On February 28, 2018, the CEQ Institute at Tulane University and the World Bank signed a Memorandum of Understanding to collaborate on common objectives. The forms of collaboration include data-sharing, re-estimates of studies applying new international poverty lines, advising and training, and knowledge sharing. The data-sharing component will significantly increase the country coverage in the CEQ Institute’s Data Center on Fiscal Redistribution. Through the assessment of the impact of taxation and social spending on inequality and poverty, the CEQ Institute aims to provide a roadmap for governments, multilateral institutions, and non-governmental organizations in their efforts to build more equitable societies.
About CEQ Institute
Posts by Carlos :
Nora Lustig’s visit to the Paris School of Economics in May and June 2017, and her discussions with Professor Thomas Piketty and his colleagues, resulted in a new partnership between the CEQ Institute and the WID.world project to produce Distributional National Accounts (DINA) in a number of low and middle income countries. With this partnership, we will join forces to enlarge the geographical coverage of countries with DINA and enhance both projects’ ability to reach out to increasingly broader audiences. For the CEQ Institute, this is a unique opportunity to assess how country-specific results might be affected when primary incomes, taxes and public spending are scaled up to match their values in the country’s National Accounts. The partnership will also allow us to identify the data challenges that are particular to low and middle income countries, and suggest ways in which they could be overcome. We shall be able to assess further whether more progressive income and wealth taxes could be transformed into benefits -in cash and in kind- for the poorest.
Professor Tassew Woldehanna ( a member of CEQ’s Ethiopia team) of Addis Ababa University provided insights on CEQ’s impact in Ethiopia.
From your experience as a user of the CEQ tool, what did you find most useful and what should be improved?
TW: The CEQ is a very useful tool to assess how poor households are affected by taxes and transfers. It would be useful to incorporate how the poor benefit from investment in infrastructure such as rural roads, water and sanitation, and so on. In Ethiopia, the government spends a significant portion of the budget on infrastructure and this is not accounted for in the current CEQ method.
The CEQ Assessment for Ethiopia was led by the World Bank who had direct interaction with the government. Did the results lead to any noteworthy policy change?
TW: Yes, definitely. The CEQ Assessment showed that the extreme poor were often paying taxes over and above what they received in transfers (Chapter 5, World Bank Group. 2015. Ethiopia Poverty Assessment 2014. Washington, DC. © World Bank). The fact that many poor were left worse off was a consequence of two factors: the threshold of income at which people were liable to start paying taxes was very low and the Productive Safety Net Program (PNSP)—our flagship cash transfer—was well-targeted but both the coverage and benefit per household were small. In January 2016, the government expanded the coverage of the PNSP to include households living in urban areas, among other things. In July 2016, the government raised the threshold of taxable personal income from Birr 150 to 750 birr per month and taxable business income from Birr 1800 to Birr 7500 per year. While these changes may not be enough to completely eliminate the problem, it has been an important policy change in the right direction.