The flat-tax revolution

9 July 2005

George Osborne on the lessons we can learn from Eastern Europe

Ducking into the mediaeval Church of the Holy Ghost in Tallinn last week to escape the Baltic rain, I stumbled across a remarkable memorial. It is to the British servicemen, mainly sailors and submariners, who died fighting in the Estonian war of independence. Forgotten in Britain, they are heroes in Estonia. They had been sent there in 1919 to help the Estonians defeat the imperial ambitions of Lenin’s Red Army. Next to the war memorial is a plaque commemorating the holders of Estonia’s Star of Liberty, and it reads like a roll call of early 20th-century British politics: David Lloyd George, Arthur Balfour, William Bridgeman, Joseph Chamberlain and Winston Churchill.

More than 70 years later Estonians fought another war of independence from communism. This time no shots were fired. Mercifully, the Red Army departed peacefully; but they left behind them an economy stultified by decades of socialism and Soviet control. Estonians have been fighting ever since to build a modern, dynamic market economy and their principal weapon this time is not the Royal Navy but instead a British idea: the flat tax.

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