Bill: Rejected Financial Institutions Tax Act (Revised 2x)

[HKE101]

A

BILL

TO


Reduce the Burden of Corporate Tax on Financial Institutions


The people of Democracy Craft, through their elected Representatives in the Congress and the force of law ordained to that Congress by the people through the constitution, do hereby enact the following provisions into law:​

1 - Short Title and Enactment
(1) This Act may be cited as the “Financial Institutions Tax Act”.
(2) This Act shall be enacted immediately upon its signage.
(3) This Act is proposed by Representative Hong_Kong_101
(4) This Act is co-sponsored by Representative Aladeen22

2 - Reasons
(1) Financial Institutions occupy an important place in the economy of Redmont, providing funds to players and businesses to engage in commerce, and providing safe places for citizens to store their hard-earned money.
(2) Due to the way they do business, as well as competition within the financial sector, banks are generally less profitable than other businesses such as supply companies, and taxing them on their company balances, which tend to be larger than those of other companies due to their role in the economy, is excessively burdensome. The way in which balances and not profits are taxed puts a greater burden on financial institutions simply because of the requirements of the economic sector in which they operate.
(3) The manner in which corporate taxes are structured in Redmont is not reflective of the manner in which corporate taxes are structured in real life.
(4) Due to the manner in which wages and UBI have been reduced, as well as future planned government wage reforms, the government’s expenses have been significantly reduced, eliminating the need for a large amount of taxation. Taxation should only be the minimum required to fund government operations, and increasing government revenue without the requirements of corresponding expenses should not be considered a goal.
(5) The government has a responsibility to promote the functioning of the economy in Redmont, and part of that responsibility is promoting economic diversity. This Act does not attempt to provide preferential treatment for a sector of the economy, but rather to rectify a particular burden placed on that sector of the economy.
(6) This bill was passed in the previous session of Congress, but was vetoed due to concerns that are now addressed in the revised version of the Act.

3 - Section 1: Taxation of Financial Institutions
(1) A deposit-taking financial institution is defined as a financial institution that takes deposits of money from other legal entities, such as companies and private citizens, in order to profitably invest them and return a portion of the profit to its depositors.
(2) Deposit-taking financial institutions will be exempt from all balance taxes. Any previously passed law or order in contradiction to this provision will become invalid from the date of this Act’s promulgation.
(3) Deposit-taking financial institutions will be required to keep detailed accounts of their profits from investments as well as their obligations to their depositors. They will be required to report their net profit at the end of every month to the Department of Commerce as specified in (a).
(a) Deposit-taking financial institutions will calculate monthly net profit by adding up their total revenue for that month, excluding unrealized gains on investments, and subtracting compensation paid to employees, interest paid on accounts, and the cost of producing any other product or service sold or provided by the institution. They will report net profit calculated thus through a DOC ticket in Discord.
(b) Should deposit-taking financial institutions purposefully misrepresent their profits in reports to the Department of Commerce, they may be prosecuted for Tax Evasion in accordance with the Taxation Act.
(4) Deposit-taking financial institutions will be taxed on their monthly reported profit as specified in (3) at a rate of 25%. The Department of Commerce will be obligated to send them a notice of the amount that they are obligated to pay the government at the end of every month according to this tax. In order to pay this tax, deposit-taking financial institutions will be required to pay the amount they owe to the DCGovernment ingame balance, and open a DOC ticket to inform the Department that they have paid their tax.
(a) From the time deposit-taking financial institutions receive notice from the Department of Commerce of the amount of tax they are required to pay for the previous month, they will be required to pay said tax within 7 days. Should they not pay the tax within this timeframe, they will owe an extra $1000 in taxes for every day past the due date.
(b) The Department of Legal Affairs may prosecute deposit-taking financial institutions and seek fines of up to $30,000, should a deposit-taking financial institution fail to pay its monthly tax within 28 days after being given notice by the Department of Commerce as specified in (4).
(5) The Department of Commerce may additionally require through policy that deposit-taking financial institutions submit their data on the historical valuations of their assets, the total amounts deposited within them, the amounts paid out every month to depositors in interest, the amounts paid out every month to compensate employees, and all income from the business of the financial institution. The Department of Commerce may additionally require any other information required to calculate the tax burden of the financial institution as shown in (2), (3), and (4).
(a) Prolonged delay or refusal from a deposit-taking financial institution to submit such data lasting greater than 28 days without extenuating circumstances will permit the Department of Legal Affairs to prosecute the institution or its management for obstruction of justice.
(b) Under no circumstances, related to the contents of this Act or unrelated to the contents of this Act, will the Department of Commerce be able to legally request information pertaining to the identity of depositors or the specific amounts deposited by certain depositors, unless authorization has been received from the Judiciary to use such information in a case.
(5) Any provisions of any previously passed law or order in conflict with this Act will be considered invalid upon the promulgation of this Act.