Flat rate for income tax

The Conservative Party is planning to include this in their next general election manifesto.

The whole idea originated from Estonia, a newly independent country that broke away from Russia. In 1994 the young prime minister of Estonia, Mr. Mart Laar, then aged only 32, pioneered and introduced the "flat rate" income tax, even defying the wishes of IMF.

Within a year Estonia had become the first European country to introduce a single rate for income tax. Critics and economist in Europe were surprised to see the stunning success of flat rate tax. Inflation in Estonia dropped from 1000 percent to 2.5 percent in line with Western Europe. Unemployment fell from 30 percent to 6 percent.

Seeing the overwhelming success, Latvia and Lithuania adopted flat rate system. In 2001 Russia imposed a 13 percent flat rate. Flat rate system is now adopted by nine European countries. Germany, Poland and Greece are planning to introduce flat rate revolution now sweeping over eastern and central Europe.

Now, after 14 years, Mr. Laar is hailed as the prophet of a revolution and "father of the flat tax".

Economist and politicians now seek him out across the globe for his counsel though he was a student of history and a historian by profession.

The system is very simple. You just pay, say for example, 13 percent for whatever amount you earn over the free allowances. The form is very simple, calculations easy and takes little time to file. This will greatly eliminate corruption in the country's tax departments, increase revenue many-fold, and save taxpayers from harassment.

It is about time the National Board of Revenue, the Ministry of Finance as well as the business circles make an in-depth study of the success of the new flat rate tax system and introduce the same in Bangladesh.