Indirect Tax Reform and Poverty in Albania

Abstract

This paper investigates the effects and effectiveness of indirect tax reform on poverty in Albania by using normalized consumption dominance curves method; initiated and developed by Makdissi and Wodon (2002) and improved by Duclos, Makdissi and Wodon (2008); and applying the approach on Albanian Living Standard Measurement Surveys (LSMS) data (2002-2008); to explain poverty reduction and life standard improvement expected from increasing tax on non-food expenditures and putting subsidies on food expenditures in Republic of Albania. The results are in favor of suggested tax reform policies­