Fiscal Policy, Income Redistribution, and Poverty Reduction: Evidence from Tunisia.

This paper estimates the impact of Tunisia's tax and transfer system on inequality and poverty and assesses the benefits from public spending on education and health. Results show that Tunisia's redistributive fiscal policy reduces inequality and extreme poverty significantly. However, based on the national poverty line, the headcount ratio increases, implying that a large number of the poor people pay more in taxes than they receive in cash transfers and subsidies. This is due to a relatively high burden of personal income taxes and social security contributions for low‐income households. [ABSTRACT FROM AUTHOR]