Originally published March 14 2005
Flat taxes becoming popular in investment-hungry Eastern Europe
by Mike Adams, the Health Ranger, NaturalNews Editor
Slovakia decided in 2004 to lower its corporate and individual tax rate to a flat 19%, a move that makes the tiny nation the eighth eastern European country to go with a flat tax model. Economists believe that flat tax rates spur investment and economic growth. Western European nations, with extensive social welfare systems, high unemployment, and very high tax rates, are angered that the eastern nations are beginning to siphon off new investments.
Subcontractors to nearby Volkswagen Slovakia and other car companies inhabit some of the nondescript buildings, but much of the park is uninhabited or undeveloped.
He is expecting all sorts of foreign investors, and his governments decision last year to ratchet down tax rates to a uniform 19 percent is giving him reason for optimism.
On Jan. 1 last year, Slovakia became the eighth eastern European country -- after Estonia, Russia, Hungary, Serbia, Ukraine, Lithuania and Latvia -- to introduce a flat-tax rate on income and corporate taxes.
The model, adopted this year by Georgia and Romania, is considered by economists to be the best way to jump-start an economy, by luring foreign investors with low tax rates.
The country, which has already attracted German giants like Volkswagen and Siemens, looks forward to posing more problems for western European governments looking to stop the flow of companies moving eastwards.
In addition to already cheaper labor, countries like Ukraine, Romania and Slovakia have offered up the flat tax as an additional incentive for foreign companies.
European economic giants France and Germany have already voiced their disapproval.
Then French Finance Minister Nicolas Sarkozy (photo) said that if the new member states could afford a flat tax -- which traditionally leads to a decline in tax revenues -- they wouldnt need financial help from the European Union.
Chancellor Gerhard Schrader last year also criticized the new member states for taking aid from Brussels while stealing business from western Europe.
When Germanys council of economic advisors last summer recommended the government introduce a flat tax of 30 percent, their proposal was duly ignored.
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