Distribution and Poverty Impacts of Tax Structure Reform in Developing Countries: How Little We Know


  • The genesis of this article is a study commissioned by DFID in 2000; a longer and more detailed version of the article is available in Gemmell and Morrissey (2003). The authors are grateful to two anonymous referees for suggested editing and revisions. The views expressed are those of the authors alone.


The past two decades have witnessed widespread reforms of tax structures in developing countries. This article reviews available evidence on the effects of various taxes, and hence of tax structure reform, on distribution and the poor. Taxes on exports and goods consumed especially by the poor (e.g. kerosene) are the most consistently found to be regressive, whereas taxes on ‘luxury’ items such as cars, beverages and alcohol are the most likely to be progressive. Sales taxes are slightly more progressive, or less regressive, than taxes on imports. The reforms implemented are therefore unlikely to have worsened the effects of the tax structure on the poor.