rules of the tax statute, it was not possible to capture a good percentage of the exempt income and deductions.

As for contributions to social security for pension, when the workers report that they pay a portion and their employer the remainder, the employee contribution is equal to 4 percent of his wage, and the remainder 12 percent is paid by the employer. When the worker reports paying the full contribution, the worker’s contribution is 16 percent of the wage. In like manner, the contribution of the workers for health care corresponds to 4 percent, while the employer's contribution equals 8.5 percent of the salary, provided that the employee earns more than ten monthly minimum wages.<sup>33</sup> If the employee reports paying the full contribution or if the contribution is deducted from the pension, the rate is equivalent to 12.5 percent. In the case of work accidents and professional disease insurance, a rate of 0.52 percent was applied for those who report been enrolled. The rates for this subsystem depend on the economic activity and are higher for the highest risk activities. In this case, the lowest rate was used from a lack of sufficient evidence on the type of rate to be used.<sup>34</sup> Regarding social spending, all the social programs whose beneficiaries were directly identifiable in the household survey were included. The per capita cost of the program was calculated by dividing the total budget by the number of beneficiaries, taking information from administrative records. This per capita value was assigned to those who reported receiving the transfer.<sup>35</sup> When regional information was available, the additional transfer from the department or city to which the beneficiary belongs was attributed, as was the case with transfers for early childhood care and school meals. For Más Familias en Acción and Colombia Mayor, the incentive value provided by the government to its beneficiaries was assigned, according to the municipality or department in which they reside.<sup>36</sup> Programs, such as rate subsidies or interest forgiveness, were excluded since access to each of these loan types and debt forgiveness depends on the score from the Targeting Selection System (SISBEN III). Programs targeted through the SISBEN, such as BEPS or Ser Pilo Paga, were also excluded, although their magnitude is low.<sup>37</sup> Likewise, housing or interest rate subsidies for the purchase of housing, rural housing, or income generation programs in rural areas were not considered.

As far as indirect taxes are concerned, it is assumed that consumers exclusively pay the burden of indirect taxes. The amount paid in respect to indirect taxes was estimated by applying the rates established in law to each article present in the ENPH, which was acquired from a formal retailer. Additionally, given the existence of informality and goods excluded from the payment of this tax, the Cost-Push model was used to estimate the “embedded VAT” to finally calculate the effective tax rate for VAT (calculated as the total VAT collections divided by total private consumption by households). For the national consumption tax and taxes on alcohol and tobacco consumption identified in the ENPH, only the rates established by law were used, which allowed estimating the direct burden of these taxes on households.<sup>38</sup>

> 33 The CREE replaced employers’ contributions for their workers with incomes below ten monthly minimum wages.

> 34 For the details on the tax law applicable to direct taxes and social security contributions, see annex II , in Nuñez et, al. (2019).

> 35 The only exception is victimization transfers, the value of which was taken directly from the survey having been unable to clarify what kind of subsidy it is.

> 36 For detail on the procedure, see annex II, in Nuñez et, al. (2019).

> 37 BEPS: Periodic economic benefits [BEPS], is a voluntary savings program for the elderly for those who do not have the resources to obtain a pension (income up to a monthly minimum wage). The value of the subsidy is 20% of the total saved once the person reaches retirement age (57 years for women and 62 years for men). “Ser Pilo Paga” is a National Government scholarship program that subsidizes higher education for poor students (according to the SISBEN score) and have obtained a good score on the Saber 11 State standardized tests. The program benefited 40,000 students.

> 38 More detailed information is found in Annex III in Nuñez et, al. (2019).

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