As we discussed in the previous section and was summarised by the Kakwani coefficients, most fiscal interventions in Jordan are progressive when considered separately and with respect to the pre-fiscal income. But to assess whether an intervention increases or reduces inequality one must take the whole fiscal system into account, that is, whether it is progressive relative to the income generated with all the other fiscal interventions (Inchauste and Lustig, 2017).<sup>51</sup> With this purpose we assess the marginal contributions to the changes in the Gini coefficient. In-kind health and education benefits reduce inequality by 3.1 points. After in-kind benefits, direct transfers are the most equalising spending (reducing inequality by 1.2 points). The significantly large expenditures on water and electricity subsidies reduce inequality by a similar amount (1.4 points). On the revenue side, direct taxes (PIT) marginally decrease inequality (0.1 points) while indirect taxes (GST and SST) increase inequality (0.5 points).

Official poverty is measured using the household per capita consumption aggregate and results in a poverty rate for Jordanians of 15.7 percent. In the CEQ framework this is equivalent to disposable income.<sup>52</sup> When measured with the national poverty line but based on market income, poverty is 18.2 percent. That is, the combination of direct taxes and direct transfers reduces poverty by 2.6 percentage points. When indirect subsidies and indirect taxes, which have a disproportionate burden on the poorest, are considered, poverty measured at consumable income would rise slightly to 15.8 percent. That is, while poorer households do pay indirect taxes (12 percent of market income for Decile 1), this is compensated by the benefit from indirect subsidies (equivalent to 17 percent of market income for Decile 1). Nonetheless, there are a number of vulnerable households who live just above the poverty line, so the net impact on the cost of living from indirect taxes affects poverty (as felt by households if not measured officially). As is standard practice, we do not report the poverty impact of in-kind transfers, since these benefits are not cash (as all the taxes and other spending benefits are), nor are they considered when constructing the poverty line.<sup>53</sup> Even a progressive fiscal system does not necessarily imply net positive transfers for all poor households. The Fiscal impoverishment indicator quantifies how many people were pre-fiscal poor and made poorer by the fiscal system or were non-poor and made poor. Excluding in-kind transfers in health and education and using the national poverty line as benchmark, 4.2 percent of individuals have been impoverished by fiscal policy. In other words, they were poor to begin with and were made poorer because they paid more in taxes than they have received in direct or indirect transfers, or their market income was above the poverty line but their consumable income fell below. Jordan’s fiscal impoverishment rate is low among middle-income developing countries. Using the international poverty line for lower-middle-income countries at Purchasing Power Parity (PPP) ($ 3.2), the fiscal impoverishment rate of Jordan (0.2 percent) is close to that in Chile and Brazil (see Lustig and Higgins, 2017).<sup>54</sup> On the other hand, close to 15 percent of individuals were made richer by fiscal policy, that is they were lifted above the poverty line because received more in cash or near cash benefits than they paid in taxes and contributions, or, even if they remained poor, they were better off after taxes and transfers.

> 51 We measure marginal contributions to consumable income, except for in-kind benefits, for which the marginal contributions are measured with respect to final income.

> 52 Poverty at disposable income is 15.5 percent. The small difference arises from the adjustment made in a small number of cases to prevent negative net market income values.

> 53 This is standard under the CEQ approach.

> 54 Although the numbers are not strictly comparable to the work by Lustig and Higgins (2017) because the fiscal impoverishment indicator is measured with respect to the PPP $2.5 international poverty line.