Bill: Draft Redmont Revenue Act

[greymc]

CONGRESS OF THE
COMMONWEALTH OF REDMONT
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A BILL TO
Restate the Law of Taxation and Revenue
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The people of the Commonwealth of Redmont, 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:
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PART I — PRELIMINARIES

1. Short Title and Enactment

(1) This Act may be cited as the 'Redmont Revenue Act'.

(2) This Act shall be enacted immediately upon its signage.

(3) This Act has been authored by President xXTheoryXx, Commerce Secretary Planke32.

(4) This Act has been co-sponsored by Senator ElegantAlly.

(5) This Act repeals and replaces the following act:

(a) Taxation Act

(6) (6) This Act is to be read with the Redmont Commerce and Finance Act, which imposes and administers the taxation of financial institutions, and with the Redmont Corporate Entities Act, which establishes the forms of legal entity to which this Act applies.

2. Reasons and Intent

(1) The Taxation Act has been amended piecemeal since 2021. It now carries the regulation of financial institutions, the deposit guarantee and the confidentiality rights of banks, none of which are taxation, while the Commercial Standards Act carries the definitions those provisions depend on. Those provisions are moved to that Act, and this Act is left to do one job.

(2) The balance tax brackets are a cliff. A player holding exactly $500,000 keeps $5,000 less after tax than a player holding one cent less, and the same is true at every other threshold. The law should never punish a person for earning one more dollar.

(3) The Act never states whether a bracket rate applies to the whole balance or only to the part of the balance within the bracket. Two readings of the central tax in the Commonwealth is one too many.

(4) The Legal Entity Act recognises partnerships, cooperatives and foundations. None of them has a stated tax treatment, and a foundation in particular can hold unlimited value with no owner to tax.

(5) There is no assessment, objection, refund or record keeping procedure for any tax in this Act, so a player who is taxed wrongly has no route to challenge it short of suing.

(6) The tax base is too narrow. Property tax exempts the first two plots, so most land in Redmont is untaxed, and the chestshop sales tax has sat at 0% while chestshops carry the bulk of ordinary commerce.

(7) This Act therefore restates the whole law of taxation in one place, removes the financial institution provisions to the Commercial Standards Act, states the base and incidence of each tax, ends the bracket cliff through marginal relief, broadens the base by taxing land from the first plot, setting the chestshop sales tax at 2.5% and imposing a small tax on direct transfers between players, gives every entity form a tax treatment, and provides one administration procedure for all of it.

3. Definitions

(1) For the purposes of this Act:

(a) Balance. The money held in an account, being a personal balance in the case of an individual and the in game company balance in the case of an entity.

(b) Corporate Balance. The balance of an in game company, whether or not it has an associated Incorporated Entity.

(c) Department. The Department of Commerce.

(d) Entity. A legal entity within the meaning of the Legal Entity Act.

(e) Financial Institution. As defined in the Commercial Standards Act.

(f) Marginal Relief. The reduction of a balance tax charge under section 8.

(g) Personal Balance. The balance of an individual.

(h) Plot. A parcel of land owned by a person, however classified.

(i) Related Person. In relation to a person, an alternate account of that person, an entity that person controls, and a person acting in concert with them.

(j) Taxpayer. A person liable to a tax imposed by this Act.

(k) Transfer. A direct payment of money from one person to another, however effected, other than a payment made through a chestshop.

4. Interpretation

(1) The economic substance of an arrangement prevails over its form or label.

(2) A tax imposed by this Act is imposed on the person who holds the balance, owns the plot, or receives the payment, as the case may be.

(3) A monetary amount in this Act is expressed in Redmont dollars and is calculated to the nearest whole dollar unless this Act provides otherwise.

(4) Where a provision admits more than one reading, the reading that does not produce a result worse for a taxpayer who has more than for a taxpayer who has less is preferred.

(5) Nothing in this Act imposes a tax on a governmental entity, except as section 11 provides.

PART II — BALANCE TAX

5. Imposition

(1) A balance tax is imposed on:

(a) the personal balance of every individual; and

(b) the corporate balance of every in game company.

(2) The tax is charged on the whole of the balance at the rate for the bracket into which the balance falls, subject to Marginal Relief under section 8.

(3) For the avoidance of doubt, the rate is not applied separately to each part of the balance.

