The 11th International Conference on Economic and Societal Development

On April 6-8, 2010, the State University - the Higher School of Economics in cooperation with the World Bank and the IMF co-sponsored the 11th International Conference on Economic and Societal Development. Leading experts of the IET contributed to the Conference.

The third day of the Conference started with a session in memoriam of Yegor Gaidar, with reports on his reformist record and research legacy.

On the same day, participants in the roundtable "The Economy of the Flat Income Tax" discussed the following issues: Did the institution of the flat tax rate back in 2001 resulted in businesses abandoning the shadow zone? What were budget ramifications caused by the transition to the flat tax? Can an abrogation of the flat tax reduce the income differentiation? Are there sufficient grounds for restitution of the progressive personal income tax?

Dr. S. Sinelnikov-Murylev, the IET Head of Research, made a presentation at the session. While referencing to objectives of the personal income tax reform, he cited the need to lower the nominal tax burden to diminish the magnitude of tax dodging; increase of the progressiveness of the tax resulting from scarcer opportunities for higher-income groups of the population to evade paying the tax; simplification of the process of collection and payment of the tax; lower compliance costs. Due to the reduction of the marginal rate, the tax base expanded. Plus, according to the IET calculations, about half of the aggregate growth in PIT-base revenues fell on the shrinking magnitude of tax evasion, which was fueled by the reduction of the average marginal tax rate.


The expert advocated retention of the flat rate of the personal income tax in the long run. He also considers it necessary to increase the standard tax rebates (and thus the progressiveness of the PIT) and improve taxation of compensation payments associated with recompense and hazardous labor conditions, taxation of interest incomes and those from securities trading.