Proposed tax sinks Economy Act

SILOFAIS – Despite its determination and the passage of two Acts to create a US Dollar-based economy for Silofais, the National Assembly found its efforts stymied by presidential vetoes.

Hoping to lay the foundation for the micronation’s future economy, the National Assembly passed the Economy Act on August 12. The Act adopted the USD as the micronation’s official currency, largely to ensure that the government dealt in the currency that it ultimately required for paying web hosting costs. The Act also provided for a largely symbolic annual $1 USD stipend to be paid to the holders of certain national positions.

To generate sufficient revenue to meet such commitments, the Act imposed a ‘Capitation Tax,’ which required each citizen over 19 years of age to pay $20 USD each year to the treasury beginning in January. Those who failed to pay the tax, either through evasion or negligence, faced fines ranging from $10 to $200, plus punitive interest or prosecution costs in some instances.

When brought before President Horatio Eden on August 13, the tax proved to be a political non-starter. For Mr Eden, it was an immigration faux pas that would undermine efforts to attract prospective citizens to Silofais by levying a potentially-discouraging tax. Such a concern is well-founded as imposing a tax in fiat currency might be considered a financial burden on some, especially those who are unsure if they wish to become fully-invested in a micronational project.

While expressing his support for the remaining provisions of the Act, including the need to raise USD to pay bills and stipends, Mr Eden ultimately vetoed the entire Act on August 20, directing his Council of State to investigate alternative revenue streams.

The National Assembly failed to overturn the veto on August 27 but was otherwise undeterred as a slightly modified version of the Act with the controversial tax still included was passed. That version met the same fate when laid before Mr Eden. “This Act is substantively the same one,” he said while committing to lay out a plan for funding Silofais’ website on or before his State of the State Address in November.

If such alternate arrangements are not found, Mr Eden said that he would relent, withdraw his veto, and allow the tax to come into effect.

Glastieve seeks useful, successful economy

Belassolt (CS) – A government white paper published today aims to develop a functional white-collar economy for the Republic of Glastieve using a model that uses an approach focused on practicality.

The self-described “Glastieven Model” was announced by Mark Kavanah, the micronation’s Minister for Media and Economics, who fêted it as the “next conceptual evolution” in the creation of a functional micronational economy. Such has been a sort of ‘Holy Grail’ for the community, with numerous failed intermicronational- and national-level projects over the past two decades.

His confidence in the model is underpinned by a focused developmental strategy which is seen as compensating for a lack of building blocks that fostered unviability in other models. The model’s lodestar is an economy founded on in-demand infrastructure, such as stock exchanges, that is further developed by a “Three Pillars Strategy”.

The three pillars, which according to the white paper are fundamental to the model’s success, focus on transactional exchange of currency to develop value, fostering supply and demand, and the state’s participation in the intermicronational and macronational economies.

Ensuring that the Luach, as the national currency is called, has meaningful “real-world” value is central to the first pillar. The white paper argues that the national economy should be thought of as a “game of give-and-take”, in which each participant strives to spend all he or she receives. The national government will insist that public servant salaries are spent on useful products or services and that policy will focus on “strict reciprocity”. These steps it is argued will allow the currency to build a practical exchange value against macronational currency, as opposed to being assigned such a random or desired value, as is a common practice.

Spending on useful products or services will play a key role in fostering a constant supply and demand within the Glastieve economy, which is the second pillar of the strategy. That other models have allowed the proliferation of useless services is seen as contributing to economic gluts. To achieve success the model seeks to overcome a key hurdle: that most micronational demands are already met by macronational merchants, who generally work from a point of competitive advantage. Accomplishing this, it is suggested, requires that the economy offers goods and service that are more attractive than macronationally-sold equivalents.

The third and final pillar will build the state’s capacity to act as a single, self-sufficient, entity within the broader intermicronational and macronational economies. In the former case, Glastieve will trade with other micronations using existing frameworks and recognized intermicronational currencies; in the latter, it will seek to earn sufficient macronational currency to cover operating costs, thereby creating financial independence.

In his announcement, Kavanah was optimistic about the model’s future, hoping that domestic success would translate to its wider adoption throughout the community. “I would also like to try to end [the neglect of economies] in the micronational community in general … to create a powerful intermicronational economy,” he said.

Alexandrian economy lurches left

A distinct socialist hue has blanketed Alexandria’s economy as government legislation controlling rents received Royal Assent this week. The legislation imposes maximum rental rates on landlords until the end of 2020, in an attempt to reduce the cost of living for average Alexandrians.

