Let's cut the sheep, shall we? ))) My post is about the Ministry of Finance of Asgardia.
The Minister of Finance will have the most important and most ungrateful job – to create and fill with income the financial system of Asgardia. The Ministry of Finance is the source of the new state's strength. But to gain this power, the Ministry of Finance must transform the power of the economy by designing and implementing Asgardia's economic policies, regulating exports and imports, attracting investment, issuing money and, of course, collecting taxes. For this latest, citizens are unlikely to experience tender feelings for the Minister of the economy... But that's the work that attracts me personally most.
In this publication I will tell you about my vision of the Ministry of Finance's tasks and how to solve them.
1. What not to do
I want my readers to immediately understand the position: the State has no right to risk the welfare of citizens.
The state of Asgardia is not an online store. This is not a Bank or exchange, and not ICO-Scam. Attempts to get income from sales of souvenirs or filling the budget with the help of ICO are looks ridiculous and wild, as this indicates a fundamental misunderstanding of the differences between the State and the Corporation.
For example, ICO (initial coin offering) is the issue of secured or unsecured electronic "coins" without any prospects of their application in the real economy. The state issues fiat for use in its own economy, and issues debt obligations (bonds) for loans.
The currency of other States, gold and other values for which the state sells its banknotes are the State property, helping the government to secure its obligations. They must have unconditional value and unconditional liquidity. The sale of Asgardia currency for Bitcoin or Ether cuts the State capital by at least 20%, since there is no way to directly convert cryptocurrency volumes into money on a State values. At the same time, cryptocurrency assets, despite their high profitability, bear the risk of unacceptable losses.
For the same reason, the State has no right to seriously consider the sale of souvenirs as a source of income. Trade is the business task, and the State should focus on developing and implementing a competent economic policy, as a result of which a strong domestic market will be formed. Companies will be able to earn profit and pay tax to the state – I see this as one of the main results of the Government of Asgardia.
2. Sources of Asgardia income
issuing the Solar
– I understand that incorrectly specify the emission Solara in the number of sources of income, but at the moment there is a question about the content of economy of Asgardia secured by cash;
government bonds
;
taxes and excise duties
;
royalty
;
income from
participation in private companies
;
income from the
sale of shares in invested companies
;
income from
economic activities of state institutions and organizations
;
income from
conversion operations
of national currency into currencies of other States and vice versa;
3. Taxation
Traditional sources of tax revenues of any state are companies and citizens. I am categorically against taxation of citizens for the following reasons:
- first, citizens owe nothing to the state;
- secondly, this state is interested in economically active citizens working in the economy of Asgardia, and not somewhere else.
However, business must pay tax, which must simultaneously meet a number of requirements:
- business tax should be easy to administer;
- calculation and payment of business tax should not generate a large amount of reporting;
- it should be possible to easily automate business tax collection;
- and, important, the business tax should stimulate the development of the private sector in Asgardia.
I believe that the simplest solution to these problems will be the introduction of a single flat tax on business at a rate of 0.5% to 3.5% of revenue. The specific rate should be calculated based on the actual business applications for registration, but currently I am inclined to the rate of 1.5%. Such a tax will be easily administered at the level of payments, and mathematical operations for its calculation consist in an elementary multiplication of the amount of money received by revenue. It is difficult to hide and easy to pay.
Moreover, such a tax can be easily integrated into both the banking system and the Solar blockchain, as soon as such will be created.
Also, a single flat tax will have a multiplier effect: companies and citizens will be able to spend more, which will lead to a total greater turnover in the economy, and as a consequence, to greater tax collection.
To ensure that the single flat tax at the rate of 1.5% is comparable to the global average tax burden of 40.5% on marginal income with an average margin of 20%, it is necessary to ensure only a 6-fold increase in the turnover of money. At the same time, the maximum turnover of the dollar mass is at the level of 2.2 per year. I believe that we can achieve outstanding results by stimulating our citizens to spend and invest savings in new businesses through the banking system and directly by the decision of citizens.
