On the removal of VAT
Day 388, 12:33
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Published in Norway 
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by
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by Evleos
On the removal of VAT
Removing VAT will increase our competitiveness with the amount VAT removed.
One of the annoyances in eNorway today, is the proliferation of black market trading – people offering imports that avoid the legal tariffs. This surge in import causes a flight of gold, tax revenue and jobs, and has the potential to further our economic slowdown.
However, there is a simple way to help our odds, a simple way to increase our competitiveness in the face of the surge in “illegal” imports. You might have already guessed it; the removal of the Value Added Tax.
Before you think I am crazy, hear me out. I will outline two very simple cases that proves my point. Note that these are just cases, not necessarily representative of an actual situation, but they nevertheless prove my point.
Wage: 10
Domestic product price: 3.5
Black market product price: 3.5
Case 1:
10% Income Tax*
10% VAT
Our diligent worker is left with 9NOK after he has paid his direct taxes. He desires to buy “product”, and can buy it either domestically or from the black market. As the domestic product costs 3.85 after VAT, he will buy the product for 3.5 at the black market. Gold, jobs and tax revenue have thus left eNorway.
Case 2:
15% Income tax*
0% VAT
Our worker is now left with 8.5NOK after his direct taxes are paid. As both the domestic and black market product are priced alike, our worker would buy the domestic product, as it is less of a hassle. Consequence; No gold nor jobs have left our country, and no tax has been exempted. Another positive effect, is that despite having reduced the overall tax pressure, our tax income went up. There is thus no way to avoid taxation, and the overall tax level may be decreased.
As you can see, with respect to black market imports, our competitiveness is increased by the percentage VAT is decreased. This implies that we have a very simple way to increase our competitiveness with 8%. I hope we soon have a system in place, in which the workers that decide to support eNorwegian industry, does not have to pay more tax than those who does not.
*Note that income tax levels are really irrelevant for my point.
Evleos
Removing VAT will increase our competitiveness with the amount VAT removed.
One of the annoyances in eNorway today, is the proliferation of black market trading – people offering imports that avoid the legal tariffs. This surge in import causes a flight of gold, tax revenue and jobs, and has the potential to further our economic slowdown.
However, there is a simple way to help our odds, a simple way to increase our competitiveness in the face of the surge in “illegal” imports. You might have already guessed it; the removal of the Value Added Tax.
Before you think I am crazy, hear me out. I will outline two very simple cases that proves my point. Note that these are just cases, not necessarily representative of an actual situation, but they nevertheless prove my point.
Wage: 10
Domestic product price: 3.5
Black market product price: 3.5
Case 1:
10% Income Tax*
10% VAT
Our diligent worker is left with 9NOK after he has paid his direct taxes. He desires to buy “product”, and can buy it either domestically or from the black market. As the domestic product costs 3.85 after VAT, he will buy the product for 3.5 at the black market. Gold, jobs and tax revenue have thus left eNorway.
Case 2:
15% Income tax*
0% VAT
Our worker is now left with 8.5NOK after his direct taxes are paid. As both the domestic and black market product are priced alike, our worker would buy the domestic product, as it is less of a hassle. Consequence; No gold nor jobs have left our country, and no tax has been exempted. Another positive effect, is that despite having reduced the overall tax pressure, our tax income went up. There is thus no way to avoid taxation, and the overall tax level may be decreased.
As you can see, with respect to black market imports, our competitiveness is increased by the percentage VAT is decreased. This implies that we have a very simple way to increase our competitiveness with 8%. I hope we soon have a system in place, in which the workers that decide to support eNorwegian industry, does not have to pay more tax than those who does not.
*Note that income tax levels are really irrelevant for my point.
Evleos
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Comments
Voted. You know what you talk about, and hopefully this will soon be in the TT party programme 🙂
I'm not with you by removing the VAT forever.
Eliberator; they might change the system in the future, eliminating imports that avoid tariffs.
voted
The system is poor.
I am the only seller I know of who provides Q5 food to Norway. I know there is a demand for these goods as I sell 20-30 a day, I also know that if a selective duty system was provided in the game, the Norwegian Government might allow a low duty rate for Q5 food as it is not produced domestically. This would mean I could provide a limited quantity of well priced Q5 food to the market and I would not be directly competing with any domestic companies.
At the moment I sell for 7 NOK which is nearer 15 NOK after tax. This gives me a huge incentive to try and circumvent the taxation system.....if I can sell by donation for 10 NOK I will increase demand as the price is much lower, and I will make more profit. This is a gaping flaw in the game. There are products produced abroad that nations require from time to time, but the primative taxation system is killing any form of international trade.
As the agme is set up now, there will never be a global economy, only a swathe of isolationist protectionist nations with high import tariffs across the board on all qualities of goods.
diecast, you are not a problem. you can do this kind of trade, till you'll stop 😉. As long there is a need on the market, you can sell.
Voted, absolutely.
Okay, Eliberator, we understand that you want to keep the VAT. But it would be more helpful if you also explained WHY you are against the proposal.
He is selling houses etc bought abroad. Vested interests you see... It is sad that our congressmen does not represent the people, but themselves.
We can't let this happen to eNorway.