Question: Provide A Summary And Intreprt Economic Thoughts In 250 Words For The Following TextThe 2003 ‘Rose Revolution’, Georgia’s New Government Embarked On An Aggressive Agenda Of Legal, Regulatory, And Institutional Reforms Designed To Stamp Out Public Sector Corruption, Increase Tax Collection And Create An Attractive Environment For Investment. …

Provide a summary and intreprt economic thoughts in 250 words for
the following text

The 2003 ‘Rose Revolution’, Georgia’s new government embarked
on an aggressive agenda of legal, regulatory, and institutional
reforms designed to stamp out public sector corruption, increase
tax collection and create an attractive environment for business
investment. In 2003, tax collection stood at only 12% of GDP, far
short of cash expenditure and with government arrears high and
rising.
In 2004, sweeping reforms purged the administration of many
corrupt practices, replacing the entire police force, as well as
the majority of tax and customs offi- cers. The State Revenue
Service (SRS) was created to bring customs and tax administration
into a single organisation. Corrupt practices were no longer toler-
ated and some tax officers were prosecuted and jailed.
Between 2004 and 2009, tax reforms focused on simplifying the
tax code and lowering tax rates. The number of national taxes to
which Georgians were subjected was reduced from 21 to six. The VAT
rate was brought down from 20% to 18% and personal income tax rates
were combined with the social contribution (payroll tax) into a
single tax of 20%
on income. Taxes on corporate dividends and interest earnings
were reduced from 10% to 5% in 2009. The new tax code applied the
same rate to all busi- ness activities, doing away with special
rates and privileges. The SRS strengthened tax collection by
streamlining and automating most processes, intro- ducing
risk-based audit management and vastly expanding e-services. This
simplified taxpayer require- ments and greatly reduced face-to-face
time between tax officers and taxpayers. They placed cameras in
most areas where taxpayers met with tax officials resulting in far
fewer illegal demands of the public and higher revenues for the
treasury. At the same time, risk-based selection for audits was
institution- alised. The percentage of non-risk-based audits
declined from 70% in 2009 to 35% in 2010 to
zero in 2011.
In addition to unifying and significantly simplifying tax and
business registration the Ministry of introduced electronic
information sharing between the Georgian Revenue Service,
taxpayers, banks, and other authorities.23 This was done in
combination with aggressive implementation of IT improvements, such
as a one-stop internet portal to enable easy public access to tax
and customs legislation, proce- dures, forms, and other revenue
related issues, and electronic taxpayer registration. These
improvements enabled e-filing of all tax obligations, which took
off from barely any e-filings in 2008 to 800,000 in 2009,
accounting for 76% of total revenue.
The current tax policy of the Georgian government seeks to
increase confidence and enhance trust by improving communication
between taxpayers and the tax authorities, by protecting the
taxpayers’ rights, by making administration more efficient, and by
harmo- nizing Georgian laws with the best international tax.
practices and EU directives. Georgian policy seeks to create a
favourable environment for doing business and investing by
simplifying tax legislation, reducing sanctions and penalties, and
enforcing fair tax admin- istration practices. In recent years, the
country has been actively cooperating with international donors to
improve tax policy, share information, and especially increase the
effectiveness of tax treaty application.
Results
Georgia’s tax revenues have increased more than four fold
thanks to the combined effect of the changes in the tax regulation
and administration. Total tax receipts soared from only 12% of GDP
to 25%, despite de- clining tax receipts on international trade due
to the slashing of import duty rates. More than doubling the tax
take was achieved through fewer taxes and gener- ally lower nominal
tax rates, while at the same time lowering administrative costs to
taxpayers and the government.
The increased tax revenues enabled increased social spending
on health and education (table 5). By 2010, public health spending
as a share of GDP had risen by 80%, equal to 2.3% of GDP.
Similarly, public education spending had risen by 46% in real
terms, nearing 3% of GDP. In addition, the SRS improved taxpayer
services, leading to a dramatic rise in tax- payer registration and
tax compliance – owing to a simplification of tax forms and a rapid
build-up of the e-filing system during 2006 – 08. The number
of registered taxpayers more than doubled between 2005 and
2008: meanwhile, VAT revenues rose from 8.5% of GDP in 2005 to
11.3% in 2009.24
The tax administration reforms and anti-corruption measures
have led to a drastic fall in the number of bribery cases involving
tax officials (table 4). Georgia’s business environment
significantly benefitted from reductions in their administrative
burdens that was initiated in 2009. Compliance costs for such
taxpay- ers declined from about 645 US dollars (USD) per year to
only USD 188 in 2011.25
Georgia has been actively working to increase its inter-
national tax treaty network. Since 2013, the number of double
taxation avoidance agreements has signifi-cantly increased and
today Georgia has 49 active tax treaties. Within the last three
years, agreements with seven countries entered into force,
agreements with five states were signed and five initialed, while
nego- tiations are ongoing with another nine countries.