The Polish government has announced that it will be following the trend established by Estonia in 1991, and will be putting in place a single 18% rate of corporate tax, income tax, and VAT.
Since Estonia launched its flat tax scheme, several other countries, including Latvia, Serbia, Slovakia, Georgia, Russia and Ukraine have followed suit, causing grave concern amongst the older members of the European Union, who have argued that they are effectively subsidising their newer counterparts' tax breaks
.According to Polish Finance Minister, Mirosaw Gronicki, the new system will be put in place by 2008.The government is hoping that higher levels of compliance, additional growth, and the bringing into the tax net of the country's farming community will cover the revenue shortfall created by the introduction of the new system.
According to reports, even if the centre-left government is toppled in this year's election, the flat tax plan is likely to go ahead, as the conservative opposition has proposed the introduction of a single 15% tax band.