6. Rates and Brackets

(1) The bracket amounts are inclusive and the rates are weekly:

Taxation Bracket	Taxation Rate (%)
$0.00 to $24,999.99	0
$25,000.00 to $49,999.99	0.5
$50,000.00 to $99,999.99	1.1
$100,000.00 to $199,999.99	1.3
$200,000.00 to $299,999.99	1.6
$300,000.00 to $499,999.99	2.2
$500,000.00 and above	3.3

(2) A rate in subsection (1) may be changed only by an Act of Congress.

7. Calculation and Timing

(1) The balance tax is assessed on a player's balance at the moment they log in.

(2) The rate charged is the weekly rate in section 6, applied pro rata to the time elapsed between that log in and that player's previous log in.

(3) Where a person has not logged in for more than one week, the charge is calculated on the elapsed time and may not exceed the amount that would be charged over 4 weeks.

(4) The tax is deducted at the moment of assessment.

8. Marginal Relief

(1) Where the amount a taxpayer would retain after the balance tax is less than the amount they would have retained had their balance been at the highest point of the bracket immediately below, the tax charged is reduced so that they retain that same amount.

(2) Marginal Relief applies automatically and requires no application.

(3) The purpose of this section is to ensure that an increase in a balance never reduces the amount a person retains after tax.

9. Taxation of Entities

(1) The corporate balance tax is charged on the in game company balance associated with an entity, and the entity is liable for it.

(2) A sole proprietorship is taxed as the corporate balance of its in game company. Its owner remains separately liable for the balance tax on their personal balance.

(3) A general partnership, limited partnership or limited liability partnership is taxed on its own in game company balance, and its partners are separately liable on their personal balances. A distribution to a partner is not itself a taxable event.

(4) A cooperative is taxed as any other entity.

(5) A foundation is taxed as any other entity on its in game company balance, unless the Department has granted it an exemption under section 10.

(6) An entity may not reduce its balance tax by spreading a balance across in game companies it controls. Where an entity and one or more entities it controls hold balances, the Department may treat those balances as a single balance for the purposes of section 6 where the arrangement has no substantial purpose other than the reduction of tax.

10. Exemptions

(1) The following are exempt from the balance tax:

(a) a governmental entity, except as section 11 provides;

(b) a licensed deposit taking financial institution, which is instead subject to the deposit tax and the taxes imposed by Part IX of the Commercial Standards Act;

(c) a non-profit or foundation to which the Department has granted an exemption; and

(d) any person or class of person exempted by an Act of Congress.

(2) An exemption under subsection (1)(c) takes effect from the date the Department grants it, and the Department may withdraw it for misconduct or non-compliance with the conditions of the exemption.

(3) The Department shall publish and maintain a list of every exemption in force under subsection (1)(c).

11. Government Commercial Activity

(1) A governmental entity that carries on commercial activity in competition with private entities is liable to the balance tax on the balance of the in game company through which that activity is carried on.

(2) This section does not apply to a governmental entity carrying out a statutory function, to the Federal Reserve Bank, or to a town in respect of its ordinary municipal operations.

PART III — PROPERTY TAX

12. Imposition

(1) A property tax is imposed daily on every person who owns one or more plots.

(2) Where x is the number of plots a person owns and y is the amount taxed per day:

y = 2.7x + 2.87x^2 + 0.0462x^3​

(3) A person who owns no plots pays no property tax.

Number of Plots	Taxation Rate ($ per day)	Amount per week ($)
0	0.00	0.00
1	5.62	39.31
2	17.25	120.75
3	35.18	246.24
4	59.68	417.74
5	91.03	637.18
6	129.50	906.49
7	175.38	1227.64
8	228.93	1602.54
9	290.45	2033.15
10	360.20	2521.40
11	438.46	3069.24
12	525.51	3678.60
13	621.63	4351.42
14	727.09	5089.65
15	842.17	5895.22
16	967.16	6770.09
17	1102.31	7716.17
18	1247.92	8735.43
19	1404.26	9829.79
20	1571.60	11001.20
21	1750.23	12251.60
22	1940.42	13582.92
23	2142.45	14997.12
24	2356.59	16496.12
25	2583.12	18081.88
26	2822.33	19756.32
27	3074.48	21521.39
28	3339.86	23379.04
29	3618.74	25331.19
30	3911.40	27379.80
Continues...

13. Terms of Property Taxation

(1) Merged plots are counted as several plots and taxed as such.

(2) Plots owned by an entity are counted against that entity, and not against its interest holders.

