[MoF] Dollars and Cents - A Look at 10 Days of Higher VAT

Day 1,849, 13:52 • Published in Canada Canada • by Bryan Alexander

Congratulations eCanada! You have survived 10 days laden with doomsday, end of eCanada, and proverbial 'Sky is Falling' type reactions; and have come out of it all relatively unharmed - with more change in your pocket as well, I may add.

The purpose of this article is just to bring a focus to what the effects of the VAT change have been over the past 10 days since their institution. It was a rather controversial change in terms of its scope and magnitude, but I personally feel once you analyze the data, you'll see that the benefit far outweighs the cost.



The reasons behind the VAT increases were quite simple: eCanada was facing the lowest daily income it had seen in quite some time. Congress was adamant on getting MU funding re-started in an effort to get money back out to military units. We also had MPP's to re-sign with allies; all of which could not be accomplish with pulling in two or three thousand in revenue in a day.

So the taxes went up:

VAT Foo😛 10% -> 25%
VAT Weapons: 10% -> 15%
Import Tax: 1% -> 10%

There were several major arguments against the taxes going up that I would like to address; primarily, they were:

1. Raising VAT will make goods significantly more expensive for the average Canadian.

2. Money is coming out of the pockets of Canadians when they compete against foreign producers with the new VAT.

3. Government income won't rise enough to warrant the changes.

I would like the address each of these concerns, and would invite an open discussion in the comments. However, please be constructive rather than simply negative.


Q. Raising the VAT will mean sellers will need to raise the price of their goods to make up for the tax increase; thus making the price of goods far too expensive for the average player.


A. Without a doubt, this is of course a real possibility. With the government taking a higher percentage of the sale, it seems logical for most sellers to adjust their prices to account for the change in the tax rate in order to get the best bang for their buck.

However, we have seen that prices for Q7 weapons, and most food levels have remain relatively unchanged. The usual price fluctuations occur, but they have not been drastic. Nobody is paying $20+ for a single Q7 weapon.

As a matter of fact, the average price for a Q7 weapon has remained +-0.10CC from what it was before the tax changes were instituted.

The tax increase did not bring about a proportional increase in the price of weapons and food.



Q. If the prices didn't go up, then doesn't that mean eCanadians are losing money on each weapon they sale? Is the money coming out of their pockets?

A. Short answer: Not necessarily. Speaking generally, if weapon prices don't rise proportionally to the VAT increase...then yes, sellers will be getting less per weapon sold. However..(and this is a big however) I don't feel that it is Canadians who are the ones making less money.

One tax change that went in at the time of the VAT changes was an increase on the import tax of food and weapons from 1% to 10%. This means that foreign sellers not only pay an increased VAT tax, but also have to pay a substantial amount more just to sell in our markets. Effectively hitting foreign producers with a double tax.

At the time of writing this article 8 of the top 10 listings for Q7 weapons were all from Canadian producers. The other two come from the eUSA.
Prior to the Import Tax change it had been noted that we were being undercut by several countries producers (Croatia/Serbia to name just two).

By raising Import Tax along with the VAT, we allow Canadian producers to be more competitive in our own markets. The cost of the VAT is balanced by a higher degree of success and margin in our own markets. Those who would normally flood the market with less expensive products are now helping fill up Canadian Accounts even more than ever.



Q. But, will the government make enough money from the changes to make it even worthwhile? Will the tax rates do more harm than good?

A. The following is a graph that shows the daily income levels of eCanada for the past 20 days. (10 days of old VAT, 10 days of new VAT)



The VAT changes came into effect on eRepublik Day 1839. As you can see, income has been consistently higher since the VAT changes.

In fact, the lowest daily income since the changes have occurred is still higher than the average of all the daily income under the old tax structure.

Furthermore, a small comparison of a running 10 day average shows:

Old VAT System:
10 Day Total Income: 37 295.28 CC
Average of 3729.52 CC / Day

New VAT System:
10 Day Total Income: 52 515.95 CC
Average of 5251.59 CC / Day

That's a roughly 41% increase in daily income.

During times of war, this % increase will only grow further, thus allowing for more money to be spent on timed strikes and concentrated war efforts.


I feel there was a lot of fear mongering over an increase in VAT; prices would skyrocket, eCanadians would be living with the trolls under eBridges, and the world would surely end.

This is certainly not the case, however. Prices of goods have remained stable. eCanadian producers face less competition and bullying from oversea importers who traditionally flood our markets, and the Canadian treasury continues to grow.

It has been 10 days since the eWorld ended due to high taxes, and now we sit 10 days away from when the real world ends according to the Mayans. How fitting!



Thankfully the MU Funding Act was just approved, and our military units and their members will be able to use those zombie Canadian Dollars to repel the inevitable zombie apocalypse!

- Bryan Alexander
eCanadian Minister of Finance