Investments in social protection and their impacts on economic growth: tax financing options

The report builds on our previous research with ITUC, showing the economic benefits of social protection by examining the different financing options that states have at their disposal in order to strengthen and extend their social protection systems.

The study simulates the effects of different tax financing scenarios for social protection on household income, employment and overall GDP. We carried out computable general equilibrium analysis for Bangladesh, Colombia, Costa Rica, Georgia, Ghana, India, Rwanda and Serbia.

The report finds that overall, progressive forms of taxation generate much better outcomes in terms of redistribution and incomes for poor households and lead to increased employment and GDP over time.

The study underscores that those who can afford to pay more should pay more and that financing inclusive and resilient social protection systems in a fair way is possible. It is just a matter of political will.