Talk:The Micro-Enterprises Act, 649
— 31/12/2022 14:26
Tabled by Phil Kirk MGA, NUP as an independent member's bill.
The Micro-Enterprises Act, 649
An act on the protection of micro-enterprises.
Proposed by Phil Kirk, MGA, NUP.
Voting is presently set for 11 Jan 2023
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— 31/12/2022 14:27
Gustave Bernier — 31/12/2022 18:43
Why would we exempt micro-entreprises from income taxes? Independents pay them, so should companies no matter what their size is in my opinion.
If we cut taxes for the few, we won't be able to fund social programs for the many.
United nation of Indi — 31/12/2022 19:13
Yes this act would help the micro companies to grow larger and when they grow we can collect taxes from them
I guess we should think and support the micro companies to grow rather than think to collect taxes from them We should encourage the micro company owners to develop a large company maybe it would work
Phil Kirk (Tecianad. Isl.) [NUP] — 31/12/2022 20:41
I know, but if we cut taxes for this small group of companies, they will grow until eventually they don't need social programs and pay normal taxes
Remember that 3,500 florins is 350 dollars, besides, each of these companies will still have to give some money to the treasury once a year, so it's not like micro-businesses are completely exempt from fees.
— 01/01/2023 01:56
Is there a compelling case why the income of a 'micro-enterprise' shouldn't be considered income? It would be my understanding that an enterprise like that would be more like a side-job or passion project than a full on business. Why shouldn't the normal graduated income tax thresholds apply for someone's passion project - but should apply to the corner accountant or a teacher?
Phil Kirk (Tecianad. Isl.) [NUP] — 01/01/2023 02:00
1. Difference in earnings.
2. Such a micro-enterprise can then develop, bringing income to the state
3. Personally, I'm more focused on the rest of the bill because income up to 30k florins is tax exempt anyway (Thus Mr. Edwards said
— 01/01/2023 02:02
sure, but if the earnings are already micro - in the order of a fraction of an individual salary - why would we exempt those earnings instead of considering them personal income. The graduated income tax is lower than the corporate tax on these very low values already. what makes these earnings 'more important' that the earnings of any other individual worker?
Phil Kirk (Tecianad. Isl.) [NUP] — 01/01/2023 02:07
Because statistical ordinary worker works for someone else for a much higher salary. He doesn't have to take care of customers or deliveries, because that's what the bosses are worried about. And in such a micro-company (assuming that it is a one-man operation), the person running it has to struggle with all the problems that an ordinary employee does not experience, and for a much lower salary. The purpose of this act is to make it as easy as possible to run a micro-enterprise while preserving any payments to the state budget.
— 01/01/2023 02:11
I think that is a very myopic view of the breadth and skills of our many salaried or hourly workers. I'm also unsure how exempting them from taxes 'preserves the budget'.
But I will reserve my position until more members make themselves heard.
Phil Kirk (Tecianad. Isl.) [NUP] — 01/01/2023 02:13
As stated in the bill, the only fee micro-businesses will have to pay to the state is a business fee of 1,500 florins per year.
Charlotte Groves (Juliette) — 01/01/2023 02:19
I haven't had time to read discussion and the act yet but I wanted to point out that income tax is only exempt up to 15k florins (see: The Individual Income Tax Act (630))
Phil Kirk (Tecianad. Isl.) [NUP] — 01/01/2023 02:19
Thanks for info
Aaron Tonnesen - New Asden — 01/01/2023 02:23
I support the bill… the bill closely resembles that of prominent countries. However, shouldn’t micro-business sales limit ($350) be raised to something more… ideal? If you sale a wedding cake (a hobby) for 175 a piece then you have to pay taxes on that. Maybe $1,000 or F10,000 would make more sense
— 01/01/2023 02:24
I just want to note that just because the florin is weak internationally, that doesn't mean the florin is inflated locally.
10,000 florins may only be 1000 USD, but its still a solid chunk of change for the local economy
a bigmac in the USA may cost 5USD but a bigmac here doens't cost 50, it still only costs like 10
Aaron Tonnesen - New Asden — 01/01/2023 02:26
Understood. But, how much would 3,500F be? I feel like there needs to be some level of exchange.
Somewhere around $2500?
— 01/01/2023 02:28
let me dig in my notes
Kodiak Florin to US Dollar is 10:1 on the currency market
Kodiak Bigmac to US Bigmac is 15 Florin : 5.50 USD
sorry, struggling to type at 230am
Aaron Tonnesen - New Asden — 01/01/2023 02:32
No worries. But the local inflation is ~2.73:1 (F to USD)
— 01/01/2023 02:32
yeah. You can imagine a US tourist would be able to buy many more bigmacs than they would in the USA
Aaron Tonnesen - New Asden — 01/01/2023 02:32
So. $350 is F956
Which is more ideal.
