Should LL Implement a Sales Tax?

The Alphaville Herald Suggested Perhaps LL implement a sales tax on purchases and transfers. Do you feel this is a good idea?

In some ways, I can see the benefits... by putting a tax on L$ transfers, it would discourage the use of Alts (because transferring money back and forth would be taxed) and reduce the money supply with each purchase (because the tax would take the L$ out of circulation).

What say you, the population? Personally, I am undecided, but think this idea may have some merit.

There.com called, they want their economic ideas back...

LF

What is this alphaville herald?
I was a beta tester for sims online and was in alphaville. Never heard of the dang thing.

In a real economy, money stays circulating because people have to pay regularly for food, shelter, and other basic necessities. In a luxury economy like SL, these pressures do not exist. We need people to be spending their money freely - so that currency stays in circulation (more money changing hands = a more vibrant and active community; especially since new money is being added to the system all the time, via Stipends). I'm afraid that any 'sales tax' would discourage people from spending; especially on large purchases.

I'm open to ideas like this that have a potential benefit to the community or LL - but a straight sales-tax seems to me to be nothing but a "sink" that drains money out of the economy. LL can't use the money, so whom does it benefit?

Take care,

--Noel "HB" Wade
(Tread Whiplash)

Thats exactly what it would be intended for... a sink. To offset the massive influx of new money coming into SL each week via stipends and bonuses.

LL should start taxing people on purchases to help take some of this curreny out of circulation...

omfg that so made my day! roflmao!

It's like no shit, I was going to go to the There Official Forums and ask if they got rid of Baloo because I think it seems like LLabs hired him!

Eddie

Are you shilling for Ulrika?

Shilling? Not sure what that means...

But what I do know is that the money supply has to be cut. The new changes will not decrease the money supply, they merely decrease the rate at which it increases.

Kinda like if you're riding in a Saturn while an oncoming semi barrels at you going 75 miles per hour. While the semi might be able to slow his speed to 55 mph before head-on impact, its still gonna be a disaster.

Such is SL's quagmire.

Sales tax would only mean higher prices for consumers. As an item seller, if you think I'm gonna pay a tax so you can buy stuff... well, that's not gonna happen.

Now now, no need to be ignorant.

Looks as if the idea is universally unpopular.

I think you might be missing the idea that the money supply ought to expand as the providers of services expand. That is, as the playerbase grows, there are more producers. If the money supply stayed constant, there would eventually be too few fungible assets for commerce to work - in other words: hyper-deflation.

At first blush this may sound good, as the L$ in your wallet magically become more valuable. But at some point, there'd be too few L$s and people would have to invent some sort of proxy cents in order for commerce to continue. This would be very bad with the official coin of the realm and multiple proxy currencies (price is $L1 plus 10 MerwanCents or 15 SiggyBux). It would look like the US before the central banks or Europe before the Euro. What a pain.

So the money supply needs to scale along with the increase of production which the new plan has taken into account.

I did notice in writing this that there is no such thing as goods in SL as everything - even objects for sale - are actually design services pretending to be goods. I have no idea what this does to economic theory, because you can have guns *and* butter.

Disclaimer: I Am Not An Economist But I Like To Pretend I Am (IANAEBILTPIA).

Its bad enough i have to pay taxes in the real world, now you propose that I do so here in SL? I'll keep it civil and nice and say no.

Absolutely, positively yes. There should be a progressive tax on all capital gains in the game. With this capital we can feed the newbies, stimulate the economy, and avoid devaluing our currency.

~Ulrika~

finally!

Already had one, didn't work, moving on.

Rather than a general sales tax, why not a tax on land transfers? In addition to functioning as a sink it would also tend to discourage land speculation.

Now, before someone jumps down my throat for being the pinko communist that I am, I'm not saying that land speculators don't provide a valuable service by helping people unload land more quickly, but I do think there's a point where land speculation (or any kind of speculation) ceases to provide social value that exceeds its social cost. I don't personally play the land game so I don't know where we are relative to that point but I've heard a lot of grumbling. I don't think a land transfer tax would end speculation, just cool it down a little, which might be a good thing.

Yes! I agree absolutely.

My only addition is that I would scale the tax progressively based on an inverse of the land-tier fees. This would equalize the cost of speculation for those with small and large land tiers, providing citizens with a greater access to the market.

We should get together and chat sometime about this!

~Ulrika~

* glares at Ulrika *

A sales tax was considered back in the 1.1-1.2 transition.
It was quickly dropped, since having a lot of transactions does not necessarily mean you are making money.
A casino can move $L500,000 back and forth in a single day and not make any profit.
I dont think LL is keen on introducing any sort of tax back into the system.
They want to be a platform rather than a game. I think the best solution would be for SL to follow a micropayment model rather than this crazy "nation" thing.

Absolutely not.

What purpose would the tax serve? To remove money from circulation? Lets see how the new changes work out before we start talking about radical sinks like this.

Its interesting that I disagree with the one thing Ul & Alby agree on lol.

No sales taxes at this point in time. That would be retarded.

-AP

What I find frustrating about questionnaires like this is that they omit the alternative options. For instance, what if the questionnaire was:

1. Implement a sales tax.
   
2. Implement a land tax.
   
3. Implement a general capital gains tax.
   
4. Dramatically reduce stipends.
   
5. Eliminate bonuses for events.
   
6. Allow runaway inflation.
   

Even more interesting would be a questionnaire that asks what the secondary effects of each choice would be. For instance, will the elimination of capital in the hands of SL's consumers lead to a recession? Who's income will be hurt by the change in policy? Who will benefit? Would taxation and redistribution of income help or hurt the economy?

While most first-order effects such as stipend reduction, loss of buying power due to inflation, and taxation, can be painful, one should judge them on their second-order effects such as improving the economy in the long term and providing economic equity to players.

~Ulrika~

if taxes are proposed as a method to provide linden support for events, tax everything or nothing. taxing land transfers alone hurts land owners and land traders. the system could not possibly account for taxing capital gains nor could it account for the fluctuation in the market price for land. furthermore, attempting counterweight the regressive tier system would be an unnecessary burden on players and is incredibly short sighted.

i am all for people role playing in SL, even role playing political structures and the marxist revolution. doing so in a fashion that will encourage naive players to support a ridiculous cause that would destroy the game is wasteful and hurtful. i think these efforts are better suited to encourage dispute resolution or some other social aspect of the game.

oh yeah - i voted no taxes.

also, i take back my "finally." i you had realized the silliness of only taxing one economic sector of SL.

if taxes are proposed as a method to provide linden support for events, tax everything or nothing. taxing land transfers alone hurts land owners and land traders. the system could not possibly account for taxing capital gains nor could it account for the fluctuation in the market price for land. furthermore, attempting counterweight the regressive tier system would be an unnecessary burden on players and is incredibly short sighted.

i am all for people role playing in SL, even role playing political structures and the marxist revolution. doing so in a fashion that will encourage naive players to support a ridiculous cause that would destroy the game is wasteful and hurtful. i think these efforts are better suited to encourage dispute resolution or some other social aspect of the game.

oh yeah - i voted no taxes.

also, i take back my "finally." i thought you had realized the silliness of only taxing one economic sector of SL, zugs.