Estimating the Incidence of Indirect Taxes in Developing Countries

The distributional impact of the public sector’s budget is a topic of enduring interest for economists and policymakers. The more recent literature on developing countries has focused almost exclusively on the expenditure side of the budget, as discussed in Chapter 2 But the few available studies on tax incidence in developing countries show that some tax policies have redistributive impacts – both positive and negative – of a size comparable to the effects of the more commonly studied social sector expenditures, justifying more equal attention from analysts interested in understanding the distributional consequences of public policies.