— 01/01/2023 02:33
they turn 10 USD into 100 florins, but because local economic conditions are so cheap, those 10 USD go from less than 2 burgers, into slightly more than 6 burgers
Aaron Tonnesen - New Asden — 01/01/2023 02:33
Gotcha. Would it be possible to pin this? Or other important info
— 01/01/2023 02:38
pinned in tweeter
Aaron Tonnesen - New Asden — 01/01/2023 02:38
— 01/01/2023 02:39
de-Earthified since technically I don't think the US exists in the RP
Charlotte Groves (Juliette) — 01/01/2023 02:39
RE: hobbies, I don't believe they are typically classified the same as a business, I would interpret a microbusiness as the intention to make a profit (regardless if you actually do) which typically a hobby isn't (in that case making money off a hobby is just an occasional happy side effect that you do every so often).
But if you're baking goods regularly and selling them then that's where the business classification comes in. Typically - hobbies aren't taxed anyway until a certain threshold.
Secondly, a clarifying question. Does this tax exemption only apply to business profits. And as such, if a salary was drawn by the owner - then it would become individual income and be taxed appropriately?
Phil Kirk (Tecianad. Isl.) [NUP] — 01/01/2023 02:42
From another source - yes.
From a micro-enterprise - no.
Charlotte Groves (Juliette) — 01/01/2023 02:43
I feel like this is highly abuseable as a loop hole on the current taxation system, bill as written anyway.
Since this is based on profit, which means expenses have been applied at this stage. The annual potential that owning two microbusinesses is about 84k per annum. If an owner uses this as their income - in other words is drawing a salary - and this is treated as entirely tax exempt then that is a lot of potential income that is not taxable. Let's say even if you don't draw it all anyway, say you're happy with half of that per year.
My point is that it doesn't scale when you approach the upper end of the threshold (it makes most sense on the lower end though).
Reifyrm Visdvk [I] — 01/01/2023 02:51
That is a good catch, that could very much be potentially abused.
Phil Kirk (Tecianad. Isl.) [NUP] — 01/01/2023 02:57
Okay, got it. The owner will have to pay normal income tax when receiving payouts. Which does not change the fact that we stop the exemption of micro-enterprises from paying income tax.
Gustave Bernier — 01/01/2023 09:06
Liberalising the economy by encouraging entrepreneurship and tax breaks is not the way to go forward in my opinion.
While I would not oppose such a proposal in the years to come, I believe we need to focus on redistributing our tax revenues to the greater mass to enable quality of life indexes to rise once again after the Darrent crisis—focusing our efforts on liberalising the economy is a threat to our economic and social development. (much needed in these difficult times)
Phil Kirk (Tecianad. Isl.) [NUP] — 01/01/2023 09:32
I believe that people should be able to earn their own money, not just rely on state aid. If another armed conflict breaks out, the government may not be able to afford further social programs and many people will end up in extreme poverty just because they are kept on welfare
Free market - that's it!
Charlotte Groves (Juliette) — 01/01/2023 23:50
From a purely technical viewpoint: Yep I think this will need to be made clear so there's no 'interpretation' room so to speak.
— 03/01/2023 19:03
Did @Phil Kirk (Tecianad. Isl.) [NUP] Want to adjust the bill in consideration of the concerns of the members? Or do you wish to continue with the bill as written?
Phil Kirk (Tecianad. Isl.) [NUP] — 03/01/2023 19:19
I will make changes when I will be home
Phil Kirk (Tecianad. Isl.) [NUP] — 04/01/2023 01:36
I would like to amend Art. 3rd, adding pt. number 2 saying:
"Only the income of a micro-business is exempt from any fees. If the owner of such a micro-business decides to pay himself a salary, it will be taxed in accordance with the law already in force.
ekyogre — 05/01/2023 22:46
I don't get the interest of exempting micro-entreprises from taxes, is the unemployment rate particularly high right now?
Phil Kirk (Tecianad. Isl.) [NUP] — 05/01/2023 23:37
This will help many micro-entrepreneurs to develop their businesses, increase competition and help students and the elderly earn extra money without a contract of employment and without qualifications
— 06/01/2023 09:50
Amended as requested. you may confirm through the link in the pinned comment
— 06/01/2023 13:55
Seeing there has been little movement, I will put the proposal up for vote in 24 hours unless there is an objection.
I will personally likely vote against the measure, but I won't object to the vote.
von Zeppelin (Clockwork Lands) — 06/01/2023 14:49
The law, it seems to me, is sound. If we confirm this with real examples, we can cite statistics from Russia: out of ten microenterprises, only 1 lives for more than a year. These measures stabilize the first stages of the economic system. But that's just how to keep the income of a microenterprise and who will check it? I didn't hear an answer to this question.
