| RavenBlog |
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| Comments on Saturday 25 September 2004: |
| In countries with government-controlled services such as electricity and phone service, what do they do to prevent natural privatisation? If Bob in the imaginary country of Ownedland sets up an unusually efficient wind-farm and solar generating plant, and offers to sell the electricity so produced to others in his town at a quarter of the government rate, is he committing a crime or what? Regarding countries with income tax (I know, this is an extremely rare occurrence that nobody is at all familiar with, but this sort of totalitarianism does happen in some crazy third-world nations, I assure you), if Bob in the imaginary country of Ownedland arranges a work-trade-unit that people in the town can exchange with each other, such that, for example, instead of working to earn the country's currency, a plumber can fix someone's toilet and later exchange the work-trade-units thus earned for having someone else fix up his garden, how does the government get its tax from such a trade? Is Bob committing a crime by arranging the existence of such a unit? [05:15] |
| Chris Chambers |
| For the first question, typically such an occurance can't happen; the volume of electricity sales renders smaller competitors, no matter how efficent, so insignifigant in comparison that it becomes impossible for them to offer a rate below the going rate and make a profit. The only case where this becomes signifigant is when Bob can provide for the electricity needs of a large community, at which point Bob will run into the problem of needing to run his own Power Lines, since a Government owned/run service has the ultimate barrier to entry. In the second example, it depends on the legal definition of income, which I could rant about for epochs. Let us just say that the US tax code itself is approximately 14 pages, with somewhere in the area of 44,996 pages defining income. Typically, a service is not defined as income, no matter the method of payment for the service, so no crime has been committed. The community obviously must rely on outside resources for the raw materials for these services, so they are indirectly paying such taxes on the goods they purchase. For a real life example, I'd start with any number of tribal cultures, and point out the Amish/Mennonite cultures. If the community is inherantly self-sufficent, it must by neccesity be so small or agriculturally subsistance to be of no impact. |
| RavenBlack |
| That doesn't answer the first question, though - it just evades it by saying "it wouldn't happen". The question is what if it did, which easily becomes more pertinent in other contexts, eg. government-backed telecommunications versus community wireless. As for the community paying taxes on the goods they purchase - yes, that's so, but if they used proper currency within the community they would be paying that amount of tax *plus* tax on every inter-community transaction. I realise they wouldn't be evading tax entirely, but they could easily be (legally) evading the bulk of it. I've since found, (discussed in my Livejournal comments), that there are systems like this (LETS, especially), and that the legality of it varies by country. Mostly it seems to be much as you say - that services become tax-free, though if goods are traded using the community currency they are taxed because payment in goods still does count as income. Most countries where LETS systems exist seem to rely on the users to declare what the currency-value of their taxable 'income' is, though, which obviously would be a huge discount even if services did count. (Normal plumbing cost to fix a toilet - tens of dollars. Self-declared plumbing cost to fix a toilet - ooh, ten minutes at minimum wage, about $2.) |
| Chris Chambers |
| In the first instance, in most cases Bob would be commiting a crime only if he used public resources in the process; he couldn't build lines on public land for transmission, for example, and law may prevent or limit his ability to build power lines on private land. I'm sure a sufficently intelligent person could get around it, but the Gov does have the power to pass new legislation, so it'd have to be a really smart way, or there'd likely be reasons for them to legislate against it anyway, at least ones that would keep most people happy. Transmitting power any distance is not an easy or terribly safe thing. As far as the second issue: Governments already rely on users to declare the currency-value of their taxable income. Some countries also ask Buisnesses to inform them of how much they pay people, to keep people from cheating, but it happens anyway; unless the Government is the sole employer, any income tax system is reliant on those it taxes to provide accurate data. |
| RavenBlack |
| People aren't relied on to declare the currency-value *of* their taxable income - they're relied on to declare the currency-value that *is* their taxable income. If your taxable income is in currency it's a fixed number that is auditable, and that's what most people have. (In the UK, US and Australia you also aren't actually relied upon to be honest if you're an employee - your employer declares your wages and it gets cross-checked, so you can't fudge the numbers much if at all.) So the government relies first on cross-checkable numbers, and where those aren't available it relies on fear of audit, not an innate willingness to declare honestly on the part of the citizens. If your taxable income is in goats, and if there's no legislation about the value of a goat, then for tax declaration purposes the goat is worth whatever you say it is. That's a completely different class of declaring the currency-value of your taxable income, and one that occurs *in addition* to the one you speak of, so there's two levels at which the figures could be fudged. |
| florence |
| Yes, in the United States there is a law that says you must pay taxes on exchange of services and/or goods. There are service exchanges in California, and not paying them, and being reported-for that's the only way the Government can find out about it, puts you in violation of the tax laws and you can be jailed for a long time for income tax fraud and/or evasion. Creating the service is perfectly legal, using it and not reported the "income" which in California would be the same as that service costs in the market place, is against the law. |
| carl |
| NZ has laws on the books that says ALL income sources and transactions are liable for taxation on the value. If one trades a load of manure for a goat then its taxable. If you pay a penny for a stall then its taxable. The law then clearly states that the value of the taxs are to be paid with legal tender. |
| carl |
| To answer the initial question. 1) legislation. The government makes it a criminal offence to be involved in a competitive practice. 2) Licensing. Government bodies set up licensing commisions to oversee industries. All operations involving that industry must meet both legal and commision "guidelines" by law. Not doing so is a criminal offense, usually with seizure provisions. 3) Registration. The market is open but all individuals wishing to operate are required to register and provide auditable financial statements. The individual pays for the government audit. Arrears of Tax are assessed at what the government thinks is "reasonable" for that type of enterprise if they can find discrepencies. A fine is also opposed of anything from 10% to 150% of the Arrears, backdated. All owings attract a 5 - 8 % per month(!) "money use charge" from the due date. that is a lot for arrears. The Tax people have first dibs on all assets and can easily have the courts remove any liability limitations. Failure to register incurs a fine from day one. 4) The value of the market is set by government commision. For corporate entities that means court and special government commisions of enquiry. For individuals like Bob the plumber the Tax department chooses an hourly rate theoretically based on "average market price for similiar tasks." 5) One can "gift" labour, materials or money. After a certain ceiling ($25k per year) any gifts are considered a form of income and attract personal taxes. 6) Perques. If one borrows their employers' equipment or prestige or some other way of reducing costs -for personal use- then the employer must assess the value of the "benefit/profit" to the employee and pay a tax on the value of that benefit. This is considered a form of extra income for the employee. Especially in the case of Self-employed people or corporate bosses. |