The Choice of the Tax System

The paper considers the choice of a tax system in the transition from socialism. The paper reviews the tax system in Bulgaria inherited from socialism and revenues generated in the early transition. It then describes the relatively high tax rate, Western European-type tax system introduced in Bulgaria in the early 1990s. It considers the question whether, in view of tax evasion and limited administrative and enforcement capacities of the tax authorities, a more modest tax structure might not have been more appropriate