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1. The Fate of Flat Tax in the EU countries

Author:
Krassen Stanchev
Publication Date:
12-2023
Content Type:
Working Paper
Institution:
Center for Social and Economic Research - CASE
Abstract:
Since 1989, flat tax (FT) reforms have been attempted in Europe and the EU only by ex-communist countries and Iceland. In the 1990s all ex-communist countries lowered and simplified their income taxes, often starting with corporate taxes. In the late 1990s and early 2000s they also reformed their social security systems. In many respects the tax reforms have never stopped, but with regard to income taxation they are less radical than in the 1990s and at the turn of this century. Even when there were reforms re-establishing progressive taxation, they have almost never returned to complex sets of nominal rates and a steep vertical ladder of progressive thresholds. This report attempts to reconstruct the reasons why EU countries moved to introduce proportional taxation on either corporate or personal income, or both, as well as the reasons behind five of them returning to progressive taxation. These reforms happened in different political and economic contexts. It would be difficult to identify unequivocal causality between flattening taxes and economic performance. However, the report compares the dynamics of economic growth and factors related to competitiveness for periods before and after the reforms were launched. The same effort has been made for indicators of wealth and disposable income. The analysis allows for a discussion of lessons learnt and of the prospects for further reforms. The report concludes that it seems impossible to prove that FT systems have been a key contributor to higher economic growth. However, it does seem that, if the social security contributions remain relatively stable and are financed by other tax revenues, they have a positive impact on fiscal performance and general welfare.
Topic:
Reform, European Union, Economic Growth, Tax Systems, Corporate Tax, and Flat Tax
Political Geography:
Europe and Post-Soviet Europe

2. The Biggest Problem in Post-Communist Transition: The Privatization of Large Enterprises

Author:
Anders Åslund
Publication Date:
09-2021
Content Type:
Working Paper
Institution:
Center for Social and Economic Research - CASE
Abstract:
Thirty years after the collapse of the Soviet Union, it is rather clear what transition policies have worked. Almost all the post-communist countries have become market economies and have achieved macroeconomic stability. Privatization was economically necessary, and its economic outcomes have been very positive. Alas, politically, these successes have often been unsustainable because of strong popular sentiments against the private ownership of big enterprises. Substantial renationalization has occurred. What went wrong? How could privatization be done better, or be defended? What should be done to defend private enterprise in the future? This paper argues that the nature of privatization is far less important than the establishment of good rule of law so that private property rights can be defended.
Topic:
Privatization, Economic Growth, Macroeconomics, Trade, Transition, Soviet Union, and Economic Stability
Political Geography:
Post-Soviet Europe

3. Seven lessons from post-communist transition

Author:
Andrei Shleifer
Publication Date:
02-2012
Content Type:
Policy Brief
Institution:
Center for Social and Economic Research - CASE
Abstract:
The 20th anniversary of the beginning of economic reforms in Eastern Europe and the Former Soviet Union provides a good opportunity to comment on the lessons of transition says Andrei Shleifer, a Professor of Economics at Harvard University. He made a top seven list, which might be useful to future reformers. Some of the issues are relevant not only for communist countries; the problems of heavily statist economies are similar.
Topic:
Development, Economics, Reform, and Trade
Political Geography:
Central Asia, Caucasus, Eastern Europe, and Post-Soviet Europe