@article {10.34196/ijm.00333,
article_type = {journal},
title = {The redistribution effect of taxation in emerging economies: Evidence from a microsimulation exercise in Zambia},
author = {Mwale, Evaristo and Robinson, Zurika},
volume = 19,
number = 1,
year = 2026,
month = {may},
pub_date = {2026-05-19},
pages = {1-31},
citation = {IJM 2026;19(1):1-31},
doi = {10.34196/ijm.00333},
url = {https://doi.org/10.34196/ijm.00333},
abstract = {The study investigates taxation, poverty, and income inequality in Zambia, aiming to identify fiscal reforms that boost revenue, alleviate poverty, and reduce inequality. It examines the effects of Personal Income Tax (PIT), Value-Added Tax (VAT), Turnover Tax (TOT), and Excise Duties using the MicroZamod microsimulation model and STATA modelling from 2010 to 2019. Key findings show that taxes increased the poverty rate by an average of 2 percentage points, with VAT as the main contributor (72.6\%), followed by TOT (19.3\%), PIT (4.2\%), and Excise Duties (3.8\%). VAT, though a major revenue source, fails to reduce poverty, while PIT significantly reduces inequality, contributing 70\% of the reduction in the Gini coefficient. This study assesses the cost-effectiveness of various taxes in relation to poverty reduction and inequality by calculating welfare multipliers per 1 billion Kwacha of revenue generated. By doing so, it significantly contributes to the existing literature and advances our understanding of how cost-effectiveness indices can inform the formulation of optimal tax policy. VAT increases the national poverty rate by 0.45 percentage points per billion Kwacha raised, whereas PIT raises poverty by only 0.04 percentage points but reduces the Gini coefficient by 0.68 percentage points. Excise Duties slightly improve income distribution with a 0.05 percentage point reduction in the Gini coefficient, while TOT marginally worsens inequality with a 0.06 percentage point increase per billion Kwacha raised. The research emphasises PIT’s potential in reducing inequality and proposes tax reforms to reduce poverty and inequality. Policymakers can use these insights to optimize tax policies, balancing revenue generation with the goals of reducing poverty and inequality.},
keywords = {Tax, Poverty, Inequality, MicroZamod, Social Protection},
journal = {IJM},
issn = {1747-5864},
publisher = {International Journal of Microsimulation},
}