Study and analysis of the role and effects of tax revenues on income distribution and human development

This paper examines the role and impact of tax revenues on income distribution and human development in Uzbekistan during 2015-2022. Results reveal that the increasing tax-to-GDP ratio was matched by a gradual adjustment in the tax composition in favor of direct taxes, together with an improvement in equality indicators. More precisely, the Gini coefficient has decreased from 0.368 in 2020 to 0.350 in 2022, while the share of income held by the poorest 40% of the population has increased. Moreover, the strong correlation (0.96) existing between the growth of the human development index from 0.701 to 0.745 and increasing social spending in the budget from 56.7 percent to 65.3 percent proves the positive influence of tax resource allocation on human capital. Results, although indicating the creation of a virtuous circle of taxation, equity, and development, underline the need for further reforms because of the existing challenges related to the informal economy.

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