Coady, D., Margaret Grosh, and John Hoddinott, 2004, “Targeting of Transfers in Developing Countries: Review of Lessons and Experience,” World Bank, Regional and Sectoral Studies.
Coady, D., Moataz El-Said, Robert Gillingham, Kagni Kpodar, Paulo Medas, and David Newhouse, 2006, “The Magnitude and Distribution of Fuel Subsidies: Evidence from Bolivia, Ghana, Jordan, Mali, and Sri Lanka,” IMF Working Paper, WP/06/247.
Coady, D., 2006, “The Distributional Impacts of Indirect Tax and Public Pricing Reforms: A Review of Methods and Empirical Evidence,” forthcoming in Poverty and Social Impact Analysis: A Review of Methods and Past Experience.
El-Said, M. and Gillingham, Robert, 2005, “Uganda: Distributional Effects of Alternative Indirect Tax Reforms, Aide-Memoire,” May, IMF.
Fletcher, K., 2005, “Increasing Public Sector Revenue in the Philippines: Equity and Efficiency Considerations,” IMF Working Paper, WP/05/22.
Haslett, S., and Geoffrey Jones, 2005, “Local Estimation of Poverty in the Philippines,” report prepared for the World Bank in cooperation with the National Statistics Coordination Board of the Philippines.
World Bank, 2005, “Community Driven Development and Social Capital: Designing a Baseline Survey in the Philippines, World Bank Report No. 32405-PH, May 2005.
Prepared by David Newhouse and Daria Zakharova.
In the Philippines, income per capita rather than consumption per capita is the standard welfare measure. The terms welfare and income are used interchangeably in the remainder of this chapter.
A franchise tax is a percentage tax levied on gross receipts of a business.
While the reduction in the excise taxes on diesel, kerosene, and fuel oil was intended as a purely mitigating measure, other “mitigating” measures were primarily intended to improve the structure of the tax system. In particular, the franchise tax was repealed to remove a potential problem of double taxation when VAT was extended to electricity, and the gasoline excise tax was reduced to equalize the tax treatment of regular and unleaded premium gasoline; while the earlier increase in the oil tariff rate to 5 percent had not been considered by the authorities to be a permanent feature of the tax system. Nonetheless, the analysis here treats all tax reducing measures as part of the package of mitigating tax measures.
The model overestimates the income loss from the reform by about 30 percent, compared to the estimated revenue gain. The discrepancy can likely be explained by imperfect tax administration. The model assumes that tax compliance is universal, which also implies that the reform may overestimate total household income loss. However, in so far as the proportion of expenditure inappropriately withheld from the VAT is the same for each income group, the distributional implications will be unaffected.
Coady et al. (2006) find that fuel subsidies are not well targeted to the poor in five countries where studies have been carried out.
The “30 percent” was an arbitrary cut off to represent households below the poverty line. However, since transfer schemes are not perfectly targeted, the 30 percent would necessarily include some well-off households.
Initiated in 2003, the KALAHI-CIDSS is a development project that aims to empower communities through their enhanced participation in projects that reduce poverty. Community grants are used to support the building of low-cost, productive infrastructure, such as roads, water systems, clinics, and schools. The project is implemented by the Department of Social Welfare and Development (DSWD) with financial and technical support provided by the World Bank.