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As a follow up to the Weapons Industry Discussion Paper, First one small thing and then one long thing.

The small thing is that through further discussions with producers I have a guarantee of increased Q7 stock to market based on a reduction of the Weapons VAT from 3% to 2%, so I will now put this to a Senate vote.

The long thing is one issue which wasn't discussed in any detail at the Weapons Industry Roundtable, and perhaps in hindsight should have been.

Work Tax

While the effect of the work tax on employee productivity and margins is minimal. It can have a very real effect on manager work. Something which is central to many businesses.



WRM Mines

Here is a table of WRM mines, and the profit from thieir output. I've used the current WRM price of $0.06

The current $2.10 manager tax is based on 3% of the $70 average salary, and the proposed $1.40 manager tax is based on 2% of the $70 average salary.

Type_________No.__Price__-$2.10_-$1.40
Iron Mine____35___$2.10___$0______$0.70
Oil Rig________70___$4.20___$2.10__$2.80
Aluminium__125__$7.50___$5.40__$6.50
Saltpeter____175__$10.50__$8.40__$9.40
Rubber______250__$15.00__$12.90_$13.60

As you can see there is presently no incentive for a new player or rocket factory owner to buy an iron mine. They would lose about $0.50 if they buy the food to replenish their energy, and another $0.06 on selling the 35 stock once the VAT is paid. They can buy it on the open market for less than it costs to make it.

Things do become a little more economical for the higher volume mines, but even then tax takes a large chunk out of them.



Q7 Factories

The break even point for a Q7 factory owner as I calculate it is something like this. I haven't included the costs of replenishing energy as this can be absorbed by low level food facilities.

Income:

$170 for 10 Q7 Weapons @ $17 ea - The most regular recent price prior to the current event.

Costs:

$5 paid in VAT

$80 In order to attract a worker on the open market (income tax included)

$75 for 1250 WRM @ $0.06 ea - For each employee in their factory they can buy at most 62.5% of the raw materials on the open market.

$6 in work tax on working as a manager in 3 Rubber plantations to gain 750 WRM.

Profit

This leaves a profit of $4 which is a rather tiny return a rather large company investment.

Obviously the more rubber plantations the manager owns and works in themselves, the larger the profit will be.

Remember that these numbers are for each worker. Also if the manager works in the factory as well their productivity will be added to the mix, effectively reducing the average salary of the business.

Now while the $6 work tax might not seem like a large figure here, it is one of only two which the government can control.

A 2% Work Tax (a reduction of 1😵 would equate to a $4 tax bill. $0.20 less per Q7 weapon.

If the manager works in 8 rubber plantations and harvests all the raw materials themselves, the original tax bill would be $18. A 2% work tax would reduce this to $12, a reduction of $0.60 per Q7 weapon.



For these reasons I am proposing a trial of a 2% Work Tax in WRM - weapons raw materials.

Pros:

Will make things more economical for WRM producers.

May lead to an increase in WRM production and weapon production.

May lead to more supply and lower prices on the eAustralian market for WRM and Weapons.

May lead to more tax being collected via work tax due to increased production.

May lead to more tax being collected via VAT from increased stock.

Cons:

May lead to less overall tax being collected via work tax due to a lower rate being collected from existing producers only filling their own needs, or from communes.

May lead to decreased productivity in other industries, although the 60% Food Bonus and 20% Housing Bonus would still put them ahead in economic terms.



Discuss!