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Fiscal policy is central to not only macroeconomic stability and growth, but also to poverty and inequality reduction. This paper provides the most comprehensive assessment of the distributional incidence of Turkey's fiscal policy to date. It analyzes the combined and individual incidence of direct and indirect taxes, transfers, and social spending and benchmarks Turkey's achievements against peer countries. The results show that fiscal policy significantly reduces income inequality in Turkey, driven by social spending on education and health, and complemented by direct taxes and transfer schemes that countervail the inequality-increasing impact of indirect taxes. At the bottom of the income distribution, targeted transfers are insufficient to compensate for the effect of taxes, resulting in net increases in poverty. In the context of upper-middle-income countries, Turkey's performance is below the median. This is driven by the relatively larger negative impacts of indirect taxes and the more limited positive impacts of direct transfers and taxes. From a policy perspective, the paper contributes to identifying entry points for improving the equity impact of the fiscal package. Among these, targeting the minimum subsistence allowance (AGI) program toward the poor could be an efficient way forward. More broadly, the study represents a platform to simulate the distributional implications of a variety of fiscal changes to inform stakeholders and the policy debate.

Distributional Impact --- Fiscal and Monetary Policy --- Fiscal Incidence --- Fiscal Policy --- Indirect Tax --- Inequality --- Macroeconomics and Economic Growth --- Poverty --- Poverty Reduction --- Public Sector Development --- Social Spending --- Taxation and Subsidies --- Taxes --- Transfers

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This paper evaluates the impact of the Emergency Social Safety Net (ESSN) in Turkey, the largest cash transfer program for international refugees in the world. The paper provides prima facie evidence that the program quickly caused substantial changes in household size and composition, with a net movement of primarily school-age children from larger ineligible households to smaller eligible ones. A sharp decline in inequality is observed in the entire study population: the Gini index declined by four percentage points (or 15 percent) within six months of program rollout, and the poverty headcount at the

Cash Transfers --- Displaced Persons --- Gini Coefficient --- Human Assistance --- Inequality --- Migration --- Poverty --- Poverty Reduction --- Refugees --- Safety Nets --- Safety Nets and Transfers --- Services and Transfers to Poor --- Social Protections and Labor --- Targeted Social Assistance --- Vulnerable Population