Here we are in Moscow, home of the Communist Revolution and one would have thought an influence in New Zealand who have sought equality between citizens through redistribution via progressive taxation. Yet the Russian income tax scale is flat – a rate of 13% !! This rate was implemented by Vladimir Putin in 2001. Combined with a GST of 18%, a tax on dividends of 9% and a corporate tax rate of 24% it can be seen that under Putin there have been big steps to encourage entrepreneurship. In fact flat rates of income tax are now commonplace in Europe – earlier I mentioned what we’d seen in Iceland and the Baltic States. Makes you wonder for how much longer New Zealand will trail the world on tax design. Seems amazing the Michael Cullen’s contribution in this area was to steepen the tax scales – just when the rest of the world was flattening them. How retro!
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