This project profiles and analyses informal taxes and transfer payments made by households in Rwanda, and considers their incidence, scale and distributional effects on household welfare levels and income distribution alongside formal, government-based taxes and transfers.
The aim of this project is to help policymakers in the optimal design of fiscal policy by demonstrating how analysis of fiscal incidence can be expanded to include informal taxes and transfers.
The study covers two aspects of fiscal incidence analysis of informal taxes and transfers:
The scale of informal transfers is found to be very large – over 95% of households give and receive them. The scale of some informal taxes is also large. Overall, the combined effects of informal taxes and transfers are regressive, compared with a flat or slightly progressive effect of formal fiscal taxes and transfers.
You can read and download the full report here.
Published on: 20th January 2021