Flat Tax for Us?

The Meme is very firmly out of the bag. Flat tax is a topic that will not go away. Following the successful adoption of Flat Taxes in Eastern Europe, The Economist has called for such a system to be given a chance in richer western countries. It started like this:

The experiment started in a small way in 1994, when Estonia became the first country in Europe to introduce a “flat tax” on personal and corporate income. Income is taxed at a single uniform rate of 26%: no schedule of rates, no deductions. The economy has flourished.

Success breeds imitation:

So far eight countries have followed Estonia's example.

So far they have all been developing countries in Central and Eastern Europe. But there is no reason why such a radical idea should not take off elsewhere.

Now and then, the bigger the idea, and the simpler the idea, the easier it is to roll over the opposition. The flat-tax idea is big enough and simple enough to be worth taking seriously.

The Adam Smith Institute is not likely to miss an opportunity to support a more efficient economic model.

The ASI spearheaded that 1986 campaign for simpler, lower taxes. The radical proposal won, with only two tax rates remaining, 40% and 25%. The ASI is also spearheading the flat tax campaign on the same basis. Compared with the current system it is simpler, fairer, more efficient, and better for the economy.

They were successful once and they could be again:

Flat Tax in Britain is going to happen.

Elsewhere, it has support from a surprising source:

Roy Saunders is founder and chairman of International Fiscal Service, specialists in international fiscal law, and a Fellow of the Institute of Chartered Accountants in England and Wales.

Accountants could be seen as natural enemies of simple tax systems. After all the more complex the system the more work for accountants, but in Mr Saunders case at least, this is not true.

As part of my company's pre-election editorials, we recommend that our clients and colleagues reflect on the type of UK government appropriate to today's global market economy. Perhaps one that adopts the rapidly growing trend in eastern Europe for flat taxes to be levied at rates competitive with the 13% Russian rate, the 16% Romanian rate or the proposed 18% Polish tax rate. Many believe that flat-rate taxes will increase rather than reduce tax revenues - creating wealth for the country rather than concentrating on redistributing an ever smaller slice of the cake.

If even the bean counters are in Support, perhaps the Flat Tax can become an Election issue in the 2010 Election. If we spend the next 5 years singing its praises, it could become a winning issue.