2020). Additional challenges also arise in terms of potential differences between annual and lifetime impacts of consumption taxes (see, e.g., Thomas, 2022), and regarding combining analysis of income and consumption taxes given that their underlying bases differ.

While distributional analysis of the above taxes is challenging, the data exists to make it possible. With regard to most other taxes, there is often simply no data available to distinguish poor and rich taxpayers and allocate tax liability among them. For example, the corporate income tax (CIT) is applied to corporations rather than individuals, making it extremely challenging to attempt to allocate the CIT paid by the corporations to the individuals and households that will eventually bear the economic incidence of the tax. It is nevertheless possible to draw the broad conclusion that the CIT is progressive – based on the conventional view that capital owners bear the majority of the CIT, and given that capital income is disproportionately earned by high-income households (see, e.g., Nunns, 2012). That said, empirical evidence does suggest that at least some of the CIT may be borne by workers (in the form of lower wages), which would reduce the progressivity of the tax (see, e.g., Fuest et al., 2018).<sup>4</sup> While similar, high-level views of the likely distributional effects of other taxes can be made (e.g., the progressivity of a net wealth tax), detailed measurement of the degree of progressivity is not typically feasible (at least not in the absence of administrative data).

All in all, these limitations mean that detailed measurement of the _degree_ of progressivity is limited to the PIT, and to a lesser extent, VAT and excise taxes. These taxes, and particularly the PIT, are consequently the main focus of this paper. However, because of the need to provide an assessment for IDA countries of the progressivity of the entire tax system, the paper also undertakes an examination of the extent to which aggregate tax revenue data – which is available for a larger number of countries in a timely manner – can be used to assess the likely degree of progressivity of tax systems in IDA countries.

It should also be borne in mind that, beyond computation of progressivity metrics, there are additional ways to help assess whether countries are taking steps to increase the progressivity and fairness of their tax systems. For example, many countries are currently implementing reforms to their international tax rules to limit the extent to which individuals and companies that operate in multiple jurisdictions can avoid or evade tax. These may include unilateral measures, or those undertaken as part of current multilateral efforts to prevent base erosion and profit shifting (BEPS) activities, address the tax challenges of digitalization (including the proposed adoption of a global minimum tax), and enable the exchange of taxpayer information amongst tax administrations. While beyond the scope of this paper, assessment or stocktaking of the various steps that IDA countries have taken to implement such measures would be informative.

This paper is structured as follows: Section 2 briefly introduces various concepts of tax progressivity and progressivity measurement. Sections 3-5 then consider the three main approaches to measuring tax 4 There indeed remains considerable academic debate regarding the incidence of the CIT. See also, e.g., Gale and Thorpe (2022). Harris (2009) finds that even if labor bears the majority of the CIT, it remains progressive. While empirical attempts can be made to allocate the CIT to taxpayers based, for example, on tax return microdata specifying capital income (see, e.g., Nunns, 2012; Rohaly et al., 2005), this uncertainty regarding incidence, and hence the appropriate amount of CIT to allocate to capital income earners, makes it an extremely challenging exercise. A further complication arises regarding how foreign ownership should impact progressivity measurement. For example, it is arguable that any CIT borne by a foreign owner could be considered to have a neutral distributional impact as it is not paid by poor or rich domestic households. This may be a particular issue in developing countries where many large companies may be predominantly foreign owned.

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