Social Spending, Taxes and Income Redistribution in Uruguay

By: Marisa Bucheli (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República)
Nora Lustig (Department of Economics, Stone Center for Latin American Studies and CIPR, Tulane University)
Máximo Rossi (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República)
Florencia Amábile (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República)
URL: http://d.repec.org/n?u=RePEc:ude:wpaper:1212&r=ltv
How much redistribution does Uruguay accomplish through social spending and taxes? How progressive are revenue collection and social spending? A standard fiscal incidence analysis shows that Uruguay achieves a nontrivial reduction in inequality and poverty when all taxes and transfers are combined. In comparison with other five countries in Latin America, it ranks first (poverty reduction) and second (inequality reduction), and first in terms of poverty reduction effectiveness and third in terms of overall (including transfers in kind) inequality reduction effectiveness. Direct taxes are progressive and indirect taxes are regressive. Social spending on direct transfers, contributory pensions, education and health is quite progressive in absolute terms except for tertiary education, which is almost neutral in relative terms
Keywords: poverty, inequality, Uruguay, social spending, taxes
JEL: I3 H2 H5
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