Slovakia’s Ivan Miklos touts flattax benefits
Slovakian lawmaker Ivan Miklos is bringing his flat-tax, less-government regulation advice to two ministers – Finance Minister Natalie Jaresko and Economy Minister Aivaras Abromavicius.
He comes with top credentials. Miklos, 55, was named as a top business reformer by the World Bank’s Doing Business report in 2004. In Slovakia, he served as deputy finance minister and privatization minister.
He's a believer in less government involvement in the economy. “All of my professional life is about reforms,” Miklos told the Kyiv Post in an interview on Dec. 8.
Ukraine’s cumbersome tax system today is similar to what Slovakia had before 2005.
“Which means it’s very complicated, it’s full of exceptions, deductions, special rates, special tax regimes, it is very distorting… very low tax administration efficiency, very high corruption,” Miklos said.
For Miklos, price deregulation, liberalization and privatization are even more important than overhauling courts and prosecutors. His reasoning is that by closing down corruption in business, there will be less lawbreaking.
Ukraine’s army of 54,000 tax officials will be trimmed by 32 percent by year’s end, if Jaresko’s tax reform package will follow through.
But the best way to simplify life is through introducing a flat income and corporate tax rate, which will make tax administration simpler and less corrupt.
After reform, Slovakia's flat rate became 19 percent. Before, rates ranged from 10 to 38 percent. It did not hurt the poor because the government raised the income threshold to qualify for exemptions of taxes.
“We tripled it… and we reduced the marginal tax rate,” Miklos said. “The low income people in the new system are paying in reality zero, because their income is lower than the tax-free income.”