Fiscal Reforms and Income Inequalities in Senegal and Burkina Faso: A Comparative Study

The West African economic and monetary union was created 1994, whch had as a main objective the reinforcement of the competitiveness of the member states by harmonizing their economic legislation. In 1995 indirect tax harmonization were adopted by a refitting of the nominal and effective protections of the community firms. The countries decided to strengthen their fiscal systems for a better interior resource mobilization, notably by the indirect taxes, the enlargement of the fiscal bases and the decrease of tax rates. Therefore Senegal and Burkina adopted the reforms instituted within the union. The regulation of exchanges within the union institutes a transient preferential tariff regime between countries of the union and precise the way it must be financed. A total exemption is established for some local products, of the traditional handicraft, and for some industrial products. Thus, countries out of the union pay, since 2000, tax duties defined according to a common external tariff based on a categorization of products. They also pay permanent and temporary taxes. About the categorization, the exchanged goods are distributed in four groups from zero to three Social goods; First necessity goods, raw materials, equipment, specific inputs ; Input and intermediate products ; Consumption goods and other products. But the fiscal reforms are policies that influence consumer and producers prices and challenge the initial distribution of living standards that existed between populations. These fiscal reforms consist to the choice of a VAT rate of 18% notably on goods whose initial rate didn't exceed 10% in most countries, in the same way, the rates of some goods were near or equal to 20%.