Flat Tax in Georgia - First Results

Year of 2005 was one of the significant in Georgians life – the government introduced 12% fat tax instead of progressive 12-20%. This and some other steps forward were to change the taxation dramatically in this country – reduction of number of taxes from 21 to 8, social insurance tax rate reduction from 31% to 20% (it is paid only by the employer) and VAT from 20% to 18% (the second half of 2005) - was expected as huge relief to taxpayers. Even though tax administrative rules remained as stupid as it was before (it is anti-constitutional in very many cases) the new code (or new rates) already proved its ability to change radically the situation.
Here are some figures to compare 2004 and 2005 years. Sometimes appear other concerns that it was not as good idea to decrease these all rates because before they were high but less people were paying them.
It’s a funny that the current prime-minister Mr. Nogaideli was calling every person idiot if he/she said that reduction of taxes would give more results both for private and state sectors. Let’s hope he regrets about his stupidity now.
This may show how it really worked – tax liberalization in Georgia even there are some concerns about realness of the figures. Before, the government was very active in falsifying the statistic information. But business legalization process is easily seen through this table.