A funksionon taksa e sheshtë?
Does the flat tax work?

Summary/Abstract: One of the main promises of the flat tax is the positive effect on the efficiency of the fiscal system. To control for this effect, 14 e-communist countries which undertook the flat tax reform after the year 2001 are analyzed. This sample is selected because those countries were very determined on the flat tax reform, lowering their tax level far more than the previous levels. To compare the efficiency of their fiscal system, a database of the World Bank “Paying Taxes”, which ranks every year the fiscal systems of about 180 countries, is used. Looking the relative ranking of the selected countries on this database for a 5 years period (2007-2011), we conclude that, in most of the cases, the flat tax does not significantly improve the fiscal system. Excluding Macedonia and Georgia, the efficiency of the fiscal systems of all other countries of the sample remain more or less the same despite the reform of the flat tax. Meanwhile, in Rumania are appearing the negative effects of flat tax on the distribution of incomes. It is recommend to the ex-communist countries to abandon the flat tax, replace it with a progressive tax and adapt their legislation to the one on the developed countries.

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