Forbes: Greece Should Adopt Flat Tax Like Bulgaria

"Austerity in Greece? Sure, and there's snow in Mykonos too!", is the sarcastic headline of an article in Forbes magazine on austerity measures in Greece.

The hideous economic contraction in Greece is partly due to economic uncertainty but it is also a consequence of tax hikes for a private sector that was already breaking down under the weight of high taxes. As a result of all this, 6,000 companies have relocated to neighboring Bulgaria, the magazine reports and points out what attraction Bulgaria has to offer to Greek business leaders. The 10% personal income tax rate and the 10% corporate tax rate, along with 20% value added tax, which is below the 23% levied currently in Greece, and the currency peg to the euro are all considered advantages.

The magazine suggests that Greece should follow Bulgaria's example by introducing a flat tax system, given that the same move in its neighbor brought a 5.24% increase in tax receipts in the first year of implementation. That’s more of an increase in revenue than Greece’s government has gotten from all of its tax-hiking austerity attempts.

The Greek Cabinet should then cut its spending dramatically, combining austerity with growth - the same strategy used by Ronald Reagan and Margaret Thatcher in the 1980s.

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