Cover -- Title Page -- Contents -- Foreword -- Preface -- Abbreviations -- CHAPTER 1 Public Finance for Poverty Reduction -- Introduction -- Rationale for the Role of Government -- Limits to Government Intervention in Developing Countries -- Structure of the Book -- Debt Sustainability -- Taxation -- Public Expenditure Tracking Surveys -- Benefit Incidence Analysis -- The Way Forward: Topics for Future Study -- Conclusion -- Notes -- References -- PART 1 Concepts in Public Finance -- CHAPTER 2 Debt Sustainability for Low-Income Countries -- Introduction -- Traditional Approaches to Debt Sustainability: A Brief Review -- Fiscal Approach -- External Approach -- Solvency Approach -- Concessionality and the Present Value of Debt -- Operationalizing Debt Sustainability Concepts: The HIPC Initiative -- Four Steps Necessary to Conduct a DSA -- Debt Sustainability Concepts Used in the HIPC Initiative and the Impact of the Initiative -- Alternative Approaches to Analyzing Debt Sustainability -- Debt Overhang -- Debt Sustainability from a Human Development Perspective -- An Explicit MDG Perspective in the MDRI -- Conclusion -- Notes -- References -- CHAPTER 3 Revenue Design and Taxation -- Introduction -- Objectives of Tax Systems -- Raising Revenue to Fund Government Operations -- Assisting in the Redistribution of Wealth and/or Income -- Encouraging or Discouraging Certain Activities with Favorable Tax Provisions -- Considerations for Choosing among the Objectives -- Criteria for Evaluating Taxes -- Efficiency -- Horizontal and Vertical Equity -- Consumption and Income Taxes -- Tax Incidence -- Actual and Perceived Fairness -- Administrative Feasibility -- Considerations for Choosing among the Criteria -- Aggregate Level of Taxes -- Relative Use of Different Tax Instruments -- Different Types of Taxes.

Considerations for Determining the Relative Mix of Taxes -- Intercountry Comparisons -- Revenue Considerations -- Administrative Considerations -- Fairness Considerations -- Political and Transition Considerations -- Effectiveness of Tax Instruments in Redistributing Wealth or Income -- Different Tax Instruments -- Costs and Benefits of Using Taxes to Redistribute Wealth and Income -- Effectiveness of Particular Tax Provisions in Reducing the Tax Burden on Poor People -- Individual Income Tax -- Tax System as Part of the Transfer System -- Exclusion of Poor People from the Income Tax System -- Provisions Targeted at Low-Income People -- Value-added Tax -- Excise Taxes -- Payroll Taxes -- Business Taxes -- Conclusion -- Note -- References -- CHAPTER 4 Assessing Front-line Service Delivery -- Introduction -- Provider Surveys: Key Features and Potential Uses -- Data Collection -- Diagnosis -- Capacity Building -- Research -- Survey Applications in Selected Countries -- Leakage of Public Funds -- Absenteeism and Job Migration -- Role and Adverse Consequences of Asymmetric Information in Public Spending -- Conclusion -- Notes -- References -- CHAPTER 5 The Impact of Budgets on the Poor -- Introduction -- Analyzing Tax Incidence -- Statutory Tax Incidence Versus Economic Tax Incidence: Tax Shifting -- Tax Burdens and Excess Burdens -- Use of the Counterfactual -- Conventional Models of Tax Incidence -- Assumptions Used in Conventional Models of Tax Incidence -- Equilibrium Approaches to Tax Incidence -- Conventional Versus General Equilibrium Approaches: Advantages and Disadvantages -- Lifetime Versus Annual Tax Incidence -- Tax Expenditures -- Incidence of Negative Taxes -- Impact of the Institutional Setting on Tax Incidence -- Tax Incidence and Fiscal Decentralization -- Tax Evasion and the Incidence of Tax Evasion.

Impact of Other Government Policies on Income Distribution -- Country Examples of Tax Incidence -- Estimating the Incidence of Public Expenditures -- The Basic Measurement Issue -- The Traditional Approach: Benefit Incidence -- The Behavioral Approach: Marginal Willingness to Pay -- Traditional Versus Behavioral Approaches: Advantages and Limitations -- Benefit Incidence and Behavioral Approaches Combined -- Country Examples of Expenditure Incidence -- Net Fiscal Incidence: Combining Tax and Expenditure Incidence -- Conclusion -- Notes -- References -- PART 2 Case Studies from the Latin America and the Caribbean Region -- CHAPTER 6 Analyzing Debt Sustainability -- Introduction -- Alternative Approaches to Analyzing Debt Sustainability -- Theoretical Foundations for the Modules in SimSIP Debt -- Debt Projection Module -- Deficit-Debt Consistency Module -- Simulations for the Debt Projection Module in Paraguay -- External Sustainability -- Fiscal Sustainability -- Simulations for the Deficit-Debt Consistency Module in Paraguay -- Conclusion -- Annex -- Notes -- References -- CHAPTER 7 Evaluating a Tax System -- Introduction -- Revenue Adequacy: Comparing across Countries and Examining the Budget Deficit -- International Comparisons -- Tax Effort and the Budget Deficit -- Tax Structure -- Buoyancy of Revenues -- Revenue Stability -- Excess Burdens and Economic Distortions -- Distribution of Tax Burdens -- Vertical Distribution -- Horizontal Distribution -- Weak Tax Administration and High Tax Evasion -- A Potential Tax Reform Package: Feasibility, Content, and Revenue Effects -- Feasibility and Strategy -- Content of a Tax Reform -- Revenue Impact -- Annex: Estimating Marginal Effective Tax Rates on Investment -- The Concept -- Methodology -- Effective Tax Rate -- Real Cost of Financing -- Net-of-Tax Rate of Return on Capital.

