[MoE] All About Taxes

Day 2,094, 08:42 • Published in Ireland Ireland • by Ian E CoIeman
August 14, 2013

Hello eIreland,

Current issues surrounding tax have inspired me to bring you an article about the different kinds of tax and how they work.

Tax In Poltics
Our tax rates are set by congress who are advised on our tax policy by the appointed Minister of Finance. Tax is always a hot political issue because of the direct and empirical way that it effects us as tax paying citizens.

There are several theories regarding effective and fair tax policy. Ultimately all views on the matter take into consideration a balance between two goals:

1) Maintaining a strong war chest and revenues for month to month operations.

2) Creating a local economy that benefits everyday citizens and the growth of economic power in factory owners.



What complicates the issue of achieving these goals is the varied history of eRepublik's economics module, which has created significant barriers to the development of young business owners... not to mention veteran moguls. Another complication has been the growth of commune business where individuals are paid in weapons and food rather than currency - a system which circumvents the taxation of income, thus creating issues around the consequently unequal tax burden pressed onto wage employees.

If you are a new citizen these are issues that you will come to understand better in time. If you are an old citizen you will continue to wrestle with these issues though they are all too familiar.

You can see our current tax rates here.

You can watch out for the status of tax related congress proposals here.

Tracking Taxes
Our current Cp recently wrote a great article explaining the mechanics of tax after it has been collected in the treasury here. Just to reiterate:

All taxes are collected in the national treasury automatically, which can again be viewed here.



Once the tax revenues are in the treasury they can be moved to government organizations only through proposals from congress which must also pass. As pointed out in the recent Cp article, these movements are rare.

The treasury is the pool of funds used to pay for mutual protection pacts, airstrikes, and wars.

You can see the abilities of congress and the president here.

Work Tax
Work Tax was formerly Income Tax, but with the update implemented by the developers of eRepublik on August 8, 2013, it now affects not only worker's salaries but also the managers working in their own factories.

Note that in both the case of wage workers and of managers the Work Tax is just one tax and one rate which is then applied differently to the two respective roles.


As Applied To Workers (Formerly Income Tax):
The Work Tax rate is applied to the salary a citizen receives from their employer. For example:

If you receive 20 IEP from your employer, and the Work Tax in eIreland is 18% you will pay 3.60 IEP to the government of eIreland and retain 16.40 IEP for yourself.


As Applied To Working Managers:
Here the Work Tax rate is applied to the Average Salary which is provided at the bottom of eIreland's Country Economy page.




The Average Salary figure is calculated automatically by eRepublik as the mean salary paid by managers of a given citizenship over the last 30 days. This means that even if the salary offers on the job market are relatively low, the actual salaries paid by more generous company owners will be reflected in comparatively inflated averages.

For example if the Work Tax rate is 18% and the Average Salary figure is 25 IEP, each time a manager works in his company he will pay 4.50 IEP to the government. At this point the manager will not have received anything him/herself monetarily, just the goods that they have manufactured.

The factory manager will pay Work Tax for every factory he or she works in. For example given the previous figures, if the factory manager owns 12 companies and works in all of them during one day, he or she will pay a total of 54 IEP (4.5 IEP for each of twelve factories). If he or she works as an employee in someone else's factory they will also pay the Income Tax function of Work Tax on that revenue.

Notes on Transitioning from Income to Work Tax:
When Work Tax came into effect on factory manager on August 8th, it immediately took Income Tax and turned it into Work Tax. If you look over the administration of eIreland dating back more than a month all proposals regarding Income Tax have been relabelled as Work Tax even though such a tax did not exist at the time.

Since Income Tax before this change was 18%, after the change was enacted Work Tax was set at 18%. The example calculations provided above are very similar to the current figures only days after the change, and so you can see how expensive this new tax is to company owners with 54 IEP being safely twice the average salary of a worker.

I also suspect that once company owners realized the new cost to working in their own companies, at least a few will have decided to take on more employees to avoid this direct cost. Of course unwittingly this may have caused a jump in the average wage on the market... thus shooting those same managers in the foot slightly.

At any rate by the 10th of August 2013 the Ministry of Finance released a new plan to address these changes, and jumped on an otherwise rogue proposal, which would pass that same day, to reduce Work Tax to 1%.

Here is the Ministry of Finance article: Link
And here is the passed proposal: Link

Value Added Tax
Known as VAT, Value Added Tax applies only to finished products such as weapons and food (not raw materials). It is collected at the time of sale on the marketplace as an immediate deduction from sales revenue.

For example, if a citizen decides to sell one unit of Food for 1.00 IEP, and the countries VAT for food is 5%, then he will earn just 0,95 IEP for that unit of Food (1.00-0.05).

This tax can be set at between 1% and 25% by congress. Different tax rates can be set to different products so that VAT on food can be higher or lower than VAT on weapons.

Import Tax
Import tax is applied to those selling on the eIrish market who do not have an eIrish citizenship.

For example, if a citizen with eUK citizenship decides to sell one unit of food at the marketplace in eIreland for 1.00 IEP, and eIreland's import tax for food is 50%, and eIreland's VAT is 5%, then the earnings for the seller will be only $0.45 (1.00 - 55😵.

Cheers!