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Horizontal inequity occurs when employees and self-employed with the same income end up with different effective tax burdens, due to the difficulty of enforcing taxes on self-employed. Based on detailed micro-tax simulations models integrated with household surveys in 29 developing countries, we show that tax systems incur large horizontal inequities in practice and that reforms which improve vertical equity worsen horizontal equity by a comparable amount. An in-person survey in Pakistan and online surveys across multiple countries reveal widespread concern about horizontal equity. Randomized information treatments heighten this concern but do not shift tax preferences toward addressing horizontal inequity.
Authors

Research Fellow World Bank
Pierre is an IFS Research Fellow and an economist in the Macro and Growth Unit of the World Bank's Development Research Group.

Research Associate University of Melbourne
Christopher is an applied microeconomist working on development economics, political economy, and public finance.

Research Associate Harvard Kennedy School
Anders is a Research Associate of the Institute for Fiscal Studies and Assistant Professor of Public Policy at Harvard Kennedy School.
Economist World Bank
Working Paper details
- DOI
- 10.1920/wp.ifs.2026.4626
- Publisher
- Institute for Fiscal Studies
Suggested citation
Bachas, P et al. (2026). Horizontal equity of taxation: citizen beliefs and policy preferences. 46/46. London: Institute for Fiscal Studies. Available at: https://ifs.org.uk/publications/horizontal-equity-taxation-citizen-beliefs-and-policy-preferences (accessed: 14 November 2026).
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