The Russian Flat Tax Reform

48 Pages Posted: 9 Jan 2006

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)

Multiple version iconThere are 2 versions of this paper

Date Written: January 2005

Abstract

Russia dramatically reduced its higher rates of personal income tax (PIT) in 2001 establishing a single marginal rate at the low level of 13 percent. In the following year, real revenue from the PIT actually increased by about 26 percent. This 'flat tax' experience has attracted much attention (and emulation) among policymakers, making it perhaps the most important tax reform of recent years. But it has been little studied. This paper asks whether the strong revenue performance of the PIT 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, did improve quite substantially - by about one third according to our estimatesthough it remains unclear whether this was due to the parametric reforms or to accompanying changes in enforcement.

Keywords: Tax reform, flat tax, tax evasion

JEL Classification: H24, H26, H31

Suggested Citation

Ivanova, Anna and Keen, Michael and Klemm, Alexander, The Russian Flat Tax Reform (January 2005). IMF Working Paper No. 05/16. Available at SSRN: https://ssrn.com/abstract=874237

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

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