Taxation in Bergonia

simplicity, efficiency, and across-the-board fairness are the goals

"Taxation is the price we pay for living in a civilized society"

-- Oliver Wendell Holmes

No income taxes, except on the self-employed.

Heavy payroll taxes on all enterprises to fund the Basic Income Fund & the National Health Funds.

Severance and energy taxes, including  large gasoline taxes at the pump and a big tax on electric bills.  All this goes into general revenue.

Excise taxes on certain commodities with high "social costs."

States have sales taxes, around 3%.  States also receive a share of all energy taxes.

Land "lease" payments go to local governments.

No other forms of taxes.

Even in syndicalist-socialist utopia people will pay taxes to the government, since this is till a society dominated by money.  Taxes in history preceded even the development of money, when peasants paid in grain and feudal nobles paid in tribute-- indeed one reason (so goes Berg thought) why the sovereign first coined money was to make it easier for his subjects to pay him taxes. As long as there is money and money-accounting of profit and loss, there will be taxes.

The socialist theorists want someday to evolve Bergonia past money, but even then there will remain a need to allocate resources to public needs & projects. Perhaps after money is ended, taxation e.g. the direct expropriation of property, will be replaced by other, more gracious methods of distribution and support, but for now taxes are still as certain as death.

Taxes on Individuals & Families

Bergonian revolutionary doctrine holds as a statement of principle that governmental and economic bureaucracy should always impose as little a burden on the individual as possible-- in order to lessen the common citizen's hassles.  This is in keeping with the utilitarian perspective common in Berg policy-making, which is to consider the immediate effect of a policy on the happiness of the people. 

One dependable way to analyze the people's lives in this regard is to examine how people spend their time, and how new policies or practices would change how they spend their time.  This emphasis on time seems natural to Bergonians as a practical outcome of the concern for the length of the work day and the work week.  Anyone who has ever had to hassle with filling out U.S. tax forms, as well as insurance forms, knows these burdens that government and corporate bureaucracy impose.

Thus, except for the self-employed, individuals do not pay income taxes at all-- it is too much bother and hassle!  People also pay no personal property taxes for their personal possessions, including automobiles, campers & boats.

Land:  Here the land is collectively owned by all the people, with democratic state organs  allocate land and buildings to individuals and collective enterprises, under a system of law.  The allocation of productive land should properly depend upon actual use (i.e. the purpose of the collective labor) and social need, not capital, so no one may accumulate land like capital.  Likewise the allocation of the residential stock  should depend on need, possession, and family ties.  Individual use and need must of course be consistent with the social welfare of the community and the environment, thus possession of land depends not just on need and use, but on compliance with the environmental laws.

Thus, people don't "own" the land they use, and therefore people don't pay taxes on the ownership of real property.  Instead, everyone pays "rent" to the local government for their leaseholds, so that one's housing costs and tax are the same thing.  This is perhaps one of the most striking differences between living in Bergonia and living in a capitalist country.

Fiscal & Monetary Policy

Bergonians have worked hard to achieve stable and solvent socialist institutions, and earnestly desire to keep them reliable and healthy.  Workers generally are motivated to work collectively to build prosperous enterprises, but all the incentives and abilities to do so are disturbed if the system overall is unstable and unpredictable.

Since money is the symbolic device by which the economy translates labor into value, the system of money must be able to accurately reflect the value of labor over time, free of fluctuations that distorts the reflection.  Therefore socialist government must protect the value of the workers' labor by providing a stable currency.  Otherwise, inflation corrodes worker productivity and confidence, and frustrates all competent planning.  There is a central bank that manages the currency and controls interest rates.  Additionally, inflationary and debt pressures are reduced by the requirement that all organs of government must keep balanced operational budgets.

The state & local development banks, and the credit union banks (associated usually with syndicates) provide regular sources of capital to cooperatives with moderate stable interest rates that are regulated by the central bank.

The commercial courts provide reasonably fair and speedy resolution of contract and business disputes among cooperatives & collectives, so that commerce exists within a framework of clearly enunciated and enforceable legal duties.  The socialists of Bergonia disclaim capitalist conservative claims that the law of individual rights (hence modern democracy) was a by-product of property law.  That rather stands the matter on its head to Bergonians, who instead argue that law and rights usually serve the cause of the propertied class.  In any event, any society consisting of independent, interacting individuals or organizations needs at the very least a system of mutual expectations based on custom, if not hard solid law.  Socialist society benefits no less than a system of law, including property and trade law-- in order to protect socialist property.

Fiscal policy and accepted business practices reflect conservative values-- hence the requirement of balanced budgets and rigid accounting and auditing standards for all organizations in the country.  

To this end, the accounting profession is an independent, self-governing professional body.  Like all professions in Bergonia, entrance and professional licensure is contingent upon an objective test of competence.  Accountants form their local, regional and national bodies democratically, and these professional bodies, in conjunction with the independent accounting schools at the various university, meet and adopt Uniform Accounting Principles for all forms of socialist organization, including government and the military, and even advisory standards for accounting of religious organizations.  The standards of course include professional ethics and auditing standards.  Uniformity raises and equalizes performance expectations.  Uniformity also facilitates transparency.



