Country by country, the Flat Tax is sweeping the world. Romania becomes the tenth country to introduce a Flat Tax on 1 January 2005.

Romania's bold decision to scrap progressive income taxes and introduce a flat rate of just 16% is a move which will further sharpen tax competition in Eastern and South-Eastern Europe still further. Russia, Estonia and Slovakia number among the Flat-Tax states. Already they have discovered that simpler, lower tax rates generate more revenues because they make avoidance and evasion less worthwhile. And lower rates encourage entrepreneurship, stimulate employment, and spur economic growth.

Romania still has a lot to do in terms of strengthening the rule of law -- another key condition for creating a prosperous economy. Regulation and corruption still need to be cut back. But the experience of other Eastern European countries is that a simple Flat Tax system goes a long way in the fight against bureaucracy and corruption.