(3) A person may not reduce their property tax by transferring a plot to a related person while retaining its use or benefit. The Department may treat a plot so transferred as owned by the transferor.

(4) Property tax applies to all plots, unless otherwise provided by the local government where the plot is located. Only a government recognised by the Commonwealth is a local government for this purpose.

(5) A town may request that the Federal Government conduct plot taxation on its behalf, in which case the Federal Government shall provide the amount taxed to the town on the first day of every month.

PART IV — TRANSACTION TAXES

14. Chestshop Sales Tax

(1) A chestshop sales tax of 2.5% is imposed on every chestshop transaction.

(2) The tax is calculated on the sale price of the transaction and is withheld from the proceeds paid to the shop owner.

(3) The rate may be changed only by an Act of Congress.

(4) All chestshop sales tax revenue is directed to the DCGovernment account.

15. Player Transaction Tax

(1) A player transaction tax of 0.5% is imposed on every direct transfer of money from one person to another.

(2) The tax is calculated on the amount transferred and is withheld from the amount received, so that the recipient receives the amount transferred less the tax.

(3) The following transfers are exempt:

(a) a transfer to or from a governmental entity, including the payment of a tax, fine, fee, wage, grant or government contract;

(b) a transfer made in compliance with an order of a court, including restitution, damages and costs;

(c) a chestshop transaction, which is taxed under section 14;

(d) a deposit with, or a withdrawal from, a licensed financial institution, and the drawdown or repayment of a loan made by one;

(e) a distribution from a bankruptcy estate under the Bankruptcy Act, and a payment made by a receiver or trustee in the course of a winding up; and

(f) a transfer between a person and an in game company that person owns.

(4) The rate may be changed only by an Act of Congress.

(5) The tax is collected under section 20.

(6) A person may not reduce the tax by dividing a transfer into several transfers, and section 25 applies to an arrangement that does so.

(7) All player transaction tax revenue is directed to the DCGovernment account.

16. Eviction Tax

(1) An eviction tax is levied whenever the Department of Construction and Transport successfully auctions an evicted plot in a public auction, or sells an evicted plot back to the government.

(2) The tax is a percentage of the revenue generated for the evicted owner through the auction or sellback, rounded to the nearest whole dollar. Where more than one category applies, the highest rate is used.

(a) For a plot evicted for inactivity, the rate is 40%.

(b) For any other evicted plot, the rate is 20%.

(3) The tax is collected by the Department of Construction and Transport:

(a) on a public auction, by withholding the amount from the payout to the evicted owner; and

(b) on a sellback, by fining the amount from the evicted owner immediately after the sellback.

(4) This tax is not levied on an eviction conducted by a town government. Towns may make their own arrangements in local law, and existing local arrangements remain in force.

(5) This tax is not levied on a sale of estate property conducted under the Bankruptcy Act.

PART V — PRUNING

17. Pruning Tax

(1) The entire personal balance of a player who has been inactive for at least 3 consecutive months is transferred to the DCGovernment balance.

(2) On request, the total of the personal funds taken, excluding taxes, is returned to the citizen if they become active again, and DCGovernment is responsible for repaying them.

(3) A charge of 10% is applied to any funds returned under subsection (2).

(4) No notification is required for the disbandment of a sole proprietorship whose owner has been pruned under this section.

(5) The pruning tax is suspended in respect of any player who is a debtor in active bankruptcy proceedings, regardless of activity.

18. New Player Pruning Exception

(1) One month after a player first joins the server, their entire personal balance is transferred to the DCGovernment balance if:

(a) they have under 1 hour of playtime; and

(b) they have not logged on in the last 24 hours.

(2) A player pruned under this section shall be returned 90%.

(3) No charge is applied to funds returned under this section.

(4) No notification is required for the disbandment of a sole proprietorship whose owner has been pruned under this section.

PART VI — NEW PLAYER STARTING BALANCE

19. Starting Balance

(1) The President, acting with the advice of the Secretary of Commerce, may set the starting balance provided to players joining DemocracyCraft for the first time, and the source from which that balance is drawn.

(2) Before a change takes effect, the President must publish a public announcement setting out:

(a) the new starting balance amount;

(b) the source of funds from which it will be drawn; and

(c) the date on which the change will take effect.

(3) A change announced under subsection (2) may be vetoed by a simple majority vote in both chambers of Congress before it takes effect, and a vetoed change does not take effect.

