bythepoororusedbythemto' .1C1esoftenraisetheprices ofgoods cons~ed.1ncrease their d " emanycountries havenoinherita prouct.1vJ.ty; attheotherestrem Incetaxordonotenforce it. -38-131.Governments wouldbewelladvised toevaluate carefully thesumtotaloftheir activities ontheincomes ofthepoor-womenandmen.Oftentheymayfindthat thebestwaytoalleviate poverty istoremoveoldsubsidies, regulations andtaxes whichendup,directly orindirectly, beingpaidbythepoorest members ofsociety, tothebenefit ofupper- andmiddle-income groups. 132.Examples ofgovernmental programmes andactivities whichdiscriminate against thepoorareabundant, especially inthosecountries, particularly inLatin America, wherethefinancing ofgovernmental deficits isachieved through an "inflation tax".Indeed, theinflation taxisprobably themostinequitable ofall taxes,sinceitcanbeavoided bytherich-byrestructuring theirassets -butnot bythepoor.Effective anti-inflationary policies arethusanimportant component ofmeasures designed toeliminate governmental discrimination against thepoor. 133.Taxexpenditures -i.e.,thegranting oftaxexemptions andtaxincentives to privileged sectors orregions -frequently discriminate against thepoor. The advantages tendtobeappropriated bytherichest segments ofsociety tothe detriment ofbudgetary balance and,ultimately, ofthepoor. 134.Similarly, direct andindirect subsidies tosuperior goodswithahighincome elasticity ofdemand, suchasgasoline, water,electricity, gasetc.,although supposedly introduced tofavourthe"havenots", endupbenefiting themore privileged groupsinsociety. Another example ofdiscrimination against thepoor istheprovision offreepublicuniversity education. Thisfrequently absorbs most ofthepublicfundsallocated toeducation, tothedetriment ofthequality of primaryeducation. Creditsubsidies toagriCUlture havealsobeenacauseofland concentration andworsening incomedistribution. Taxesonthewagebillofthe modernsectortendtoreduceboththelevelofurbanemployment andthetake-home payoflow-income employees. 135.Areassessment ofmanygovernmental activities ofthetypenotedabovewould bedesirable. Analysis hasshownbeyond muchdoubtthatthebeneficiaries ofmost subsidies arenotthepoor. Thustheelimination ofdiscriminatory measures would increase efficiency, improve thedistribution ofincome andreducepoverty. It wouldalsoimprove thebudgetary position oftheGovernment. Unfortunately, however,itoftenisdifficult toformapolitical coalition ofthepoortostop thediscrimination against them. Democratic political processes obviously havea roletoplayhere. Thefactremains, nonetheless, thatstepstohelpthepoorby removing measures thatharmthemoftenseemtobeunpopular. Upper- and middle-class constituencies, thedirectbeneficiaries oftaxcredits andsubsidies, andthebureaucracies thatadminister themarewellorganized andwillresist change. Thepoorareunorganized, anditisdifficult tomobilize support for abolishing policies thatindirectly ordirectly discrimina~e ~gai~st them. T~i~is notanargument against pushing aheadwithreforms butan1nd1cat1on thatpo11t1cal reforms mayhavetoaccompany economic ones. F.International co-operation ineradicating poverty 136.Whilethemajorresponsibility foreradicating poverty ~ecessarily ~estswith thedeveloping countries themselves, international co-operat1on c~nprov1de . effective support toefforts atthedomestic level. Themostobv1ous wayth1s.can bedoneisbycreating aglobal environment conduci~e t~accelerated ands~sta1ned growth. Thedeveloped market economies haveanob11gat1on notonlytothe1rown -39-1bttotheinternational community atlargetoadoptmacro-economic policiespeope u . .b . . f d .thatpreferably encourage andatleastdonot ~':}U ~tanexpa~s~on. 0prouct:OD. Whileitwouldbewrongtoimagine thatgrowth 1nr1chcountr1es w1l1automatically diminish poverty inpoorcountries, itisce~tainly theca~e ~hatprolonged. stagnation intherichcountries wouldmake ~tmuchmoredl.ff1cult substantlally to reduceworldpoverty. 137.Perhaps themosteffective areaofinternational co-operation isinternationa: trade. Worldcommerce andtoalesserextent international capital flowslink
**Analysis**
The text discusses the economic and social implications of government policies on poverty alleviation, focusing on taxation, subsidies, and international cooperation. It highlights the need for governments to evaluate their activities and remove discriminatory measures that disproportionately affect the poor. The text also touches on the importance of international cooperation to eradicate poverty.

**Category**
Economic development, International trade