September 19, 2003: Paul Bremer Establishes Flat Tax in Iraq

Paul Bremer signs Order 37, titled “Tax Strategy for 2003,” reducing the tax rate on corporations from a high of 40 percent to a flat rate of 15 percent. The income tax rate is also capped at 15 percent. “The highest individual and corporate income tax rates for 2004 and subsequent years shall not exceed 15 percent,” the order says. [Coalition Provisional Authority, 9/19/2003 ] The flat tax has long been a goal of economic conservatives and was planned for Iraq in pre-war planning sessions with Iraqi exiles. According to one Middle East expert interviewed by the Washington Post, the new tax system “has almost no support from other members of the US-appointed Iraqi Governing Council.” The new tax law will take effect in January. In the meantime, reports the Post, “Bremer has abolished all taxes except for real estate, car sales, gasoline and the pleasantly named ‘excellent and first class hotel and restaurant tax.’ Even while leaving these Hussein-era levies in place, Bremer exempted his coalition authority, the armed forces, their contractors, and humanitarian organizations. Exempting occupation personnel leaves only the Iraqis to pay taxes, as well as journalists, business people, and other foreigners.” [Washington Post, 11/2/2003]