Free-market government in Macedonia to adopt flat tax in 2007

WASHINGTON, DC – The flat tax revolution taking place in eastern Europe has spread to Macedonia:  The new free -market government, led by 36 year-old Prime Minister Nikola Gruevski, has adapted a flat 12 percent personal income tax rate for 2007.  In 2008 the rate will drop to 10 percent, making it the lowest in the world along with the nations of Kyrgyzstan and Kazakhstan.  A government statement said:  “This step should decrease tax evasion and stimulate taxpayers to meet their obligations to the state.  It would also encourage foreign investors to put their money in Macedonian business, knowing that taxes are low.”

While most advanced nations in the West had flat tax rates prior to the influence of Marxism, the modern flat tax movement in Europe began in 1994 — with Estonia, Latvia, and Lithuania leading the way.  Earning their distinction as the “Baltic Tigers”, the three countries experienced an influx of foreign investment, a drop in unemployment rates, and staggering growth in GDP.  Such positive results did not go unnoticed by the neighbors, as the resulting wave of “tax competition” has now spread to ten eastern European countries, with the Macedonians being the most recent to adopt the flat tax and compete for foreign investment.  To protect the flat tax, a new taxpayer group has formed by the name of “Macedonia Citizens for Tax Reform”.

“In a global economy, capital naturally flows to areas of least resistance, which is why we are seeing such explosive growth in flat-tax countries,” said Grover Norquist, President of Americans for Tax Reform.  “It is ironic to witness the number of eastern European countries, many of them former Communist nations, moving to tax simplification,” continued Norquist, “while the American system of taxation is moving in the opposite direction.”

Listed below are countries with a flat personal income tax rate, the year of introduction, and the rates for 2007 and 2008:

Country
Year of Introduction
2007 Rate
2008 Rate
Kyrgyzstan
2006
10%
10%
Kazakhstan
2007
10%
10%
Georgia
2005
12%
12%
Macedonia
2007
12%
10%
Russia
2001
13%
13%
Ukraine
2004
13%
13%
Serbia
2003
14%
14%
Iraq
2004
15%
15%
Romania
2005
16%
16%
Slovakia
2004
19%
19%
Estonia
1994
22%
21%
Latvia
1994
25%
25%
Lithuania
1994
27%
24%
  • Countries in Bold are EU members
  • Source of chart data: World Taxpayers Associations (www.worldtaxpayers.org)