TAX-REFORM IN COUNTRIES IN TRANSITION - CENTRAL POLICY ISSUES

The paper addresses central policy issues involved in the design and implementation of tax reform in countries in transition. After a review of the inherited tax system, three main policy issues are discussed: (i) the appropriateness of the current reform plans, copying the tax systems of Western European economies, against the introduction of (untested) alternatives frequently proposed for Western countries, such as consumption- and energy-based taxation; (ii) the need for transitory tax measures and the main options, such as a transitory import surcharge and a capital gains tax; and (iii) the necessity and possibility to further capital formation and growth under the new tax system through fiscal incentives for investment and savings.