Tax reform in transition countries

Within this study, ?Tax Reform?, which has been put in practice in ?Transition Countries Transforming from a Central Planned Economic System to a Market Based Economic System?will be tried to be discussed. The basic axis of this study consists of on explanation to the close relationship between the improvement of the ?tax reform? and ?economic structure? and also on determining that it is impossible to carry out a universal reform prescription for every country. For this reason, inflation and growth figures, which are two important macroeconomic indicators, will be tried to figure out for every transition country. Besides, the subjects of foreign direct investment and privatization will be touched upon. Within the transition literature, there are a lot of studies have been made about the relationship among these and almost all of them have reached to similar results. Besides these, during this study, together with tax?s shaping, it will be also tried to be emphasized the importance of ?tax reform? and basic aims of taxation. For this purpose, two different reform alternatives which re-shaped and regulate economic environment of transition countries will be generally handled. The former of them is economic reform application named ?Big Bang? adopted by almost all central and eastern European countries such as Russia, Hungary, Poland and Czech Republic. The other is economic reform application named ?Gradualizm? adopted by China. The first considers necessity of the reform process to be put rapidly, revolutionarly and totalitarianly in practice and the latter considers necessity of the reform process to be put slowly, evolutionarly and gradually in practice. Without doubt, each of them has advantages and disadvantages. This study, consisting of comprehensive literature research will clarify that ?tax reform? is one of the most important components of economic transformation process. It discloses how two different economic models which have transformed gived tax systems different shapes and what results can be removed from these reform policies. We hope this scientific debate on tax reform will be discussed deeply as it is getting a vital importance for economies. Key Words : Transition Countries, Central-Planned Economy, Market Economy, Tax, Tax Reform