New Tax Rules !

OOC thread : discussing actual rules.

So the tax planets are gone. This will have massive repercutions on the galactic economy.
From a rough estimate, I would say the tax part of income for government will be reduced to 10% of what they were, or less. It depends on how much Facility Income was developed in those governments. A safe bet is that old governments had a somewhat strong FI, and the newer govs relied mostly on Tax Income.
This change of rules will advantage gov and factions who did stock on money. A credit will now become rarer, and having a few billions worth of saving will help in the future. Of course, the factions that have been warned beforehand of the change had time to save more money (GE ... ).
The govs that developed under the old rules will also be advantaged, as they did had plenty of time to build their planets or stock on ships. Though, I see it as less a problem, as new govs wouldn't have been able to catch on with older ones under the old tax rules. They cannot still with the new tax rules, but the gap should be less as it will be in millions, not billions.
The salaries are already revised at the lower. Although I don't expect a division by ten like the admins, it is safe to assume a division by at least two. This will impact galactic economy direly, and we can expect a general lowdown of trade, with a new boom in a few months when prices had been adjusted. The market should then know an all time high, as to compensate for loss of incomes, factions will be forced to produce and sell again. This will be a major change, with probably an excess of items available for less credits, the reverse of the situation we knew last years. The ship market is particularly crowded notably.

I can discuss some of the govs issues :
- GE : having been warned in advance, has probably hoarded money a lot. They might renew with their politic of low salary, as the GE never had a shortage of recruit because of its prestige.
- TAC (The Avance Coalition) : having no decisive DCs to exchange, TAC choose to become an economic powerhouse, focusing on Tax Planets. They are screwed now, but still can recover as they control huge territory and can focus on building their FI. It seems they have stocked some money too, as recent DC sales of Lictor may have earned them nine billions or more.
- TF : interesting time for them. Their planets are very well developed, with some of them focused on FI. They do lack of space to expand though. Having quitted the IU, the TF was most isolated. They did put forth that interesting initiative of offering citizenry to every trader in the galaxy, with advantages (like access to discount products, macrobinoculars for example). This is a good way to break isolation, and become an empire of trade, at long last.

I agree with most of what you have said, but I don't think that we will see prices dropping soon, but rather over time. As others have pointed out, the flow of credits into the economy has been heavily decreased, but there are still very few credit sinks to actually remove credits from the system. So I believe that inflation will pretty much halt, but until combat is in full swing we won't see much deflation occurring.

I agree. Once combat rolls around large amounts of credits will be going up in smoke with their holders, and disappearing in the form of replacing destroyed property.

However, won't this possibly raise prices, if production cannot keep up with the demand?

Aye, prices will initially raise for a short period of time methinks. After a while though, when credits are running short and people cannot afford the high prices, sellers will be forced to lower their prices and thus the almighty credit will have greater buying power.

On a related note, who here has invested their credits into the nova crystal, due to the all-time low value?

On an OOC level, I really want to invest in the Nova Crystal. I think it is an awesome alternative to the credit and the Krath deserve a lot of praise for successfully implementing it as a viable currency.

However, on an IC level, I despise the Krath and refuse to use any of their shoddy crystals that can't even keep their worth. So, no nova crystals for me.

With luck, some of the deflation will come (or at least the severe inflation will halt) with either combat or R&D. "Why R&D?" you might ask. My reasoning behind it is that with all DCs available to be researched, most items will lose their value. Old CP ships and restricted items are the things worth the most on CPM. Since anyone can and probably will mass produce these formerly rare items, the prices are bound to go down over time as more of the DCs are unlocked and made public.

However, on a contrary note, with Rendili's temporary release of the Lictor DC, Lictor prices have risen about 100 million credits. Then again, Koros' publicizing of the MTC did lower the price by a couple hundred million. I suppose the only way we'll know will be when R&D comes out, but I am fairly certain prices will be decreasing.

R&D is interesting. I wonder if one will be able to upgrade old things with new tech...

For instance, Government A has a giant fleet of Ship X. They R&D better engines and weapons for Ship X. Does the updates only apply to the ships made post-discovery, rendering their entire fleet obsolete, or can they upgrade the fleet and save the possible 14-year investment into a nation's defense?

We don't know much on R&D, so it is difficult to know if we'd be able to mod ship. R&D should be quite slow tough, and so I don't believe rare ships will see their prices drop quickly.

As for general level of price, I said it will drop, then raise again. That is because people are hoarding their money as they anticipate a drop in price, effectively leading to a lack of cash. Then the prices will raise again, as there is still a lot of money in the game, as Mao noticed. Then I believe they should drop because I anticipate an overproduction linked to the fact that faction will need to work to get money. But that last part is not sure, as they could restrict sales to maintain a high level of price. I would say two months for the first drop, six months to one year for the reraise, and then perhaps the drop due to overproduction.

This is a topic of interest for me, it was through a discussion of this on the GME that I was linked to the Guild through Ashura. Not sure how active it is now, we'll see if we can change that. As a scholar of economics and political science, this may be a more appropriate place for such discussions.

I am very interested in the Nova crystal, it puts KD in a unique economic position, but worry about the currency's long term viability. That's a topic for another discussion, though it does relate to the the tax situation in a way. For the time being, I would advise against buying them.

The fact that the economic activity on tax planets was only theoretical, and thus was pure money supply increase instead of simply money changing hands from citizens to governments, made that situation untenable, though now facility income is essentially the same thing, on a smaller scale perhaps. Once govts adjust to the new system, and the galactic economy recovers from the shock, inflation should start happening again.

R&D should remove the monopoly effect on a lot of tech, but that depends how it is implemented. I can't imagine how its economic effects could be bad (except for the monopolists), but maybe someone else can.

So there are topics for three lengthy studies, and then combat could be one as well, though I don't think its effects on economics will be as great as that of R&D. I've heard the game described as an economic simulator, and if that's accurate, which I'm not sure it is, then determining the nature of the economy and whether it can be manipulated through policy is in everyone's interest. To put that into perspective, in character, will be a great challenge. But that's what I seek to do, and it doesn't really matter if anyone reads it or not- understanding it will have its own rewards.