Mittwoch, März 16, 2005

The Flat-Tax revolution

Today´s good news come from Poland, where the government decided to implement a flat-tax system. The Czech government might follow this example soon. So the idea that this system could even spread to western europe one day, is not so far-fetched anymore.

The basic idea behind the flat-tax is, that by lowering the tax-rate to a single unified low rate and abolishing all tax exemptions, the state´s tax-revenues will actually rise. This is due to the fact a low tax rate will probably result in higher economic growth. On the other hand there are fewer incentives and possibilities for tax-evasion.

The system is explained in more detail in this paper published by the Adam Smith Institute.
The countries that have already introduced a flat tax include Estonia, Latvia, Lithuania, Slovakia, Romania, Georgia, and - to some extend - Russia, Serbia and Ukraine.

The economist also discusses this issue and reaches a quite optimistic conclusion. Open markets in the European Union might encourage a competition for the best economic and fiscal system:

"So far, the preferred response of the Germans and French is to press for an EU-wide ban on “fiscal dumping” and to push the EU towards tax harmonisation. The trouble is that EU decisions on tax are taken by unanimity—and there is no way that the Slovaks and others are going to surrender their freedom to set their own taxes. So some in western Europe are beginning to think of copying the flat-taxers, rather than fulminating against them. Gerrit Zalm, the Dutch finance minister, has said that his Liberal Party is considering a flat tax for the Netherlands, albeit at the high rate of over 30%. More surprisingly, advisers to left-of-centre governments in Spain and Germany have also done serious feasibility studies on flat taxes. If old Europe cannot beat the flat-taxers of new Europe, it may have to join them."

Meanwhile Craig of the National Exam makes the case for a Consumption tax system. But, as a german, I may be a bit biased against the "Mehrwertsteuer", because I already have to pay it everyday...


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At 2:40 PM, Anonymous Anonym said...



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