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Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.
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Income Inequality and Poverty in Colombia - Part 2. The Redistributive Impact of Taxes and Transfers
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- Isabelle Joumard1, Juliana Londoño Vélez1
- Author Affiliations
- 1: OECD, France
- 27 mars 2013
- Bibliographic information
Income inequality in Colombia has declined since the early 2000s but remains very high by international standards. While most of the inequality originates from the labour market, wealth – and thus capital income – is also highly concentrated and the tax and transfer system has little redistributive impact. The tax-to-GDP ratio remains low. Consumption taxes, which tend to be regressive, account for the bulk. The progressivity of income taxes had been undermined by generous tax reliefs, which benefit the well-off most and increase tax avoidance opportunities. The tax system should be reformed to enhance progressivity and raise more revenue which could be used to expand social policies. Cash transfers to households are small and dominated by non-redistributive schemes such as contributory pensions. Education coverage has increased steadily but quality and equity in access at the tertiary level remain important issues. Though significant progress has been made towards universal health coverage, the financing and organisation of the health care system could be improved to raise the quality of care and reduce adverse incentives to remain in the informal sector.
- pensions, health, personal income tax, education, conditional cash transfers, Colombia, inequality, water and electricity subsidies, value added tax, property tax
- Classification JEL:
- H23: Public Economics / Taxation, Subsidies, and Revenue / Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- H24: Public Economics / Taxation, Subsidies, and Revenue / Personal Income and Other Nonbusiness Taxes and Subsidies
- H31: Public Economics / Fiscal Policies and Behavior of Economic Agents / Household
- H4: Public Economics / Publicly Provided Goods
- H51: Public Economics / National Government Expenditures and Related Policies / Government Expenditures and Health
- H53: Public Economics / National Government Expenditures and Related Policies / Government Expenditures and Welfare Programs
- H55: Public Economics / National Government Expenditures and Related Policies / Social Security and Public Pensions
- I14: Health, Education, and Welfare / Health / Health and Inequality
- I24: Health, Education, and Welfare / Education and Research Institutions / Education and Inequality
- I38: Health, Education, and Welfare / Welfare, Well-Being, and Poverty / Government Policy; Provision and Effects of Welfare Programs