External publications

Taxation and social protection

von Schiller, Armin
External Publications (2021)

in: Esther Schüring & Markus Loewe (Hrsg.), Handbook on Social Protection Systems, Cheltenham: Edward Elgar, 276–288

ISBN: 978-1-83910-911-9
DOI: https://doi.org/10.4337/9781839109119.00039
Open access

Revenue mobilisation and social protection systems are intrinsically intertwined. It is impossible to think carefully about either independently of the other. People want to know what they can expect to get in exchange for the taxes and fees; governments can only provide social protection if there is enough funding. This last aspect is commonly the most prominently highlighted. Revenue is needed in order to finance more ambitious social protection systems and secure their sustainability. This issue is particularly salient in low- and middle-income countries where funding is particularly scarce and donors contribute non-trivial amounts of finance, especially in the area of social safety nets. However, looking at revenue collection only as a source of funding comes too short. The distributional impacts of a fiscal system depend on both, the revenue and the spending side. This is obvious and widely recognized in principle, but largely ignored in practise. Experts tend to focus on “their” side. Similarly obvious, where the funding comes from (who pays taxes and fees) will limit what programmes design are politically feasible. All these aspects need to be considered more prominently when discussing the scope for reforms in the social protection system. This chapter discusses these interlinkages and calls for a more integrated perspective of social protection and tax policy not only as a desirable step but as a necessary one.