Transatlantic Politics

The Eastern European countries are engaging in what seems to be a race to the bottom in the implementation of a flat tax policy & rate. Trying to attract ore foreign investments than its neighboring country Romania, who adopted the flat tax at a rate of 16% in 2005, Bulgaria now announced it will introduce a flat tax of 10% in January 2008, the lowest rate so far. But other Eastern European countries are contemplating the idea of adopting this fiscal policy, and one has to wonder how low they can go with the taxation bar. For instance, the Czech Prime Minister announced in March that a 15% flat tax is "certain" to be introduced next year.

Implemented correctly, the flat tax policy has proved to be successful, at least in the Baltic states (which had higher rates though, between 24%-26%) when combined with strong emphasis on collecting the taxes and cutting red tape. In Romania, though, the policy is a mixed bag, the current Liberal minority government being backed by the Socialists in Parliament, has recently adopted a new pensions law that will most probably increase the social contributions and other hidden taxes. Cutting red tape has not been a priority so far, and foreign investors, although drawn by the new EU country, complain about the lack of transparency, bureaucracy and lingering corruption.

In the same race to the bottom spirit of Bulgaria, the Balkan country of Macedonia lowered its flat tax from 12% to 10% this year, claiming it's a "new business heaven in Europe". According to the Index of Economic Freedom,

"Macedonia is ranked 32nd out of 41 countries in the European region, and its overall score is lower than the regional average. Macedonia faces many challenges, including weak freedom from government, investment freedom, property rights, and freedom from corruption. Government expenditures are high, although state-owned businesses do not account for a significant portion of total revenue. The court system is prone to corruption, political interference, and inefficiency, partially as a result of the country's political turmoil."

Macedonia's agressive PR campaign might be thus a slight overstatement, though perfectly understandable as it is coming from a country that wants to join the EU and become more prosperous. Still, just by lowering the taxation bar and failing on deeper economic and political reforms doesn't do the trick.  Not in the long run.

Share This

If you enjoyed this post, make sure you subscribe to my RSS feed!

Putin has resurrected another Stalinist recipe for dealing with critics and opponents, apart from imprisoning and murdering: forced placement in a mental institution.

It's another female journalist, just like Anna Politkovskaia. Her name is Larissa Arap. Radio France Internationale reports that she has been arrested in Murmansk and then forcedly placed in a mental hospital. In June she had published an article about the cruel and inhumane treatment children are submitted to in the local mental institutions, including electroshocks. Arap is also an active member of Gary Kasparov's opposition party, who now accuses the resurrection of Stalinist methods.

AFP talked to the local leader of Kasparov's party, Elena Vassilieva, who said that Arap was arrested on July 6, while passing a medical test for obtaining a driver's licence: "The doctor told her to wait on the hallway, then all of a sudden, the police arrived with an ambulance and took her by force." After being held in custody in a clinic for a while, Arap was transferred on July 26 to a psychiatric clinic with restricted access, 150 km away from the city, said Vassilieva. "We don't think she's ill. Maybe she had some breakdown, but she never lost her temper or became a threat to anyone. It's a return of the Stalinist repression", claims Vassilieva as quoted by AFP. 

A press spokesman of the regional governor declared that, although he's not aware of this particular case, it is impossible for her to have been placed in a mental institution on political reasons. "I completely rule out the idea that it's a case of political repression. There is no persecution of opponents. Everyone can express his point of view. It's absurd."

Share This

If you enjoyed this post, make sure you subscribe to my RSS feed!

In yet another indicator of the changing dynamics of the global economy, Ireland, a country better known for emigration rather than immigration, is reforming its immigration laws to offer a green card-type system that will allow bankers, scientists and engineers from outside Europe to live and work in the fastest-growing economy in the Euro region.  This according to Bloomberg.

Clearly, Ireland recognizes the benefits immigration plays in an expanding economy and how the well-educated worker is more mobile now than ever before.  In hopes of attracting such talent, Ireland is making it easier for these people to come and work in Ireland.  Unfortunately, it appears the U.S. Congress does not appreciate such a basic principle of the 21st century as, instead of tackling immigration reform, the U.S. Senate has decided to hold a congressional all-night "sleepover" to debate the Iraq war.  Amazing.

Share This

If you enjoyed this post, make sure you subscribe to my RSS feed!