# 6. Comparison of 2012/13 and 2016/17 Fiscal Incidence Analyses

Below we compare the results from the previous CEQ Assessment in Uganda, presented in Jellema et al. (2017), which is based on 2012/13 fiscal and household survey data, and the CEQ Assessment summarized here, which is based on 2016/17 data.

Overall, the redistributive impact of fiscal policy has not changed drastically between 2012/13 and 2016/17. While across all CEQ Income Concepts, estimated inequality was _lower_ in 2012/13 than in 2016/17, in both years all taxes and transfers accounted for a decline in inequality of approximately 3 Gini points from Market Income plus Pensions to Final Income (Figure 12a). While the marginal impact of indirect taxes on inequality appears larger in 2016, the marginal impact of subsidies and in-kind transfers on inequality has fallen (Figure 12c).

As discussed above, the increased impact of _net_ indirect taxes – that is, indirect taxes paid minus any subsidy benefits received – on inequality in 2016/17 relative to 2012/13 is due to the increase in the relative magnitude of indirect taxes (or, put differently, the _decrease_ in the relative magnitude of subsidies allocated). As it was primarily richer households who were benefitting from the electricity subsidy, the decision to not allocate an electricity subsidy in the current incidence exercise impacts those richer households the most. So, although rates of _net_ indirect tax payments have gone up for everyone, they have gone up by more for richer households, which in turn creates a larger impact on inequality.

The reduction in the impact of in-kind services on inequality is due mostly to a reduction in the impact of in-kind health care services. Whereas in 2012/13 in-kind health care service delivery contributed approximately 0.6 Gini points to a reduction in inequality, in 2016/17 the same in-kind services contributed approximately 0.1 Gini points to a reduction in inequality. This reduction in impact is likely due in part to a revised estimate of mandatory fees paid to public health care service providers in 2016/17.

The impact of fiscal policy on poverty is considerably larger more recently: in 2016/17 the fiscal system contributes to an increase in the poverty headcount ratio of approximately 2.3 percentage points while in 2012/13 fiscal policy had approximately zero impact on poverty (Figure 12b). The most significant difference in the evolution of poverty across CEQ Income Concepts between 2012/13 and 2016/17 is at Consumable Income, when the poverty headcount ratio increases by over 2 percentage points in 2016/17 and by less than 0.5 percentage points in 2012/13.

The principal difference between the effects of the fiscal instruments is that in 2016/17 the indirect taxes, particularly the VAT and the excise tax, have a considerably larger poverty-inducing effect. In 2012/13 the impact is close to 0 (Figure 12d). This result reflects both an increase in absolute terms in tax revenue coming from indirect taxes (while indirect subsidies have declined) and the exclusion of an electricity subsidy -allocated in the previous assessment- after it was determined that there were no longer implicit subsidies in the public provision of this service. In addition, it reflects the inclusion of the indirect effects of indirect taxes in the analysis, not included previously.

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