Fiscal reforms and income inequalities in Senegal and Burkina Faso: a comparative study

Abstract

There have been income and welfare redistribution in Burkina Faso and Senegal occasioned by fiscal reforms undertaken within the context of the WAEMU, where a unique VAT tax and common tariffs harmonization were adopted. The measure of redistributive effects and the costs of the horizontal inequality generated by the new taxations shows that, although the reforms are deemed positive for both countries, Burkina Faso benefited more. This is mainly explained by the relatively important place of fiscal evasion, with the self-consumption and the informal sector, and by the fact that most of the goods consumed by the poor households are not liable to taxation. The performances of tax systems have been improved, with an appreciable reduction in inequality in the two countries, particularly for Burkina Faso. The excess fiscal revenues generated from taxation are more important after the reform for both Senegal and Burkina Faso. African Journal of Economic Policy Vol. 11(2) 2004: 73-92