The Rent Control Law of 2017 represents the most significant encroachment into the free market by the Alliance Liberal government of Primo de Aguilar. With the legislation having received Royal Assent on March 28, landlords in Alexandria are no longer permitted to increase rents until 2018, when a maximum increase of 5 pc of 2016 market prices will be allowed. The allowable increase in 2019, which is required to remain in-force until the end of 2020, will be 10 pc of the 2016 price.

Controlling rents is a policy largely predicated on a belief that Alexandrians are downtrodden and unable to afford home ownership. “It secures [the average Alexandrian] a decent home at an affordable rate,” said Mr Aguilar in tabling the bill.

It is however unclear whether a decent home will result from the measures. With annual inflation in Alexandria trending at 2.3% last year, any freeze requires landlords to cover the associated higher maintenance costs from their own pocket in 2017. While generally equalized with inflation in 2018 and 2019, landlords again must cover such a loss in 2020. Any unforeseen major capital or maintenance costs, or inflation above 2.5%, would place landlords at a clear net financial loss throughout the period.

This financial burden imposed by the government is likely to be offset with less investment and maintenance in existing properties and a lack of new construction. According to an Alexandrian Broadcasting Corporation report, the shuttering of rental properties is also being considered, if the tenants are unable to buy the units out. Such a reaction may trigger a housing crisis in the near term; in the long term, the need for landlords to spike rents in 2021 to recover losses and fund deferred maintenance may trigger a similar crisis.

Landlords who are tempted to violate the controls to offset any financial burden the government has imposed will face fines ranging from 200 pc to 500 pc of any charge in excess of the maximum, as well as business licence revocation and hard labour. Such punishments are, in the government’s view, required to correct an economy in which the average Alexandrian spends 35% of income on housing.

For his part, Mr Aguilar, in celebrating the law’s passage, suggested that Alexandrians use their personal savings from the controls to “earn a decent return and safeguard capital that may lead to owning [a] home.”

It is unclear whether that goal will be achieved. With extra cash in their pockets, Alexandrians may instead buy household wares, food or luxuries as opposed to investing in a downpayment for a home. If that is the case, Mr Aguilar’s celebration may be premature.

MEG aims to start where M$ left off

The downfall of the Micronational Dollar Institute earlier this summer, which the Coprieta Standard prophesied due to the administrative quirks of its design, brought a temporary halt to intermicronational economics in the MicroWiki Community. That halt may soon come to an end with the launch of the Micronational Economic Group today by one of the community’s leading economists, Henry Twain.

“[The MDI] failed, in a large part, because it was cluttered. It was disorganized. [The M$] operated through a series of Google Forms all altered manually by one person … this isn’t how a digital currency should operate,” said Twain, the Chairman, in opening his announcement regarding the founding of the MEG. To overcome that failure, Twain worked with micronationalists Karl Friedrich, John Houston, and Lucas Campos to develop the idea that would evolve into the Group.

In terms of its primary goal, the MEG aims to bring together public and private financial institutions throughout the community to support a number of economic projects, based on a new intermicronational digital currency called the “MicroCoin”. Among these projects is “MicroTrade,” an automated stock exchange which merges the former Quetico Microinternational Stock Exchange and the Skovaji Stock Exchange, and “MicroGamble” which will act as an online casino. The MEG will also operate the “MicroTimes,” a news outlet that will report on economics, as well as other traditional news topics, such as politics and entertainment.

Those micronations that do not wish to make use of the “MicroCoin” will still be able to make use of the MEG’s banking architecture to conduct transactions in its own currency. Those transactions, like those using the “MicroCoin,” will be automatically processed immediately, according to Twain.

That architecture consists of an integrated, secure website that provides users with access to all available services, in addition to a central dashboard. Through the website, users can add their micronations to the directory along with local currency (called a “commodity” in the program), create multiple bank accounts and engage in transactions seemlessly. The interface is clean and modern in its design, a great improvement on the last major automated bank/stock exchange program created half-a-decade ago by Internet micronationalism, the SCUE.

A Council and an Assembly will form the governance structure of the Group, though the latter will be an advisory body rather than a legislative one, offering member banks the opportunity to propose ideas for the Council’s ratification. The Council itself will compose the founding banks of the MEG, plus three non-founding banks elected by them. Those founding banks were Royale, Verona Bank, the Bank of Wesley, the Bank of Mcarthia and the National Bank of Loquntia, though the Bank of Mcarthia was since expelled from the group due to Kit McCarthy’s departure from micronationalism.