And for those who are fighting for the free market, I will remind you of the existence of Somalia and Mexico. There is the freest market there, but this does not make their citizens richer.
Charlotte Groves (Juliette) — 06/01/2023 19:09
On reflection I retain misgivings around tax-exemption applied uniformly, as well as two businesses treated as separate entities with their own thresholds. I am unsure if this is the best solution that is equitable for taxpayers, particularly as a tax break isn't necessarily support towards a business' success. However I welcome the change that individuals drawing salary from their micro-business is considered income and will be treated accordingly.
I do recognise the need to support our economy and small and micro businesses however. Though that may be a different discussion for a different day regarding the extent a government can provide support to smaller businesses, essentially an investment into the economy.
In any case, I do not object to this going to vote.
Regarding who checks the income, not the author so I can't speak to intentions. My observations are that - The Kodiak Revenue Directorate Act establishes the Kodiak Revenue Directorate receiving income reporting for taxation purposes, and all individauls, businesses, and corporations are obligated to report their income, with penalties for not doing so or inaccurate information and so forth. I think that is fairly effectively covered in this case and will not necessarily need to be mentioned. (For reference in case you haven't seen yet: https://kodiak.wiki/wiki/The_Kodiak_Revenue_Directorate_Act_(630) )
von Zeppelin (Clockwork Lands) — 06/01/2023 20:24
Although I am not a lawyer, but the tax system seems good to me, especially fines equivalent to a salary. After searching the Internet, I found a way to identify people who evade taxes - the abolition of bank secrecy. Of course, random passers-by should not be aware of the contents of my wallet. But the Tax Inspectorate should be allowed to view bank deposits. Otherwise, I have no questions about the bill.
Phil Kirk (Tecianad. Isl.) [NUP] — 06/01/2023 22:57
In my opinion, this law not only does not introduce much (because only the micro-business is exempt from the tax, not its employees and owner), but also provides a (perhaps small) income to the state of 1500 florins per year.
John Edwards [KWP] — 07/01/2023 00:29
Except, anyone earning F3500/month (42,000/year) falls squarely within the middle tax bracket, upper brackets if they're running 2 of them. That puts them squarely within the wealthier end of Kodiakers. That's far more than 1500 per year. This ends up just being a massive loophole for the rich to avoid paying taxes.
The only way I can see this being viable is if the annual income falls under the tax free threshold
Otherwise there's nothing to prevent anyone earning lower incomes to simply declare micro business income. I note there's nothing in the proposal about checks to ensure legitimacy.
This feels too open for massive corruption.
John Edwards [KWP] — 07/01/2023 00:41
I'm not against the proposal per say, but only if the total income isn't above the lower income tax threshold.
Phil Kirk (Tecianad. Isl.) [NUP] — 07/01/2023 03:41
As I wrote earlier, only the company is exempt from tax. When the owner withdraws 3,500 florins (42,000 per year) from the micro-business, then he will already have to pay tax in accordance with the applicable regulations.
John Edwards [KWP] — 07/01/2023 03:42
Then you might want to amend 2.2 - Micro-businesses are exempt from paying income tax
Phil Kirk (Tecianad. Isl.) [NUP] — 07/01/2023 03:43
Read point 3.2 please
John Edwards [KWP] — 07/01/2023 03:46
So the point is to avoid the sales tax or land value tax?
Phil Kirk (Tecianad. Isl.) [NUP] — 07/01/2023 03:47
If you're selling something on someone's (not yours)land, it's both.
John Edwards [KWP] — 07/01/2023 03:50
I would still recommend amending 2.2 from Income tax to something like "articles contained in the Commodity & Services Tax".
— 07/01/2023 11:43
Does the member @Phil Kirk (Tecianad. Isl.) [NUP] wish to clarify his proposal as requested or does he prefer to call the vote?
— 08/01/2023 11:11
@Phil Kirk (Tecianad. Isl.) [NUP] Just pinging here again.
Phil Kirk (Tecianad. Isl.) [NUP] — 08/01/2023 20:14
No, I think that everything is explained as much as possible and there is no big legal loophole here.
— 09/01/2023 13:39
As the member desires to continue with the proposal as it presently stands and the previous 48 hours haven't made any meaningful changes, the vote shall commence.
— 09/01/2023 13:40
Do you approve of the Micro-Enterprises Act, 649 as proposed?
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— 09/01/2023 13:40
The poll has been called. Debate is suspended. The vote shall remain active for 72 hours. The proposal is linked in the pinned post. Please vote within that time. Thank you
— 11/01/2023 23:46
Just a reminder this poll closes in ~13 hours. Please be sure to vote before then.
— 12/01/2023 21:49
The motion has passed and this shall be archived in 24 hours.