Economy Annex

Libertarian Economic Policies Kick-start Modernization Tax and Tax rates slashed: Only six taxes, down from 21 Flat personal income tax of 20% (15% by 2013) Corporate income tax 15% By 2012 no taxes on dividends, interest income or worldwide income "Liberty Act" Referendum is required for an increase in tax rates Budget expenditure capped at 30% of GDP (effective FY2012) Budget deficit capped at 3%, effective FY2012 Public debt capped at 60% of GDP, effective FY2012 Corruption and Red tape slashed Corruption significantly reduced, Transparency International ranked Georgia 7th out of 69 by Global Corruption Barometer 98% of Georgians didn't have to pay bribe in past year, according to International Republican Institute Georgia 11th out of 183 in the WB's Ease of Doing Business (up from 112 in 2005) Customs code harmonized with EU; Capital controls abolished since 1990s Bribe payers index (% are not paying bribes) United States Turkey Georgia United Kingdom Poland Belarus Romania Armenia Azerbaijan Ease of doing business Ukraine Russia Turkey Poland FSU Average EE Average Belarus 54% 57% 142 120 73 72 71 67 58 Romania 55 Armenia 43 Azerbaijan 38 Israel 29 Switzerland 21 Georgia 11 UK 5 United States 4 87% 86% 98% 98% 98% 97% 96% LOLE BANK OF GEORGIA Source: Transparency International, the Heritage Foundation, World Bank www.bog.ge/ir October 2010 Page 8

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