Social Spending, Taxes and Income Redistribution in Uruguay

How much redistribution does Uruguay accomplish through social spending and taxes? How progressive are revenue collection and social spending? A standard fiscal incidence analysis shows that Uruguay achieves a nontrivial reduction in inequality and poverty when all taxes and transfers are combined. In comparison with other five countries in Latin America, it ranks first (poverty reduction) and second (inequality reduction), and first in terms of poverty reduction effectiveness and third in terms of overall (including transfers in kind) inequality reduction effectiveness. Direct taxes are progressive and indirect taxes are regressive. Social spending on direct transfers, contributory pensions, education and health is quite progressive in absolute terms except for tertiary education, which is almost neutral in relative terms.

Keywords: poverty, inequality, Uruguay, social spending, taxes

JEL Classification: I3, H2, H5

Suggested Citation: Suggested Citation

Bucheli, Marisa and Lustig, Nora Claudia and Rossi, Maximo and Amabile, Florencia, Social Spending, Taxes and Income Redistribution in Uruguay (September 21, 2012). Departamento de Economia, Facultad de Ciencias Socilaes Universidad de la Republica, Documentos de Trabajo 12/12, Available at SSRN: https://ssrn.com/abstract=2150168 or http://dx.doi.org/10.2139/ssrn.2150168