The Russian 'Flat Tax' Reform

47 Pages Posted: 5 Aug 2005

See all articles by Anna Ivanova

Anna Ivanova

International Monetary Fund (IMF) - European Department

Michael Keen

International Monetary Fund (IMF) - Fiscal Affairs Department; CESifo (Center for Economic Studies and Ifo Institute); Institute for Fiscal Studies (IFS)

Alexander Klemm

International Monetary Fund (IMF)

Abstract

In 2001, Russia dramatically reduced its higher rates of personal income tax (PIT), establishing a single marginal rate at the low level of 13%. In the following year, real revenue from the PIT increased by about 26%. This 'flat tax' experience has attracted much attention (and emulation), making it perhaps the most important tax reform of recent years. But it has been little studied. This paper asks whether the strong performance of PIT revenue was itself a consequence of this reform, using both macro evidence and, in particular, micro level data on the experiences of individuals and households affected by the reform to varying degrees. It concludes that there is no evidence of a strong supply side effect of the reform. Compliance, however, does appear to have improved quite substantially - by about one third, according to our estimates - though it remains unclear whether this was due to the parametric tax reform or to accompanying changes in enforcement.

Suggested Citation

Ivanova, Anna and Keen, Michael and Klemm, Alexander, The Russian 'Flat Tax' Reform. Economic Policy, Vol. 20, No. 43, pp. 397-444, July 2005. Available at SSRN: https://ssrn.com/abstract=767605

Anna Ivanova (Contact Author)

International Monetary Fund (IMF) - European Department ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Michael Keen

International Monetary Fund (IMF) - Fiscal Affairs Department ( email )

700 19th Street, NW
Washington, DC 20431
United States

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Institute for Fiscal Studies (IFS)

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

Alexander Klemm

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
20
Abstract Views
1,759
PlumX Metrics