​Social protection and tax policy are commonly examined separately, yet they are strongly linked. Tax revenue levels and ‘mix’ matter to the resources available for social protection financing and their sustainability over time. They also affect the net incidence and distributional impact of public policy.

This paper contributes to efforts to include tax considerations in social protection analysis and design by discussing the key methodological issues in carrying out joint distributional analysis, reviewing the evidence on the incidence and distributional impact of taxes and transfers and discussing alternative tax revenue sources and their implications for social protection financing and sustainability.

This working paper was produced as part of project on social protection and tax funded by the Department for International Development (DFID).