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Microsimulation analysis of indirect tax benefits on poverty reduction in Tanzania
(The University of Dodoma, 2019-10) Amani, Kibonde B
This paper analyzes the impact on income distribution and inequality in Tanzania from the changes to indirect tax policies using the standard static microsimulation model TAZMOD v1.8. The simulations model two indirect tax reforms involving changes to the excise duty and the VAT rate of alcoholic drink and tobacco products as well as changes to the National Health Insurance Fund employers and employees ' contributions. The first reform results have a positive impact on government tax revenue and a negative effect on distribution of income and poverty. The second reform results will have a positive impact on the consumption and income distribution of household. The results show that, despite an little increased on income distribution, poverty indicators have fallen.