rate for these individuals. This demonstrates that, even though the fiscal policies are poverty-reducing in 2019, there are groups of individuals who are worse off after taxes and transfers. We also find that the reduction in poverty due to fiscal policies is similar for households headed by Afro-Brazilians compared to those headed by whites. This finding is relevant given the previous evidence for Brazil that fiscal-induced poverty reduction in 2008/2009 was higher for whites than Afro-Brazilians (Pereira, 2016).

This paper contributes to the literature on fiscal incidence analyses that have been extensively applied to a variety of countries and contexts (Lustig, 2018, Cuesta et al., 2012, Higgins and Pereira, 2014, Bucheli et al., 2018, Greenspun et al., 2019, Lara Ibarra et al., 2019, Meija-Mantilla et al., 2019, Pabón et al., 2021). The available empirical evidence suggests that fiscal policies across the globe are often poverty- and inequality- reducing, and that reductions are typically more pronounced when in-kind transfers are considered. Sometimes, however, the effects of the fiscal system can be detrimental. In Zambia and Uganda, for instance, the poverty headcount ratio increases by 2.3 p.p. when considering the post-fiscal income (De la Fuente et al., 2017, Meija-Mantilla et al., 2019). Even though direct transfers were found to be pro-poor in such countries, they are not large enough to counteract the purchasing power declines caused by indirect taxes. Similarly, neither the presence of elderly in the household structure is a warranty of poverty decline nor the presence of children implies in increases in the likelihood of poverty, as demonstrated in the case of Armenia (Tarlovsky and Icaza, 2022). The same is also true when it comes to the ability of fiscal systems to mitigate existent gaps across gender, racial and other groups in a country’s population. Therefore, updated fiscal analyses are fundamental to designing well-informed policy actions, as governments seek to be as effective and efficient as possible to protect the most vulnerable populations.

The results in this paper are consistent and complementary to a recent study on fiscal incidence analysis for the case of Brazil. In a recent study, Silveira and Palomo (2023) use the latest national household budget survey (Pesquisa de Orçamento Familiar, POF 2017-2018) and find that direct cash transfer and in-kind transfers are the main poverty and inequality reducing mechanisms of the Brazilian fiscal system. Using self-reported data in the survey, the authors document the regressive character of the public servants’ pensions system ( _Regime Próprio de Previdência Social_ , RPPS) and regressive impacts of indirect taxes. Differently from Silveira and Palomo (2023), our paper models and simulates direct taxes and contributions instead of using survey responses. By considering different elements like job status and family composition, our estimates aim to add more consistency between the reported income and the direct taxes assessment. We also model rural pensions as a separate cash transfer and contributory pensions are treated as deferred income, while their treatment of government transfers is estimated as an alternative scenario. An advantage of our study is its cross-country comparability to the large body of work based on a comparable methodology. However, we are not able to separate between the pensions system for private-sector workers, the _Regime Geral da Previdência Social_ (RGPS), and the pensions system for public servants, the RPPS (for details on the pension system, see Paiva (2016)).

The remainder of this paper is organized as follows. Section 2 shows the details of the methodology and presents the data sources. Section 3 presents the main results, while Section 4 shows the fiscal incidence analysis focused on the demographic groups of interest. Section 5 discusses international comparisons. Section 6 concludes.

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