(4) Where no starting balance has been set under this section, the most recently set policy remains in force.

PART VII — ADMINISTRATION

20. Collection

(1) A tax imposed by this Act is collected by plugin where a plugin is implemented for it, and otherwise by the Department.

(2) The Department may make rules necessary to administer and collect a tax imposed by this Act. A rule must serve a legitimate governmental purpose and be reasonably tailored to achieve it, and takes effect on publication.

(3) All revenue from a tax imposed by this Act is directed to the DCGovernment account unless this Act provides otherwise.

21. Assessment and Reassessment

(1) The Department may assess or reassess a tax, and any interest on it, payable by a taxpayer under this Act.

(2) A notice of assessment shall state the tax concerned, the period, the amount, and the basis of the assessment in reasonable detail.

(3) The Department may reassess within 4 months of the tax becoming payable, and at any time where the taxpayer concealed or misrepresented a material fact.

22. Objections and Appeals

(1) A taxpayer may object to an assessment by notice to the Department within 14 days of the assessment or of becoming aware of it, stating the grounds relied on.

(2) The objection is reviewed by the Secretary of the Department, or by a designated officer not involved in the original assessment where practicable, who may confirm, vary or vacate the assessment.

(3) A taxpayer dissatisfied with the decision on the objection may seek relief before the Federal Court.

(4) An assessment remains payable during an objection or appeal unless the Department or the Court orders otherwise.

23. Refunds

(1) Where a taxpayer has paid more than the amount properly payable, the excess is an overpayment.

(2) The Department shall refund an overpayment within 14 days of it being established.

(3) Where an overpayment arose from an error by the Government and is not refunded within that period, interest accrues on it at 1% per week.

(4) A tax collected from a person who was exempt at the time of collection shall be refunded in full.

24. Records

(1) The Department shall keep a record of every assessment, exemption, refund and rule made under this Act.

(2) A taxpayer is entitled, on request, to the record of their own assessments and payments.

(3) The Department shall publish quarterly the total revenue collected under each Part of this Act. Published figures shall be aggregate and shall not identify an individual taxpayer.

25. Anti-Avoidance

(1) An arrangement entered into wholly or mainly to avoid a tax imposed by this Act is disregarded, and this Act applies as if it had not been made.

(2) Without limiting subsection (1), the Department may disregard:

(a) a transfer of a balance to a related person, an alternate account, or an entity, made within 24 hours before a log in, where the transfer had no substantial purpose other than reducing the balance tax;

(b) the division of a balance across accounts or in game companies to obtain a lower bracket; and

(c) a transfer of a plot that leaves the transferor with its use or benefit.

(3) Where the Department disregards an arrangement, it may assess the tax that would have been payable had the arrangement not been made.

(4) This section is administrative. It does not create an offence, and conduct amounting to tax evasion is prosecuted under Section 14 of Part VII of the Criminal Code Act.

PART VIII — RELATIONSHIP, TRANSITION AND GENERAL

26. Relationship to Other Acts

(1) The taxation of financial institutions, the deposit tax, the deposit guarantee, and the supervisory powers of the Department over financial institutions are governed by the Commercial Standards Act and not by this Act.

(2) A reference in any enactment to Section 5, 6, 7 or 8 of the repealed Taxation Act is read as a reference to the corresponding provision of the Commercial Standards Act.

(3) A reference in any enactment to the deposit guarantee limit under the Taxation Act is read as a reference to that limit under the Commercial Standards Act.

(4) The Bankruptcy Act governs the treatment of a taxpayer in bankruptcy, and a government claim for unpaid tax ranks in accordance with Part VI of that Act.

(5) Except as subsections (2) and (3) provide, a reference in any enactment to the Taxation Act is read as a reference to this Act.

(6) The Auction Levy is not imposed by this Act. Where another enactment refers to the Auction Levy under the Taxation Act, that reference is to the levy imposed by the enactment that establishes it.

27. Transition

(1) A tax that became payable before the enactment of this Act remains payable, and is administered under this Act.

(2) An exemption granted under the repealed Taxation Act continues in force under the corresponding provision of this Act or of the Commercial Standards Act.

(3) Marginal Relief under section 8 applies to a balance tax assessed on or after the enactment of this Act.

(4) Nothing in this Act affects an existing legal action or a liability already accrued.

28. Severability

(1) If any provision of this Act is held invalid or unenforceable, the remainder continues in full force and effect.