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Reforming Tax Systems: Experience of the Baltics, Russia, and Other Countries of the Former Soviet Union

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  • Vahram Stepanyan

Abstract

Starting in the early 1990s, the Baltics, Russia, and other (BRO) countries of the former Soviet Union initiated tax reforms that varied widely at the later stages. Recently, some of the BRO countries, basing decisions on the proposition that lowering of the top marginal income tax rate would significantly benefit economic development and increase tax compliance, have initiated a new stage of tax reforms. This paper reviews country experiences and suggests that (i) overall, there seems to be little evidence of a substantial improvement in income tax revenues resulting simply from a reduction in the top marginal tax rates, and (ii) in the BRO countries, the elasticity of the behavior of economic agents, in terms of labor supply, saving, and investment, with respect to income tax rates is not large, and a reduction of the existing income tax rates is unlikely to lead to a notable expansion of economic activity.

Suggested Citation

  • Vahram Stepanyan, 2003. "Reforming Tax Systems: Experience of the Baltics, Russia, and Other Countries of the Former Soviet Union," IMF Working Papers 2003/173, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2003/173
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    1. Mr. Julio Escolano & Mr. Parthasarathi Shome, 1993. "The State of Tax Policy in the Central Asian and Transcaucasian Newly Independent States (NIS)," IMF Policy Discussion Papers 1993/008, International Monetary Fund.
    2. Mr. Liam P. Ebrill, 1999. "Tax Reform in the Baltics, Russia, and Other Countries of the Former Soviet Union," IMF Occasional Papers 1999/010, International Monetary Fund.
    3. Tanzi, Vito & Zee, Howell H., 2000. "Tax Policy for Emerging Markets: Developing Countries," National Tax Journal, National Tax Association;National Tax Journal, vol. 53(2), pages 299-322, June.
    4. Willi Leibfritz & John Thornton & Alexandra Bibbee, 1997. "Taxation and Economic Performance," OECD Economics Department Working Papers 176, OECD Publishing.
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    Cited by:

    1. Baburin, Vyacheslav & Zemtsov, Stepan, 2014. "Diffussion of ICT-products and "five Russias"," MPRA Paper 68926, University Library of Munich, Germany, revised 10 May 2014.
    2. Koziarivska Larysa & Oliinyk Andrii, 2006. "Effects of the 2004 Personal Income Tax System Reform on the Shadow Sector in Ukraine," EERC Working Paper Series 06-08e, EERC Research Network, Russia and CIS.
    3. Morawski, Leszek & Myck, Michal, 2010. "'Klin'-ing up: Effects of Polish tax reforms on those in and on those out," Labour Economics, Elsevier, vol. 17(3), pages 556-566, June.
    4. Mariana-Luminita COMAN (LINTA), 2020. "Performance Analysis Of The Eu Member States' Tax Systems," Scientific Bulletin - Economic Sciences, University of Pitesti, vol. 19(3), pages 177-186.
    5. Mr. David Moore, 2005. "Slovakia’s 2004 Tax and Welfare Reforms," IMF Working Papers 2005/133, International Monetary Fund.
    6. Marek Gora & Grzegorz Kula & Magdalena Rokicka & Oleksandr Rohozynsky & Anna Ruzik, 2008. "Social Security, Labour Market and Restructuring: Current Situation and Expected Outcomes of Reforms," ESCIRRU Working Papers 5, DIW Berlin, German Institute for Economic Research.
    7. Paweł Borys & Piotr Ciżkowicz & Andrzej Rzońca, 2014. "Panel Data Evidence on the Effects of Fiscal Policy Shocks in the EU New Member States," Fiscal Studies, Institute for Fiscal Studies, vol. 35, pages 189-224, June.
    8. Nikolay Galabov, 2009. "The Flat Tax – Theory and Practice," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 7, pages 124-137.
    9. John E. Anderson, 2005. "Fiscal Reform and its Firm-Level Effects in Eastern Europe and Central Asia," William Davidson Institute Working Papers Series wp800, William Davidson Institute at the University of Michigan.
    10. Jakub Boratyński & Jakub Borowski, 2012. "The long-term economic impact of the flat tax in Poland. CGE simulation under alternative assumptions," Bank i Kredyt, Narodowy Bank Polski, vol. 43(3), pages 5-30.
    11. Mr. Ricardo Varsano & Kevin Kim & Mr. Michael Keen, 2006. "The "Flat Tax(es)": Principles and Evidence," IMF Working Papers 2006/218, International Monetary Fund.
    12. Terry McKinley, 2006. "Gearing Public Finance to Growth, Employment and Poverty Reduction in Moldova," Research Report 3, International Policy Centre for Inclusive Growth.
    13. repec:bas:econth:y:2013:i:2:p:3-26 is not listed on IDEAS
    14. repec:bas:econth:y:2013:i:2:p:27-49 is not listed on IDEAS
    15. Jason L. Saving & Alan D. Viard, 2015. "Are income taxes destined to rise? the fiscal imbalance and future tax policy," Working Papers 1502, Federal Reserve Bank of Dallas.
    16. Nikolay Galabov, 2009. "The Flat Tax – Theory and Practice," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 2, pages 3-18.
    17. Vita Jagric & Sebastjan Strasek & Timotej Jagric & Tanja Markovic-Hribernik, 2009. "Personal Income Tax Reforms as a Competitive Advantage," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 1, pages 189-218, May.

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