Originally published March 9 2005
Romania introduces new flat tax of 16 percent; adds momentum to flat tax wave sweeping Eastern Europe
by Mike Adams, the Health Ranger, NaturalNews Editor
Romania's new president has introduced a flat tax of 16 percent in an effort to prepare the country for its role as a stabilizing force in the the Balkans, and for its 2007 accession to the European Union. This tax applies to both personal and corporate income, and replaces five personal tax brackets ranging between 18% and 40% and a corporate income tax of 25%.
Tariceanu's centrist cabinet attempts to prepare Romania for its role as a stabilizing factor in the Balkans and the Black Sea and and for its 2007 accession to the European Union.
In this context, the new Romanian Government has introduced a new fiscal policy to eliminate, or at least reduce the tax evasion, corruption and poverty.Romania's new rate of 16% applies to both personal and corporate income.
Some economic analysts predict that Poland and the Czech Republic will soon join the club.
Apart from reducing the tax evasion, the flat tax system is also easy to administer and it encourages the unemployed to seek jobs, while the ones who already work are encouraged to work harder in order to increase their salaries for themselves, not only for the state's sake.By implementing this new fiscal policy, Tariceanu's government expects to bring the black economy in the open and tax it.
Dr. Alexander Klemm analysing the effects of the tax flat in Estonia, declared that while there was some improvement in reducing the tax evasion, a fix single tax did not have any effect on the labour supply work efforts or higher revenues to the state budget.
In Romania, as everywhere else in the former communist countries the taxes imposed by the state were progressive in order to finance various social welfare measures.
After the fall of communism in 1989, the Social-Democratic Party (PSD) continued to perpetuate the political and the economical legacy of the former communist party to a certain extent.
Due to the very poor administration of the state budget, in the last four years the underground economy was evaluated at 40%.
Manuela Paraipan received a Political Science degree in Romania, concentrating on Arab/Muslim domestic and external policy.
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