Wednesday, November 24, 2010

Thanksgiving: Giving Thanks for the Flat Tax

Romania: On November 22, 2010, Romania’s Senate adopted a draft law by a 54 to 31 vote to reduce the flat tax from its current 16% rate to 10%.  Proposed by Economy Minister Ion Ariton, the bill was supported by opposition lawmakers.  The argument in support of the 10% rate was that it would both generate growth and increase revenue.

If the larger Chamber of Deputies approves the rate reduction, it will become law.

As expected, the IMF urged Romania not to lower its flat rate to 10%, insisting that a rate cut would reduce revenue.  Stay tuned!

Estonia: In a recent radio interview, Prime Minister Andrus Ansip defended the flat tax, rejecting a proposal by the opposition Center Party to switch to a graduated rate system.  Ansip pointed out that Estonia has the lowest public debt in the EU, which could be paid off using reserve funds.  In his view, the flat tax was instrumental in Estonia having the highest growth rate in the EU during the past decade.

Hungary: As previously blogged, Hungary joined the league of flat-tax members, enacting a 16% flat rate on personal income effective January 1, 2011.

For more information on these and other countries, check out Google Blog search and Google News on the flat tax.

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