A Voluntary VAT System For Liberland?

During my recent interview with President Vit he mentioned that part of the reforms that he wanted to see for Czechia was a lower rate for the VAT system and to decrease their defense spending. For our American readers it’s what we call a sales tax, they just do it a bit different in the rest of the world kinda like how we still the Imperial system versus the metric system that the rest of the world uses.

It got me to thinking, since Liberland will be completely based on voluntary taxes could using the VAT be used as a gauge in a way to measure for recommendation purposes solely what the government of Liberland recommends what rate businesses should contribute for taxes.

What Liberland is doing for its tax policy has to the best of my knowledge never been done before and because it has never been done before it is extremely difficult to find any parallels or even contemporary examples of such a voluntary system. The only similar example I can think of is the US Confederation Government during the American Revolutionary War period. The Continental Congress had no direct taxation power at all, it was solely dependent on donations from the 13 state governments and individual people to support the federal government. This is part of the reason why the current US federal government exists because the states did not send much money at all nor did the people. The biggest source of debt was the war the Americans fought to gain their independence and because the states jealously guarded themselves against the other states, yes they fought a war together but economically they were little islands and did not trade well with each other. This was also a large part of why the American War between the States was fought too, it was not until after that war that the US states began to truly began to trade between each other the catalyst was when the industrial boom of the late 1800’s occurred and the US exploded on growth.

The reason why I am referencing that time period is while the confederation government had no direct taxing power it collapsed but I think it did so primarily was due to the war debts it had incurred to win independence. Liberland is different, there was no war for independence in fact since the Balkan wars the region is quite peaceful as most of Europe has been in recent years minus Ukraine that is. Because of that peace I think the voluntary tax system could work especially if DAO’s are used properly and with the libertarian leanings of Liberland the government is not out to run education, healthcare, labor, environment, etc. You know the things governments in the past 150 years or so have taken upon themselves to do but have no business being involved in.

To get to my next point, and this is the hardest one for me, how would Liberland approach the idea of a baseline recommendation for a VAT taxation rate? It would be a hard sell I think but because the government of Liberland is quite limited in what it can do this may be feasible. What I am thinking is the Minister of Finance when he presents the annual budget to the Congress gives what he thinks should be the recommended VAT rate for the given budget year.

Now my thoughts are it should be extremely low less than 5% and depending on how well the investment income is doing it could even be 0%. I think this possible because what we see normally going to taxes would be instead going to memberships in DAO’s, user fees and so onto build and maintain things like roads, schools and hospitals for example. If we are to have a truly free economy without government regulations and it is strictly done by the private marketplace the funds required to run a government becomes quite small just as its powers should be. Maybe the metric used should be different like gross receipts, corporate net income or something else?

Another thing I think that could be used to offset the use of a VAT would be the registration of different foreign assets like automobiles, airplanes, boats, ships, etc, I am not sure how yet but I am thinking that there should be a way to utilize the blockchain registration system in such a way as to allow foreign entities to register such items in a way as the Bahamas do as referenced in my Liberland vs The Bahamas article. There should be discounts for the registered asset if it is in the territory of Liberland for X number of days per year and it be a sliding scale to the point where if an assets is in Liberland for seven or more months in a calendar year the registration cost is nominal to only cover the operational expenses of the registration process, whatever that may be. I may expand on this in a future article about ways to generate different sources of revenue for Liberland but I think for now at least the blockchain should serve as the key to this equation. I know I have heard arguments that the blockchain should be privatized and that could happen in the future we shall see.

There are going to be critics to this I know and I do welcome them if there are flaws in my logic pleas point them out so that we can build a better place for everyone and be that shining light upon a hill for all to use Liberland as the standard of what it means to be a free country.