A Simpler Consumption-Based Alternative to the Income Tax for Socialist Economies in Transition

Aspects of Fiscal Performance in Some Transition Economies Under Fund-Supported Programs

“…xxxi If a VAT is deemed desirable, it may be preferable to levy and collect at a single (final) stage, like a retail sales tax on final consumption (see Mclure [1992] and Tait [1992]). xxxii Proposition 16.…”

Tax Reform in Transition Economies: Experiences and Lessons

“…Hungary and Poland were the first two countries to reform the Sovietinspired enterprise profit tax in 1989. The process of reform for this tax in CITs has been slow and 10 See, for example, McLure (1995b) for a critical look at the enterprise profit taxes of Poland, Hungary, and the Czech Republic. 12 tortuous and often has not produced desirable results as judged by standard principles of tax policy.…”

“…See Martinez-Vazquez and McNab (1997). 10 for particularly cautious approaches to those areas where tax policy and tax administration overlapped and for elevating the status of some tax administration issues by addressing them in the tax law (Cnossen, 1991;Ickes and Slemrod, 1991;McLure, 1995a;and Tanzi, 1993). The policy advice coincided, to a large extent, on the early introduction of a VAT and excises, the elimination of export taxes and the lowering of import taxes, and the delayed introduction of a modern western-style global income tax on individuals.…”

The Tax Reform Experiment in Transitional Countries

“…This legacy has proved difficult to overcome. Many CITs still only require a token employee 18 See McLure (1992) and McLure and Zodrow (1996). To the extent that a consumption-based income tax provides more incentives to savings and investment, the choice of a consumption base would be more desirable in CITs because of their much higher needs for national savings and capital accumulation.…”