Analysis of the Effect of Tax Fairness and Complexity on the Poverty Gap in Urban and Rural Areas of Iran

Document Type : Research Paper

Authors

1 Associate Professor in Energy Economics, Faculty of Economics and Administration Sciences, University of Mazandaran

2 Professor in Economics, Faculty of Economics and Administration Sciences, University of Mazandaran

3 M.A. Student in Economics Science, University of Mazandaran

10.22051/ieda.2024.45808.1392

Abstract

The main purpose of the current research is to investigate the factors affecting poverty in the provinces of Iran and specifically to focus on analyzing the effect of tax complexity and fairness. For this purpose, the poverty gap index was calculated for 31 provinces from 2011-2020 using raw household income-expenditure data. Then, using the dynamic panel data method and GMM estimator, the research model was estimated for urban and rural areas. Calculating the poverty index indicates that the poverty gap in rural areas (with an average of 38.62 Percent) is larger than in urban areas (with an average of 24.50 Percent). The estimation results in urban and rural areas confirm the phrase "poverty brings poverty." Tax fairness in both regions harms the poverty gap, and the effect size in rural areas is more than three times that of urban areas. Increasing the tax system's complexity in urban areas is detrimental to the poor, and in rural areas, it is beneficial to the poor. Inflation in both regions has an undesirable effect on poverty, and of course, in terms of effectiveness, the rate of its undesirable effect on poverty in rural areas is more than double that of urban areas. The increase in urbanization increases poverty in urban areas, and the increase in rural population reduces rural poverty. Also, by moving towards goods-oriented production activities and increasing its share and weight compared to service-oriented production activities, poverty will decrease in urban and rural areas, and the size of the favorable effect of this factor on poverty in rural areas is almost three times that of urban areas. On this basis, poverty alleviation economic policies with a greater focus on rural households than urban households should be used to reduce poverty, adopt supportive policies and create income-generating job opportunities for the urban and rural poor. Also, poverty reduction should be targeted in provinces with a higher poverty gap index

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منابع
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Iranian Economic Development Analyses
Volume 9, Issue 2 - Serial Number 24
October 2023
Pages 121-140

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