Fiscal Architecture

Part of the state series of articles.

Summary

• The Commonwealth cannot raise tax from residents, which in practice means its revenue is institutionalised – derived from firms, resources, land and foreign assets.
• The largest state revenue mechanism is the sweep, which is the surplus a firm has left once it has reinvested its income.
• Rather than a rate set by income or profit, the sweep is the remainder of revenues after reinvestment. In an ordinary year it comes to about 40 per cent of accounted surplus.
• This produces revenues without even comparison to states overseas. In 2063, the Commonwealth raised ✦260 billion, advanced ✦90 billion of it to the commons and lent ✦60 billion abroad.

Read more: National Accounts and Handshake Accounting

The unusual fiscal architecture and revenues structure of the Commonwealth is a result of the moneyless commons. While residents do receive goods and services from the state indirectly, they have no income in any sense that a tax office would recognise, and so the vast majority of state revenue falls on firms and on the assets the state holds on behalf of the Public.¹

Each firm keeps an accounted revenue ledger in ✦ at the Commonwealth Bank. Because firms in the country cannot pay wages or dividends (but still produce a surplus), they return what they do not reinvest to the state, as the representative of one collective owner. This surplus can be attributed a money-value, but there is no legal mechanism for a firm to accumulate it, since the money depreciates a fixed share of its value each period.

As such, there are generally five sources of state revenue in Vekllei:

1. The hydrocarbon royalty, paid by Commonwealth Oil and its licensees set at 55 per cent of oil and gas receipts, and paid straight into the sovereign fund
2. Export charges, which comprise the federal contribution (10 per cent) and the export permit fee (5 per cent) on all other foreign sales²
3. Ground rent, paid by firms to the “Public” on business land (see Land Sovereign)
4. The sweep of accounted surplus³
5. Income from the state’s foreign assets, held in the sovereign fund⁴

State revenues (✦ billion)

Exporting does confer limited rights to firms. Because the state is the only holder and dealer of foreign exchange, exporters keep a share of their foreign earnings as import credits and a luxury allocation, which cannot be transferred from one firm to another. In most cases, firms in the Commonwealth are independent businesses, and the state has no control over what they make, whom they supply or how they choose to invest, but the Treasury can direct its resources toward particular places.⁶ In this sense, the sweep is similar to a tax on profits overseas, except it has no fixed rate and the company’s right to reinvest its earnings takes precedence.