Poor households in the Middle East pay more in taxes, get less in subsidies

A World Bank analysis shows that in the Middle East and North Africa, the poorest households pay a larger share of their income in indirect taxes. Meanwhile, wealthier households receive more benefits from untargeted subsidies, especially for energy. This means government spending and taxes often make inequality worse, not better.

Governments in the Middle East and North Africa have long used subsidies to keep prices low for things like fuel and food. This paper shows that these subsidies mostly benefit the rich, who consume more. It also shows that the poor pay more in sales taxes, which makes them poorer. This means that the current system of taxes and spending is not helping to reduce poverty or inequality, despite official goals.