REFORM OF THE GDR TAX-SYSTEM - A BLUEPRINT FOR EAST EUROPEAN ECONOMIES

The transformation of the GDR to a market economy is supported by the adoption of the West German tax system. There is evidence, however, that the adoption approach is a costly way of changing the tax structure of a country in transition. Nevertheless in this paper the implementation of the German tax system is regarded as the hypothetical benchmark, which allows for analysing amendments to and deviations from an adoption approach to be recommended to countries in transition. With reference to the Hungarian and the Czechoslovakian example emphasis is put on simplified VAT structures, trade taxation, cash-flow bases for income taxation and withholding devices.