credibility exercise examines the nature and degrees of diversion of resources allocated by national budgets as well as the causes and consequences of this diversion. The case of budget credibility in Paraguay presented here refers to a public program that helps children performance at schools. The Paraguay Food Program for School (PAEP) was created by law in 2014, replacing another program of Nutritional Supplement for School, in force since 1995. The purpose of PAEP is to meet nutritional needs of students in order to create good nutrition habits, healthy lifestyle and to improve school attendance and school performance. Two modalities are adopted in order to provide food to schools: i) food prepared at schools; ii) food provided by local and national suppliers. PAEP is directed to public schools, both primary and secondary. It aims to provide food baskets to students on regular basis for the whole academic year. Priorities are given to schools located in zones of extreme poverty, indigenous settlements, peasant colonies, schools located at hazardous districts and those with double schooling (shifts) The Central Government implements this program for the Capital (Asuncion), through the Ministry of Education. While local governments (governorships) are in charge of implementing the program for different regions (departments) and districts (municipalities) of the rest of the country.
Topic:
Education, Budget, Public Spending, and Schools
Political Geography:
South America and Paraguay

37. Public Expenditure Governance in Uganda's Agricultural Extension System

Author:
Annette Kuteesa, Emmanuel Keith Kisaame, Julian Barungi, and Ramathan Ggoobi
Publication Date:
01-2018
Content Type:
Research Paper
Institution:
Advocates Coalition for Development and Environment (ACODE)
Abstract:
In its quest to become a middle-income economy, Uganda has placed emphasis on improving and commercialising agriculture as one of its growth strategies in the National Development Plan (NDP II 2015/16 – 2019/20). Funding to the agricultural sector has more than doubled – rising from UGX 422 Bn in FY 2013/14 to UGX 901.68 Bn in FY 2017/18. About three-quarters of this funding has been directed towards agricultural extension, particularly, the provision of agricultural inputs to farmers. In addition, the sector has had several reforms in the provision of agricultural extension services. The most recent these reforms were the creation of the National Agricultural Advisory Services in 2001 and the switch to a single-spine agricultural extension system, which culminated into the adoption of the National Agricultural Extension Policy in October 2016. Despite the reforms and the increase in funding, the agricultural sector’s growth has stagnated and in some instances regressed over the NDP II planning period. Macroeconomic statistics from the Uganda Bureau of Statistics (UBoS) indicate that in fiscal year 2015/16, the agricultural sector’s share of Uganda Gross Domestic Product (at market prices) was 23.6%. This marked a 0.2% decline from the fiscal year 2014/15 share of 23.8%. As of June 2017, the agricultural sector had experienced four consecutive quarters of negative growth.
Topic:
Agriculture, Governance, Economy, and Public Spending
Political Geography:
Uganda and Africa

38. Are Survivor Pensions Still Needed?

Author:
The Organization for Economic Co-operation and Development
Publication Date:
12-2018
Content Type:
Policy Brief
Institution:
The Organisation for Economic Co-operation and Development
Abstract:
This policy brief summarises the findings assembled in OECD (2018) “Are survivor pensions still needed?”, Pensions Outlook, Chapter 7. It describes survivor pension schemes in OECD countries: expenditures on survivor pensions the number of recipients and the average level of benefits, details about eligibility rules and benefit determination across countries
Topic:
Governance, Social Services, Economic Development, Pension, and Public Spending
Political Geography:
Global Focus

39. Assessment of Public Expenditure Governance of the Universal Primary Education Programme in Uganda

Author:
Susan Namirembe Kavuma, Kiran Cunningham, George Bogere, and Richard Sebaggala
Publication Date:
01-2017
Content Type:
Research Paper
Institution:
Advocates Coalition for Development and Environment (ACODE)
Abstract:
This study seeks to assess public expenditure governance of the Universal Primary Education (UPE) programme in Uganda. UPE is a government programme that aims at providing basic education to school-going children aged six years and above. Established in 1997, its policy objectives include the equitable provision of education that is affordable to the majority of Ugandans. This study focuses on various dimensions of governance of the UPE program at the district level with emphasis on decision-making, effectiveness of the accountability framework and the interaction among the actors. The study was specifcally designed to fnd out the 3ublic (xpenditure *overnance 3(* practices under UPE at district levels, document the perspectives on public expenditure governance of UPE of the actors at the district levels, and show the importance oI specifc public expenditure governance practices to sector outcomes.
Topic:
Development, Education, Governance, and Public Spending
Political Geography:
Uganda and Africa

40. Following the Money in Ghana: From the Grassroots to the Hallways of the IMF

Author:
Abdulkarim Mohammed
Publication Date:
12-2017
Content Type:
Special Report
Institution:
Accountability Research Center (ARC), American University
Abstract:
Between 2011 and 2014, Ghana went from boasting the world’s fastest growing economy to requiring a bailout from the International Monetary Fund (IMF). While a global downturn in commodity prices precipitated the fall, a lack of accountability in how public finances have been managed has been at the heart of the problem. Fiscal indiscipline, fueled by a lack of oversight and rampant corruption, left the government unable to mount an effective response during lean economic times. Oxfam and its civil society partners in Ghana were worried that everyday Ghanaians would be left shouldering the burden of the economic crisis. Moreover, Ghanaians worried that their concerns and aspirations would not be represented in the high-level negotiations on the bailout between the Government of Ghana and the IMF. To address these concerns Oxfam and its partners coordinated a multi-level advocacy campaign. The campaign drew together a diverse coalition of civil society—from community activists to globally influential think tanks—able to represent and articulate local level concerns and project a united voice at the national and global levels. This novel approach proved highly successful in driving important changes in policy and practice that have enhanced accountability, fiscal responsibility, and citizens’ participation. The campaign not only contributed to improving the laws governing how public finances are managed in Ghana, but also helped to increase pro-poor spending and protect crucial social services.
Topic:
Civil Society, Corruption, Accountability, Social Services, Participation, IMF, Oversight, and Public Spending
Political Geography:
Africa and Ghana