The Flat Tax May Spread to Bulgaria

The global tax reform revolution may soon include Bulgaria. The Sofia Echo reports on the pressure — thanks to tax competition — for Bulgaria to hop on the flat tax bandwagon:

It won’t be surprising if in a couple of years Bulgaria introduces a flat 10‐​per cent tax on incomes, Georgi Angelov, senior economist at Open Society Institute, said, as quoted by Pari daily. Radical reforms are carried out more easily in countries with radical problems, such as those in Eastern Europe. A quarter of the countries in Europe levy a flat tax. The first to introduce a flat tax rate was Estonia – 26 per cent in 1994. The tax has been cut to 22 per cent already and the fashion has spread to neighbouring countries like Lithuania, Latvia, Russia and Ukraine. The example has been followed by Slovakia, Romania, Georgia, Serbia and Macedonia, with the Czech Republic and Albania expected to apply the lowest rate of 10 per cent from 2008. According to Angelov, one of the reasons for that is that Bulgaria has so far focused on reducing the corporate tax. Now that the tax has been cut to 10 per cent, the logical step is to reduce labour taxation by implementing a single rate. Just a few years ago, a 10 per cent tax was wishful thinking, but now it is a fact.