International Herald Tribune reports that new Estonian government under the leadership of Andrus Ansip has committed itself to slash current income flat tax rate from 22 percent to 18 percent by 2011.
Estonia ranks as one of the freest economies in Europe and the world. In 1991, after the collapse of the Soviet Union, the country was economically devastated and financially bankrupted. The inflation rate hit 1076 percent annually in 1992, unemployment rate was nearly 20 percent and the economy was in 92 percent trade-dependent on Russia. On its way to economic recovery, Estonia exercised radical economic reforms resulted in a globally trademarked galvanized success. The reforms which included rapid privatization (95 percent of all government-owned enterprises were privatized), the adoption of the flat tax, the introduction of private property rights and the liberalization of the market returned an economic miracle surrounded by high-tech boom, sound business environment and sizzling economic growth.