Flat, but not too flat
3 November 2003
Conservatives, rejoice! Not only is Iraq proving that an armed society is a polite society, but the
American viceroyCoalition Provisional Authority administrator has decreed a flat tax of 15 percent for all individual and corporate income. For anyone looking to snicker at the way the Bush Administration is handling the post-“Mission Accomplished” era, this order provides, shall we say, a target-rich environment.
- If even Red Cross workers aren’t safe from terrorism, who is going to go out and collect these taxes?
- Most members of the Iraqi Governing Council, the closest thing Iraq has to a government recognized by the United Nations, are against this decree. Why should any entrepreneur or investor care about a tax law which, in all likelihood, will be torn up as soon as the occupation is over?
- In many oil-rich countries, since revenues from oil export go directly to the national treasury, income tax on individuals ranges from trivial to zero. (See these summaries of tax laws in Bahrain, Kuwait, Qatar, and Saudi Arabia.) If Iraq has such bounteous oil reserves, why should it have any income tax at all?
- Some of the Hussein-era excise taxes remain in effect, but the Coalition Provisional Authority itself, the armed forces, and their contractors (including all those Indian and Bengali cooks that the US Army is hiring) are exempt from them. Apparently, if Viceroy Bremer had placed himself under the same tax burden as his Iraqi charges, the tax structure would have been a little too flat for his comfort.