Taxes on Cooperatives & Enterprises

The traditional Bergonian outlook and new revolutionary doctrine both regard the collective enterprise as the main unit of economic activity, not the individual.  Thus the main unit subject to taxation should be the collective enterprise, not the individual member.

Therefore every economic enterprises must pay a payroll tax.  It is the equivalent of a tax on the "workers share" of the collective enterprise's income.  It is not a "withholding" from individual pay, so no part of the payroll tax is in anyway chargeable to individual workers, since no individual ever become liable for taxes.  Instead it is seen as a tax on the collective's net income, before the workers pay themselves.  The payroll deductions are calculated with a simple flat percentage of the net amount the workers pay to themselves. 

This withholding is primarily devoted to the Basic Income Fund and the Nat'l Health Funds, but some of the money goes into general revenue.

The utilitarian perspective encourages the government to focus on ease of collection, which compels policy-maker to identify within the economy "flow points" where everyone's economic activity is easily discernable and taxable at a single basic point in the economy.  In the medieval economy toll roads and tolls at city gates were such points, as was taxation on the production of grain.  .

Sales Taxes & Value-Added Taxes

After the revolution the socialists imposed sales taxes as a way of putting the government back on its feet.  The Congress imposed a uniform national sales tax in 1937 with a system of sharing the revenue with the states.  The tax generally hovered at around 10-13%.  Then a system of value-added taxes were developed in the late 1940s, again with national & state sharing the revenue.  This allowed for the national sales tax to reduce to about 7%.

However, as part of the Big Green Tax Reform of 1987, the commonwealth retail sales taxes were abolished.  The states received the power to impose sales taxes, and to replace the income they were about to suffer under the new arrangements nearly every state imposed 3% general sales taxes.

Moreover, value-added taxes were also abolished.  These taxes could be justified as labor taxes, since every addition of "value" to the property represented the expenditure of labor, and a current of socialist thinking holds that to tax labor is to introduce an "alienation," another authoritarian expropriation of the workers' "surplus value."  Besides, abolishing the value-added expropriations made work easier for all the nation's collectives and enterpises.

Instead, the Congress enacted a series of sales taxes on targeted categories of goods, with revenues channeled directly into specific programs, based upon the social costs generated by each category.  Each tax tries to correlate need with actual use.

The Green Tax Reform --
the new system of Energy Taxes

During the Greening, the Green Tax Reform placed a series of taxes based on energy, which in turn most directly affected the entire environment.  Heavy taxation on energy would encourage environmentally friendly parsimony.  Heavy taxation on energy would be a tax spread equally across all segments of society.

1. Taxes at the source of energy

These taxes, flowing into the commonwealth's general revenue fund, are charged upon energy production:

(a) severance tax on coal and other minerals,

(b) a wellhead tax on petroleum and natural gas,

(c) a tax on petroleum imports, and

(d) a tax on hydroelectric production.  

The tax rate for each kind of energy depends on the carbon units contained therein (much as Al Gore explained in his book Earth in the Balance), which directly correlates with carbon emissions. 

These taxes are a decent and easy way to broadly and equitably tax all economic activity at a single collection point, involving the simplest system and the fewest numbers of people worrying about it. 

Of course the costs these taxes impose upon the producers, the costs get incorporated into the price charged to the first buyer, and gets passed down the line.  But this happens universally, so everyone in the economy and society shares relatively equally in the cost.

2. Taxes at the point of energy consumption.

Taxes intended to discourage consumption by increasing overall cost to the consumer, are here often called the "retail energy taxes."

(a) The most prevalent of these is the flat-rate tax on retail electric bills, per megawatt.  No sense imposing graduated rates on energy consumption.

(b) Some of the targeted sales taxes are designed to punish energy use, including sales taxes on all products with internal combustion engines.  Cars, trucks, bulldozers, lawnmowers and garden trimmers are taxed according to their fuel efficiency rating.

(c) The gasoline tax finances highway maintenance, since the tax is directly correlated to actual use, wear & tear on the roads.  Since the occurrence of auto crashes directly correlates with the volume of cars on the highway, a portion of the gasoline tax is diverted to augment the health insurance funds by funding trauma units, emergency rooms and other service systems evoked by car wrecks.

(d) Excise taxes on certain commodities with high "social costs."  These taxes frankly do not have much to do with energy, but inasmuch as they adopt the same factoring of social costs as do all other taxes, they are like all other excise taxes.  "Dangerous instrumentality" excise taxes are imposed on firearms, all-terrain vehicles, dirt bike motorcycles, jet skies.  Likewise liquor and tobacco products carry taxes that go in part to the National Health Funds, particularly to buttress the allocations made for cardiac, pulmonary, oncology funds.  With the same rationale, Bergonians also tax meat.  

On-site solar production is not taxed at all, which has greatly enhanced the incentive to employ solar water heaters and solar cells.  Likewise other forms of on-site energy production are not taxed, so that a factory pay no tax when it recaptures heat generated by its furnaces, boilers, smelters or whatever, and uses it either to drive turbines or motors, heat water or do something else.

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