Moreover, a further differentiation could be made across specific areas of activity so as to provide incentives in support of a profit-investment nexus that helps to influence the direction and speed of structural change (TDR 1997, chaps. In developing countries, taxing consumption of luxury goods at a higher rate than mass consumption, besides having a progressive incidence, may also help in this regard. By the same token, an individual regressive tax may not necessarily contribute to greater inequality if the tax yield is spent in such a manner that it has a progressive effect, for example through social transfers and improved public services.