Sunday, March 7, 2010

The Flat Tax at Work in Moscow’s Real Estate Market

Those of you who have followed the flat tax revolution, beginning with the Baltic state of Estonia in 2004, know that Russia was the first large country to adopt the flat tax, effective January 1, 2001. This blog has posted results for Russia’s flat tax each year for the seven years 2001-07, documenting the rapid growth in revenue attributable to the flat tax.

The weekend edition (March 6-7, 2010) of the Financial Times carried a story on the Eastern Europe property market in the wake of the global financial crisis. The author noted that some Eastern European countries were faring better than many in Western Europe.

Prospects in Moscow were sufficiently attractive for British real estate firm Chesterton Humberts to open an office earlier this year. One of its agents, Greg Thain, who has lived in Moscow for 17 years, explained why:

"Working Russians have large disposable incomes because they pay just 13 percent [the flat rate] in tax and utilities are very low in real terms." Moscow’s population has grown rapidly because everyone in Russia who wants a good job moves to Moscow and the low flat-rate income tax enables many to afford a housing unit.


Daniel Nelson said...
This comment has been removed by the author.
Daniel Nelson said...

A flat tax is a percentage charge applied equally to everyone, regardless of their income level, investments, or other financial characteristics.

I like that the tax plan is easy to use but do not think it worth the benefit of injustice, how many people are taxed according to the specific financial circumstances.

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Alari said...

A small correction: Estonia adopted a flat tax in 1994.

cloff said...

As a poor person, I am against a tax that would make me pay more tax. I pay little to no tax now on my tiny income. Under a flat tax, I would have to cough up thousands. And who benefits? Just the rich and corporations.

cloff said...
This comment has been removed by the author.
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Hopefully, tax will be based with the income that people have so that it won't really cause damage in the budget.
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