Re: Poll: flat tax hits pocketbook, Volume 11, Number 21, May 30 - June 5, 2005
The benefit of the flat tax is largely administrative. For example, the government doesn't have to investigate the pay of every individual in a company, it can just take X percent of the company's payroll.
It is unlikely that in Slovakia the money brought in by additional higher bands [of income tax rates] would equal the cost of administering it.
In any case, I have read that the Slovak government is getting much more revenue from VAT (sales tax) and consumption taxes (petrol, cigarettes etc.) than from income taxes. The high rate of VAT on top of the rapidly rising deregulated utility prices is one of the biggest factors causing unrest in Slovakia.
People won't re-elect the government if they feel that their standard of living has taken a real hit.
A flat tax of around 25 percent and VAT around 15 percent would probably have done less political damage, but there's no going back now.
6. Jun 2005 at 0:00