Economic Ideas in the Transition from Communism
New Thinking in Political Economy series
Chapter 8: The Flat Tax in Eastern Europe: A Comparative Perspective
8. The ﬂat tax in Eastern Europe: a comparative perspective The ﬂat tax has a special position among a broad package of neoliberal ideas. Unlike many other economic policy ideas (for example privatization or monetary reform) it is not just a response to the past, an attempt to turn around previous errors or an echo to policies already implemented in the advanced industrial democracies. On the contrary, it goes beyond the current deﬁnition of what the standard package of feasible economic reform policy ideas is supposed to contain. It is not an attempt to ‘catchup’ with the richer Western economies, but actually a means to ‘get ahead’ using cutting-edge free-market ideas. In this respect it could be truly called ‘neoliberal’: it seems to be a natural extension or even the beginning of a new phase of the ‘neoliberal revolution’. It looks like a signal that Eastern Europe, after absorbing the neoliberal worldview, is now able to experiment by itself, moving on independently of the advice and concerns of the Western countries. And therefore, the ﬂat tax is swathed in an irony: it is former communist countries that seem to be leading the way in liberal, freemarket economic reforms. We see Western academics travelling to Eastern Europe not to teach, but to learn, and the lesson is that the implementation of radical economic policy is more feasible than one has been used to thinking. The remarkable thing about the spread of the ﬂat tax is that in less than 15...
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