4. Economic policy
The direct conclusion from the previous paragraph is the Economic Policy. The Ministry of Finance of Asgardia should all measures to stimulate spending in Solars, tracking the total account balances and movement of sub-accounts in the Central Bank. As a reaction to the "stagnant" money should be immediate incentives issued by the Ministry of Trade and Commerce, the Ministry of Industry, the Ministry of Science for investment in business, startups, research and applied development.
The Ministry of Finance itself should rid the economy of "real" money by issuing bonds for further targeted investment in the economy and financing Government spending.
5. Grants vs investments
The state should not help business with grants, because it is a waste of money in terms of economic effect. After receiving the grant and paying, for example, 1.5% of the revenue in the form of taxes, the business will pay the grant amount for more than 5.5 years.
Instead of grants, the state should participate in the capital of ordinary companies and "breakthrough" startups, forming three income vectors in one action:
- tax payment;
- participation in the distribution of profits of invested companies;
- sale of shares in the business to the founder or on the open market.
This approach will make asgardia's capital, which is directed to stimulate business, effective. The same approach is acceptable in the case of startups with uncertain potential: the state can sponsor breakthrough startups, but the state should get a significant return in the form of dividends and increase the value of its share in the business.
5. Gold standard and free Solar conversion
I believe that the Solar in the first time of existence of the state should be as stable as possible, and for this reason should be tied to Gold Solar.
The reason for this is that the Ministry of Finance should ensure the free conversion of Solar into the world's major currencies. Citizens of the country will receive income in Solars, but they actually live in different countries and are forced to use the national currency in their everyday life. To do this, the Ministry of Finance should form funds to exchange fiat currencies and support the formation of commercial exchanges of Asgardia for the exchange of Solar to other currencies on market rates. With the growth of the Solar rate, these funds will be spent intensively, and with the fall of the rate, the incomes of asgardia citizens will depreciate. The Ministry of Finance of Asgardia should act in the interests of its citizens, so a firm course will be the most correct policy.
6. The policy of the state loan
The traditional state borrows from its citizens and businesses in various ways, including by regulating the exchange rate of the national currency. I consider the implicit form of loans unacceptable for Asgardia. If the state requires funds for the implementation of programs and the decision on the loan is made, it is necessary to issue debt obligations and subsequently pay to bondholders remuneration.
7. Financial markets and liability insurance for financial market participants
Asgardia needs financial institutions - in particular, banks and insurance companies. Banks are perceived as evil, issuing loans and collecting fees for them. The insurance company is evil, which simply collects the money. But the fact is that banks and insurance companies are the largest investors who can operate with the total capital of the client on their own behalf, they can buy out debt instruments of companies in large quantities, and the Bank loan rate is many times lower compared to crowdinvesting or collective private loans. At the same time, the world is waiting for financial innovations, and the Ministry of Finance will initiate the creation of convenient modern business financing instruments.
The Ministry of Finance of Asgardia is also the body responsible for monitoring the activities of financial market participants:
- banks;
- markets;
- depositories;
- brokers and dealers;
- investment funds;
- venture funds;
- insurance companies.
The purpose of ruling the financial market organizations will be to eliminate the risk of fraud and loss of client funds as a result of erroneous actions of managers. The Ministry of Finance of Asgardia will form collegial bodies to coordinate financial markets among owners and chief executives of financial companies. The Ministry of Finance will also set up trust funds to insure the liability of financial market participants.
8. Unconditional basic income
One of the points of my election campaign is the unconditional basic income for the citizens of Asgardia. This will be a unique solution due to the fact that I previously proposed to abandon the individual income tax.
The source of unconditional basic income should be the economy of Asgardia. I indicated earlier the sources of income of Asgardia, from which a Fund for payments to citizens will be formed. The state budget should be formed taking into account the item "income of citizens", and according to the results of the financial year, in the presence of a positive financial result, the amount of income should be paid to the citizens of Asgardia.
To pay the citizens of Asgardia annual income of $1,700 budget revenues should be about $2 billion, i.e. $890...$900/month. on man.
