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This is the second in a series of articles covering the Eight Opportunities in the MOO platform. The goal of the series is to break down the complexities of the platform into a collection of simple beliefs.

The first article in the series asserted that reducing income taxes to 1% will put more money in the pockets of employees, more value into the compensation paid by employers, and more accountability into our government.

Let's turn our attention to VAT.



What is VAT?

VAT has not been used to any extent at all in eCanada for over 18 months. VAT, or Value Added Tax, is a tax on manufactured goods. Commodities, or raw materials, do not attract VAT. VAT is added to the price of a product after the net price posted by the seller. The VAT does not compound any import tax.

Currently VAT is 1% which is the in-game minimum.

To illustrate the mechanics, say you are managing a moving ticket company and sell your Q1 tickets for $10. You add VAT of 1% to the ticket to arrive at a price of $10.10. A competitor from the eUS selling into eCanada at CAD$10.00 would have the import tax of 80% plus the VAT of 1% to arrive at a price of $18.01.



Why is a VAT rate of 10% so important to MOO?

In a closed economic system, ie no imports and no exports, you can completely replace income taxes with VAT and see no change in revenue from the government's perspective. You take the 15% income tax buried in the cost of the product and add it to the net cost of the product to end up at the same place.

Consider that if the existing 15% income tax were reduced to 1%, as proposed by MOO, and VAT were increased to 15%, then each product would still generate 15% tax for the government.

But I said 10%, not 15%.

MOO wants to shift the balance of wealth from the government to both the consumer and the company owner so the MOO platform is a VAT rate of 10%, not 15%.

Let’s assume that MOO realizes it's platform and eCanada institutes a VAT of 10% for all products.

Now, let's go to our little closed system with no imports and no exports and open it up to allow exports. For the record, there is no in-game mechanic to kill exports.

The goods produced in eCanada with a 1% income tax would be produced with essentially TAX FREE LABOUR. This makes the labour “cheaper” and makes eCanadian products more competitive in international markets. When exporting into large markets with no VAT and low import tarriffs, like the eUS, eCanadian companies will actually have a cost structure advantage.

Now, consider opening the system further to allow imports.

All goods sold in eCanada, regardless of where they were produced, will be taxed at at least 10%. This levels the playing field, even in situations where import tariffs are low to non-existent. Domestic companies will have an inherent advantage over foreign companies in the VAT system that I propose.

VAT is a consumer tax, those who consume pay the tax. If you consumer more, you pay more. Under our current system, everyone pays tax based on their employment income however government budget is spent on the groups of its choosing, the largest of which is military. With VAT, the money that the government spends on weapons for the military will fund the government budget which is primarily focused on the military. Money spent tanking on high Q weapons will fund the budget which could include tanking on high Q weapons.

This is akin to user fee systems in RL. People who do not use the products don't get taxed. VAT is an accountability tax, holding the consumer of products accountable to tax.



Who are the losers with an increase in VAT to 10%?

To be completely transparent, the price of food and weapons will go up by 10% overnight. Consumers will be pissed. In isolation this would be bad, perhaps a showstopper, but my tax reform respects the interactions that income tax, VAT and import taxes have on one another. Bear in mind that in the first article, we increased the net pay of all employees by reducing income taxes by 14% so an increase in product costs by 9% is still a net gain. You have more money in your pocket to pay for the products. If you are more of a worker and less of a consumer, you aren't even pissed.



So what is the simple belief?

VAT centric taxation targets "the shopper" as opposed to "the worker", it also provides the state a reliable source of revenue independent of where the product was manufactured.



Join the herd today!!!

Your Minister of Opportunity,

Addy Lawrence



The Eight Opportunities of MOO

The first opportunity is to maximize the net pay of employees by setting income taxes at 1%.

The second opportunity is to maximize the value to employers of labour costs by setting income taxes at 1%. See the first opportunity, this is two birds with one stone.

The third opportunity is to provide employment options for all eCanadians through harvester jobs by setting import taxes at 99% for high commodity types.

The fourth opportunity is to align the interests of the state with those of the consumer by shifting government tax revenues to be VAT based and setting VAT to 10% for each product.

The fifth opportunity is to provide eCanadians with competitive pricing for products in the domestic marketplace by lowering the import tax on all products to 10%.

The sixth opportunity is to actively support all eCanadian entrepreneurs in their pursuit of 10% profit on all capital they employ by maintaining import tax rates of at least 10% on all products and commodities and VAT rates of 10% on all products.

The seventh opportunity is to support our domestic manufacturing industry by actively maintaining a full complement of high regions covering every commodity so that our businesses are as competitive as mechanically possible in this game.

The eighth opportunity is to foster transparency and accountability in government spending by reducing tax revenues (see one through seven) and creating more dependence upon bond issues where government must lay out what they want and what they intend to do with funds and earn the support of those who can afford to support it.