but less effective than direct transfers. Health spending is much more neutral, reducing inequality only by 0.3 points.

**_Table 4 Kakwani Coefficient and Marginal Contribution of Main Taxes and Transfers_**

**_Figure 8 Budget (JOD m) and Effectiveness of Main Taxes and Transfers_**

||Kakwani<br>Coefficient<sup>a</sup>|Marginal<br>Contribution<sup>b</sup>|2,000<br>million||8<br>Effective|
|---|---|---|---|---|---|
|Main taxes|||1,500<br>JOD||6<br>ness|
|PIT|0.6|0.1||||
|GST and SST|-0.2|-0.5|1,000||4|
|Direct transfers||||||
|NAF|0.7|0.4||||
|Bread subsidy|||500||2|
|compensation|0.6|0.7||||
|Other direct transfers|1.9|0.0|0||0|
|_Total Direct transfers_|3.2|1.2||||
|Estimated Takaful<br>(2021)|0.9|0.7|-500|IT<br>ST<br>rs<br>ad<br>AF<br>ul<br>er<br>dy<br>dy|nd<br>on<br>th<br>-2|
|Indirect transfers||||P<br>T + S<br>nsfe<br>Bre<br>N<br>akaf<br>Oth<br>ubsi<br>ubsi|n-ki<br>cati<br>Heal|
|Electricity total||||GS<br>Tra<br>T<br>ty S<br>er S|tal I<br>Edu<br>|
|subsidy|1.7|0.7||otal<br>rici<br>at|To<br>|
|Water total subsidy|1.2|0.8||T<br>lect<br>W||
|_Total Subsidies_|2.9|1.4||E<br><br> <br>||
|||||Taxes<br>Direct Transfers<br>Indirect|In-kind|
|In-kind transfers||||Subsidies|Benefits|
|Education net benefits|0.5|2.8||||
|Health net benefits|0.4|0.3||Budget (LHS)<br> Effectiveness (|RHS)|

Notes:

- a. Kakwani coefficients measure whether a fiscal intervention exercises an equalizing or unequalising force. It is measured as the difference in the concentration curve of the tax and the Gini for market income (or the inverse in the case of transfers). Progressive interventions have positive Kakwani coefficients, and regressive ones have negative coefficients.

- b. Marginal contribution is the points which the Gini Index is reduced between market income and consumable income, or between Consumable and Final income (for in-kind transfers); a positive contribution is a reduction in Gini, negative contribution is an increase in Gini.

Budget Is the budget identified in the survey. Effectiveness is marginal contribution / budget. GST and SST include the cascading indirect effect of GST exemptions. Total electricity and water subsidies include residential subsidies and the indirect effect of commercial and industrial (cross) subsidies.

Source: 2017-18 HIES, 2018 Government Budget, administrative data and World Bank analysis.

# Results in International Context

In this section we compare Jordan’s performance to other countries in terms of fiscal space and distributional impact (all data are included in an appendix). The database we use is from the CEQ Institute and includes 42 different countries, some with multiple years of studies. We begin by looking at the overall progressivity of Jordan’s fiscal system relative to other countries. Figure 9 presents the extent to which fiscal policy in 42 countries (with five countries having two entries) reduces inequality as measured by the Gini Index. It shows both the reduction in Gini when moving from market income to consumable income— that is, taking only cash taxes and benefits into account (upper panel)—and from market income to final income—that is, including public spending on health and education (lower panel). The charts are ranked from most inequality reducing to least. Whether we consider inequality in strictly monetary terms or also