Stock exchange plan announced for M$

Two months after the founding of the Micronational Dollar (M$) by Kit McCarthy, the intermicronational currency continues to mature with the announcement of a comprehensive plan to develop a stock exchange that will trade in it.

The Quetico Microinternational Stock Exchange will form an integral part of “Quetico Street”, the brain-child of Henry Twain, who described the Street as “the revolutionary micronational private sector,” and a project that will seek to emulate Wall Street in New York City.

The exchange would form a cornerstone of Quetico Street and be developed as part of a four-phase plan that centres around the development of the micronation itself. Much of the monetary policy and necessary agreements, such as the partnership with the Micronational Dollar Institute, are anticipated to be rolled-out within the next six weeks, with a website for the stock exchange coming online by May 30. The bulk of the stock exchange’s development would not occur until December 25, when stock market indices are to be opened, with full independent operations expected to commence on January 3, 2017.

In addition to its economic scope, the exchange is also a project that is geared toward netting the Quetican Islands new citizens. While a micronational business anywhere in the community will be allowed to freely join the exchange, membership will be contingent on its Chief Executive Officer being a registered and approved citizen of the Quetican Islands. The buying and selling of stock on the exchange will similarly be limited to only those who are citizens of the Quetican Islands, said Twain, as he advertised a link to the micronation’s citizenship application for those interested in joining the project.

If a business does decide to join the exchange, it will have to enter into a short operating contract that will require it to move its headquarters to the Quetican Islands. The contract will also require the business to impose a 7pc tariff on its exports of goods and services outside of the Quetican Islands, and in the event of dissolution, any funds left in the business’ account will be shared between the Quetico Street Overseer’s Office and the Micronational Dollar Institute.

As of publishing, the concept has been well-received by several members of the MicroWiki Community, including McCarthy who expressed his interest in starting a hedge fund investment centred on Quetico Street.

Analysis

A well-developed plan for creating a centre of micronational finance for the MicroWiki Community risks being overshadowed by head-hunting for citizens by the Quetican Islands.

The micronational community is a small one in which the majority of participants wish to be their own ruler or are otherwise intently loyal to one micronation. To require that a person obtain Quetican citizenship in order to participate in what is billed as an intermicronational market it to risks alienating that participation. To be forced to acquire another citizenship in order to participate in buying and selling stocks is a tenuous strategy for Twain to adopt.

This strategy is even riskier when one considers that the portion of the micronational population who are actually interested in participating in finance and economics is much smaller than the general populace, so to alienate one person by the citizenship requirement is far more devastating to a finance and economics project than a general-interest one. In this author’s 15 years in micronationalism, most finance and economics projects suffer a debilitating decline in months, rather than years, due to the limited audience to which they appeal, and that’s without any barriers to participation such as citizenship requirements.

Another key barrier is the need for businesses to move their headquarters to the Quetican Islands. As most micronational businesses are nationalized, this policy may serve to exclude some of the community’s most important companies due to the legal and territorial issues associated with surrendering the flag to another jurisdiction. That said, Twain can overcome this should he make clear that a subsidiary of the company can simply be headquartered in the Quetican Islands.

M$ gets business moving in MicroWiki

Since its introduction to the MicroWiki community on March 10, Kit McCarthy’s Micronational Dollar (M$) initiative has renewed local interest in cross-border economics.

“It has long been an aim of mine to start an intermicronational currency,” said McCarthy in announcing the M$’s introduction, adding that he hoped the currency would “allow micronationalists to run functioning, profitable businesses – the first step towards an actual micronational economy.”

McCarthy was inspired by the currency used in the Universal Triumvirate, a simulationist micronation that operates an extensive economic simulation based around its local currency, the Tri, and its provision of services based predominantly in the advertising, legal, newspaper, and recruitment industries.

The M$ itself is maintained using a series of Google Sheets and Forms that allow for transactions to be undertaken, which are recorded in account ledgers maintained by McCarthy, who at present heads the associated Micronational Dollar Institute (MDI) and Intermicronational Bank (IB).

As it is purely virtual and not tied to any macronational currency at present, it is hard to assign value to the M$, though a market basket, predominantly consisting of products offered by McCarthy’s various businesses, has been used to estimate its initial value to be approximately £2.33, in order to assist users in visualizing its purchasing power. McCarthy expects this value to fluctuate and become more refined, and has offered a M$5 reward to whoever can create the best method of valuation.

Initial reaction to the introduction of the currency was generally positive, and it has spurred the creation of several business initiatives. Of the 38 accounts registered so far with the IB, 15 are held by non-MDI business or banking interests.

