Economic Miracle

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• Under Soviet-imposed socialism, people were not used to thinking for themselves, taking the ini­tiative, or assuming risks. Many had to be shaken free of the illusion--common in post-communist countries--that somehow somebody else would solve their problems for them.

• Estonia reduced trade tariffs and non-tariff barriers and abolished all export restric­tions, making the nation a free-trade zone

Give us no aid, but more trade

• Some countries try to encourage foreign investors by offering all sorts of enticements, such as tax exemptions, privileges, and special rights. The alternative is to build a busi­ness environment that favors both local domestic investment and foreign investment without making any distinction between them.

• during 1993-1994, Estonia went from an almost unknown spot in the world for foreign inves­tors to a mecca for them

• Estonia eliminated all state banks and made very clear demands of private banks. Banks were to com­pete, and we did not hesitate to let them go bank­rupt when necessary.

• A flat-rate personal income tax, and Estonia introduced such a system on January 1, 1994.

• The Estonian experience with the flat-rate tax was so successful that other countries--first Lithuania and Latvia and then Russia in 2001--have copied it. Ukraine and Georgia have also introduced a flat tax, as did Slovakia in 2004 and Romania in 2005.

• Comparing Central and Eastern European countries with flat rates (Estonia, Latvia, and Lithuania) to the most similar countries (Slovenia, Poland, Hungary, Slovakia, and the Czech Repub­lic), we can see that the flat-tax countries grew significantly faster
  

  . Economic Miracle: Estonia

  If Estonia stays the course it'll soon be richer than Singapore and HongKong...it'll be the richest country in Europe and the EU will be pleading to join IT...