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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 03/173, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:03/173
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    1. 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.
    2. 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. Saving, Jason L. & Viard, Alan D., 2015. "Are income taxes destined to rise? the fiscal imbalance and future tax policy," Working Papers 1502, Federal Reserve Bank of Dallas.
    2. Baburin, Vyacheslav & Zemtsov, Stepan, 2014. "Diffussion of ICT-products and "five Russias"," MPRA Paper 68926, University Library of Munich, Germany, revised 10 May 2014.
    3. 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.
    4. Terry McKinley, 2006. "Gearing Public Finance to Growth, Employment and Poverty Reduction in Moldova," Country Study 3, International Policy Centre for Inclusive Growth.
    5. 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.
    6. repec:bas:econth:y:2013:i:2:p:3-26 is not listed on IDEAS
    7. 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.
    8. Ricardo Varsano & Kevin Kim & Michael Keen, 2006. "The "Flat Tax(es)"; Principles and Evidence," IMF Working Papers 06/218, International Monetary Fund.
    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. 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.
    11. repec:bas:econth:y:2013:i:2:p:27-49 is not listed on IDEAS

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    Keywords

    Azerbaijan; Armenia; Estonia; Fiscal policy; Russian Federation; Georgia; Lithuania; Kyrgyz Republic; Kazakhstan; Latvia; Moldova; Uzbekistan; Tajikistan; Tax policy; Ukraine; Tax reforms; tax administration; tax systems; tax reform; tax system; Taxation and Subsidies: Other; Kyrgyzstan; Moldova; Republic of;

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