Join the new world

The first reason our taxes need to change is quite simple: compared to our competition, we don't make enough. We have hovered around the 4,000 currency per day mark for quite some time. France, a nation plagued by war and with a fraction of our bonus stability, is not too far behind. Lithuania regularly beats our income. As do Germany and Taiwan. All of these nations, regardless of their alliance, are our competition. We have similar natural resources (i.e. based in our 'original regions'), we trade positions in the rankings for damage and number of citizens, and we are all seen as 'mid-power' allies within our alliances. Sure, we can't win a war, but we can make an impact on a battle, we can contribute financially or through leaders. And yet despite all this, our tax system would have us earn less than these countries on a normal basis (accounting for all of France's income going to France), quite regularly.

So there is the first reason for changing our taxes; what we currently have is not sufficient - those of similar means or measures elsewhere earn more than we do because they have different taxes. Instead of ignoring this, it's time to accept that things should change.



The second reason I want to change taxes, is quite simply, an imitation of Warren Buffet. Basically, in eRep terms I'm a 1%er. I earn around 600 gold per month, on an average month, from my companies. Of this 600 gold of revenue, I pay the work rate of tax; so 6 gold. Minus my costs, which is about 2.4 gold per day, and I am left with a monthly profit of around 520 gold, assuming current market conditions and a month of 31 days. This is because my income does not require any consumption on my part. I produce enough Weapon Raw Material to fund my own production (Working as Manager) in my Q7 companies, as well as providing enough for me to use 10 workers in each. My only costs, as I said, are around 2.4 gold per day in wages, and 6 gold per month in taxes. So my effective tax rate is around 1.5% of my profits (not including medals).

Compare this with someone who doesn't have my means, or resources. Let's assume someone has their free plato companies (3 x Farm, 1 x Q1 food, 1 x Iron Mine). Let's also assume that they do the bare minimum; they get their 25 kills, work in their companies and train in their only their free training ground. They also work as an Employee.

Their total monthly income would be 883.5 in wages, plus 310 GBP from their Iron Mine production (assuming 0.05 cc/WRM).
Their daily requirement to work and just kill 25 times, means they would need roughly 1100 energy per day (fighting without weapons). Minus their food production (UK bonuses pegs that at 280 units of energy per day). Thus, our new player must purchase 820 units of energy per day. Sure, there is the possibility of players engaging with their parties, military units, the NHS, if they jump through the hoops such as filling in gDocs, message the right person or read the right article, but what about those who don't?

They'll be facing a daily cost of 24.6 GBP spent on food. Of this, 2.46 GBP is tax. Assuming they don't buy a single thing other than what they need all month, their breakdown is;

Income: 1193.5 CC
Expenditure minus tax: 686.34 CC
Tax: 34.72 Work Tax, 76.26 VAT
Total Profit: 396.18

This means their taxes are 28% of their profit, compared to 1% for anyone who can survive on goods they produce. They haven't even touched a single weapon here, and yet their profit would increase by ~20% if we taxed food at 1% VAT (edit: I should add, this would only be the case if we didn't increase Work Tax)



Finally, my main case for changing taxes is quite straightforward. Times have changed. We decided to tax food because the vast majority of it would not need to be eaten; it would be sold on. Then, Plato changed the amount of Energy; it doubled. So instead of only being able to hold 600 at any one time, we could have 600 'banked' and have 600 stored. Thus, anyone who did not double their food production, would have to buy food. Of course, new players do not get the head start of existing before the rule change, so this instantly puts them at a disadvantage.

As well as this, we had to ensure our weapons market was internationally competitive to protect our currency, so we reduced VAT. In a world where all currency is interchangeable 1:1, we do not need to protect our market to encourage demand for our currency. The price of the market will fall as sellers try to compensate for the huge overproduction; whether we tax weapons at 50% or 1%, ultimately our market will never be as cheap as economies that have more bonuses, but we can rely on our huge overproduction of weapons to ensure that prices are in continuous freefall.

The base argument for reducing Work Tax to 1%, when it was changed to include 'Work As Manager' companies in its remit, was that it was going to stop people from leaving the country to tax havens. A look across the globe shows us in uncertain times. Our natural bonuses, at 60/40, are arguably one of the best in the world. Despite being in wars, we are regularly at this rate of bonus, and geographically we have many more allies than enemies in our midst. We need not discount; the people who want more bonuses, have already gone to Argentina, China, Poland or Chile. The rest of us aren't bothered about paying a few extra GBP here and there, for the sake of giving the Government more money to do things with.

Thus, I would propose we change taxes to;

Work Tax; 3% Across the board
Weapons VAT; of 5%
Food VAT; of 1%

To acknowledge firstly, that our current tax arrangements do not produce enough income, obviously an increase in Work Tax will secure us a more reliable chunk of income. A modest rise to 3% still prices the UK competitively internationally, whilst also accounting for the fact our history shows, UK Governments on the whole keep the country at optimum 60/40 for long periods of time.

Then, the switch in VAT is to switch the tax which ignores your income, to tax that which is a luxury, as opposed to a necessity. Food is one of the best ways to get new players to level up, complete their Daily Order, or missions. Weapons are not necessary for this, most of the time.

I've written this article as well as pasted it into the Congress Discussion in the hope that we can put this to a vote before the end of our term. Any points raised here, will also be raised in the discussion message with other members of Congress.

EDIT: In response to Neil Lewis;

POST-CHANGE TO 3%;

Income: 1193.5 CC
Expenditure minus tax: 686.34 CC
Tax: 104.6 Work Tax, 7.62 VAT
Total Profit: 396.5

POST-CHANGE TO 2%;

Income: 1193.5 CC
Expenditure minus tax: 686.34 CC
Tax: 69.7 Work Tax, 5.08 VAT
Total Profit: 432.4

The point I'm making here is not so much that this person will be substantially be better off; the game requires that you'd need more than 100% of your income spent on upgrades for you to really 'progress'. My point is, people who have just started the game pay much more as a percentage of their total income that the rest of us. An increase to the rates I propose will see the new player pay an extra 0.3 GBP per month in tax (0.0007% Increase) at today's rates. The more you rely on consumption to fund your profits, the closer to 3%+ you will pay.

The more tax is paid, the more help can be provided to these new players, the more activities or top-ups can be provided, the more MPPs we could afford, the more wars we could have, etc etc.

This also moves our system towards protecting newer players from fluctuations in wages; should their wage reduce, their tax will proportionally reduce too, having less of an affect on the amount of food they can purchase, because the VAT is as low as it can go.