The National Bank of Loquntia has adopted the M$ and is offering interest-bearing savings accounts and loans to customers in the currency, noting that it is willing to underwrite the accounts and loans with United States Dollars and silver bullion. Meanwhile, Emperor Nicholai Fredriksson of Førvania, in creating an account for Fredriksson Media, voiced his excitement to “become the next Kerry Packer or Rupert Murdoch.” Adding to the interest, those who create a new account with the IB receive an upfront grant of M$10 as a means of allowing them to get their feet wet in the associated economy.

Yet there is reservation to the initiative. An editorial by Aeton Stesanor Hilaera in the Spanish-language Heraldo de Hermenepolis voiced concern over the virtual status of the M$, suggesting that its valuation will be whatever the users want to believe they deserve, as opposed to something reflective of credible economics. Hilaera further suggested that the reliance on spreadsheets and forms to administer the M$ was an “obsolete and outdated model” that is unsustainable.

Regardless, the interest and participation generated by the M$ remains a positive for micronational economies, especially given that the difficulty in creating and sustaining a meaningful virtual economy over the Internet for micronations has long been considered somewhat of a “Holy Grail” for the community.

The Coprieta Standard’s Analysis of the M$

The M$ is the latest in a line of virtual intermicronational currencies used by Internet micronations to create, or simulate, economies dating back to the early days of the Micras community in 2001. It is the first major such currency that has been readily embraced and given a solid start since much of the Micras community adopted the common SCUE currency unit in 2009 to allow for ease of intermicronational trade.

A keen interest of McCarthy, the M$ is neither revolutionary in design nor function, but it has nonetheless renewed interest in intermironational trade amongst several MicroWiki nations and micronationalists, as demonstrated by the 38 accounts that have been created so far with the Intermicronational Bank.

The major potential failing point for the currency is the administrative burden required to maintain it. All transactions and account balances require manual updating by McCarthy or his successor in a series of spreadsheets, and he must also respond to any inquiries by users for transaction histories, as this information is not publicly accessible. Once interest is lost on the part of the administrator or an unavoidable absence in required, the system will fail and the M$ will fade into history, as has been demonstrated dozens, if not more, times dating back to the popular rise of Internet micronationalism.

This rudimentary administrative system for the M$ is its Achilles-heel but one that can be addressed by the Micronational Dollar Institute adopting one of the various automated systems developed within micronationalism. One such system is phpBank, a standalone package that was developed and refined by Micrans more than decade ago, and presently used by SCUE. The program allows users to log into a password-protected account, conduct transactions, and view balances, without the need for administrative burden. The stock exchange companion to phpBank provides greater functionality (though it is not as refined in function as the bank) including the issuance and purchase of loans from banks and individuals.

Yet even with greater automation, the M$ may not remain relevant, much as the SCUE unit, for all the ease of administration it has due to its use of phpBank, has slipped into irrelevance for its users and their micronations.

The key to making the M$ a success will be for McCarthy and its users to create real value for the currency. The focus on a purely service-based economy is a good start, but this focus is no different than that undertaken by many micronations and intermicronational organizations before with only short-term success.

The M$ needs to become a component of micronationalists’ participation in their micronations so as to ingrain in it real value for users, rather than leaving it to be a currency used only by those who wish to delve into business ventures. Until that time, the upfront grant of M$10 and every M$ earned thereafter will be ultimately meaningless, as has been demonstrated countless times in the last 16 years.

Tax reform on the table in Paravia

Following her landmark victory over the incumbent High Chancellor in the February 19 general election, Lise Næsheim-Renwick is set to get to work on a policy platform that includes tax reform for the micronation.

At present, Paravia suffers from what its Emperor, Patrick Renwick, described to the Coprieta Standard as an “inefficient” taxation system. A monthly tax of 25 Norwegian Krones (approximately $3 USD) is levied on each citizen; however, the government’s ability to collect the tax has been wanting due to a popular reliance on credit/debit cards in Norway, where much of the population resides, and the lack of a proper tracking system for tax remittances.

One proposal to address the inefficiency under Næsheim-Renwick’s mandate is to collect the monthly tax at less-regular increments, such as bi-monthly or quarterly. Such a time frame would reduce the inconvenience associated with withdrawing such a relatively small sum of Krones from macronational financial institutions each month on the part of the citizenry while allowing the Paravian government to more easily track remittances.

In addition to her focus on tax reform, Næsheim-Renwick will seek to implement what media in Paravia describe as a “progressive platform” that includes the development of a proper national budget, the expansion of the Law Code to include more protections for common citizens, and an increased focus on diplomacy for the micronation.