# 1 Introduction

Public revenue and expenditure policies, or taxes and transfers, shape individuals’ behaviors, consumption, savings and investment patterns, participation in labor markets, and access to social safety nets and other publicly provided goods and services. Poor and vulnerable women, men, and children make decisions about how much to work outside the home for pay or inside the home without pay, about how much to save and spend, about what to buy, and about which services are essential for which household members. These decisions are often made under severe financial, social, and cultural constraints, which fiscal policies can either ameliorate or exacerbate. Fiscal incidence analysis (FIA), which accounts for the receipt of public expenditures (transfers) and contributions to public revenues (taxes), can demonstrate how policies affect welfare, purchasing power, and wealth, and can identify policies that are most effective in redistributing public resources to those who need it most.

While FIA has become an integral component for assessing the equitable nature of fiscal systems, most FIA work does not attempt to describe how fiscal policy differentially impacts men, women, and children. Incidence accounting at the individual level is challenging for two reasons. First, fiscal policies either support or hinder activities a household member pursues, rather than individual household members or their characteristics. Second, when tax burdens and transfer benefits are linked directly to individuals or their characteristics, they may or may not be shared broadly among all household members. For instance, a woman receiving a cash transfer may not necessarily control how that additional income is used. Analogously, a man’s statutory liability for income taxes may not mean he alone will bear the entire economic burden of any income lost to tax payments.

Gender norms influence the activities in which men and women participate. Fiscal policy either supports economic and social activities through public expenditures or makes such activities more expensive by imposing taxes. For example, Barnett and Grown (2004) identify four differences in economic activity which condition the impact of fiscal policies: gender differences in paid formal and informal employment and wages, gender differences in unpaid care work or participation in social reproduction, gender differences in asset ownership, and gender differences in consumption behavior. The imposition of taxes on the wages of those who are formally employed or the support of subsidy expenditures encouraging consumption of basic commodities, for example, link fiscal policy directly to economic and gender-based inequality.

International frameworks have also implicitly connected fiscal policy to gender inequality. For example, the Sustainable Development Goals 2030 (SDGs) have listed gender equality (SDG 5) and reduced inequality (SDG 10) as separate goals; while SDG Target 5.4, “Recognize and value unpaid care and domestic work through the provision of public services, infrastructure and social protection policies...” and SDG Target 10.4, “Adopt policies, especially fiscal, wage and social protection policies, and progressively achieve greater equality” are listed separately. Both dimensions of equality will likely be addressed through a common set of fiscal and social policies.<sup>1</sup>

> 1. Social and fiscal policies supporting goals and activities in targets 5.4 and 10.4 will be funded at least partially by countries’ own revenues, which also links these SDG targets explicitly to tax and revenue collection policy. While grants, donor aid, and concessional loans will partially fund or otherwise support public policy, the contribution from domestic resources is expected to be equally large if not larger (Lagarde and Gaspar 2018). For an empirical look at how increased mobilization of domestic resources may weaken the equity impacts of expenditures, see Lustig (2018).

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