Gross-of-Tax Rate of Return on Capital -- Capital Goods -- Inventory -- Land -- Aggregation -- Notes -- References -- CHAPTER 8 Measuring Targeting Performance through Public Expenditure Tracking Surveys -- Introduction -- Central Government Targeting of Social Spending -- Funding Transfers from Central to Local Government: Efficiency Problems -- Targeting Performance of the Four Principal Transfer Programs -- Unpredictable Volatility of Central Government Transfers -- Transparency Problems -- Insufficient Auditing and Supervision -- Leakage of Public Funds from Transfer Program, as Revealed by the PETS -- Leakage in the VDL Program, as Revealed by the PETS -- "Milk" Leakage Stage 1: Transfer from Central Government to the Municipality -- "Milk" Leakage Stage 2: Unaccounted-for Conversion of Transfer to Products -- "Milk" Leakage Stage 3: Transfer from the Municipality to the Local Committees -- "Milk" Leakage Stage 4: Transfer from Committee to Beneficiary or Household -- "Milk" Leakage Stage 5: Dilution of the Ration within the Household -- Conclusion -- Conclusions Specifically Regarding the VDL Program -- Broader Conclusions -- Notes -- References -- CHAPTER 9 Benefit Incidence Analysis and Social Protection -- Introduction -- What to Target? Basic Needs, Poverty, and Social Exclusion -- Overview of Existing Social Protection Programs -- Risk Mitigation and Coping Programs -- Overall Performance: Coverage, Costs, and Incidence -- Early Childhood Development -- Food Programs -- Cash Transfers -- Other In-Kind Programs -- Pension Programs -- Housing Programs -- Social Exclusion and Social Protection -- What Can We Learn? -- Programs for Children Ages 0-5 and for Pregnant Women -- Programs for Children Ages 6-14 -- Programs for Teenagers and Young Adults Ages 15-24 -- Labor Market Programs for Adults Ages 25-60.

Programs for Senior Men and Women Age 60 and Above -- Programs for the General Population: Cash, Food, and Housing Transfers -- Recommendations for Social Safety Net Programs -- Social Information Systems: Targeting, Monitoring, and Evaluating -- Cost Effectiveness and Financial Sustainability -- Strengthen Interagency Collaboration and Third-Party Involvement in Benefits Delivery -- Improve Financial Autonomy and Provide Isolation Mechanisms -- Exploit Reliable Sources of Information -- Improve Collaboration between National and Subnational Governments -- Annex: Estimating the Incidence of Social Protection Programs -- Centros CAIF -- Food Programs -- Cash Transfers -- Labor Market -- Housing Programs -- Notes -- References -- PART 3 Case Studies from Africa -- CHAPTER 10 Analyzing Debt Sustainability -- Introduction -- Review of Previous and Current Debt Relief Initiatives -- Traditional Debt Relief -- Debt Sustainability Criteria of the Original HIPC Framework -- Outlook beyond the HIPC Initiative -- Debt Accumulation, Stagnation, and Debt Relief -- Long-term Trends in Total External Debt -- Debt-Service Problems and Traditional Debt Relief -- Debt Relief under the Enhanced HIPC Initiative -- Using Debt Projections to Analyze Debt Sustainability -- Using SimSIP Debt's Deficit-Debt Consistency Module -- Conclusion -- Notes -- References -- CHAPTER 11 Analyzing the Potential Impact of Indirect Tax Reforms on Poverty with Limited Data -- Introduction -- Medium-Term Targets for Public Revenues and Structure of Taxation -- Assessing the Impact of Indirect Tax Reforms: VAT Exemptions -- Aggregate Statistics -- Consumption by Category of Goods -- Tax Revenues by Category of Goods -- Comparison of the Incidence of Taxation to the Incidence of Social Spending -- Size of Various Benefits and Taxes -- Coverage -- Targeting -- Eradicating Poverty.

Upward Bias in the Estimates of Benefit Incidence Analysis.