Article XIX: Central Bank Payment System (CBPS)

Section 1 — Principles of Taxation

  1. Taxation shall be levied solely on the consumption of goods and services.
  2. Production, trade between producers, investment, and all other non-consumptive economic activity shall remain untaxed and unrestricted except as required to enforce this Article. No income tax, corporate tax, payroll tax, property tax, capital gains tax, inheritance tax, or wealth tax shall exist.
  3. Taxation shall be simple, automatic, non-intrusive, and free from bureaucratic discretion.
  4. No Resident or Citizen shall be required to file tax returns, maintain tax records, or submit to tax audits.

Section 2 — Account Types

  1. Every Central Bank account shall be assigned exactly one of the following four account types at the time of creation:
    • G for "general"
    • B for "business"
    • R for "retail"
    • C for "consumption"
    These account types are symbolic labels used by the Central Bank Payment System.
  2. The account type assigned at creation is permanent and shall not be altered. B-accounts and R-accounts shall be assigned and governed by Product Categories in accordance with Article XIV: Product Categories Defining Business Activity.
  3. Every C-account shall have a privacy flag whose value is set when the account is created and shall not be altered. A C-account whose privacy flag is set is called a private C-account; any other C-account is called a standard C-account.
  4. Only a Non-Citizen may own a G-account. Any Person may own an account of another type after accepting the Central Bank account owner contract.
  5. Before a Non-Citizen becomes a Citizen, the CBPS shall require the Person to transfer the remaining balance of every G-account they own in accordance with this Article and close each G-account.
  6. A C-account is a personal consumption account for its owner and the owner's dependents. A private C-account provides the information protections in Section 7.

Section 3 — CBPS Person Records

  1. For each Person who owns one or more Central Bank accounts, the CBPS shall maintain exactly one person record indexed by that Person's unique person-identifier in the Identity System \(M_{\text{IS}}\).
  2. Access to the Person's Central Bank accounts shall be authenticated through the Identity Authentication Service of \(M_{\text{IS}}\).
  3. The person record shall record the Person's tax-choice preferences.
  4. The CBPS shall retain a Person's most recently recorded tax-choice preferences after the Person ceases to be a Citizen, including if the Person ceases to own any Central Bank account. While the Person is a Non-Citizen, the CBPS shall not permit the Person to view or modify those preferences. If the Person subsequently becomes a Citizen, the CBPS shall restore the Person's access to the retained preferences.
  5. The person record shall index every Central Bank account owned by the Person. For each account, it shall record the account type and, where the account is a B-account or R-account, its assigned Product Category. For each C-account, it shall record the privacy flag.
  6. The CBPS shall keep the person record consistent with the account records it indexes.
  7. The CBPS shall record the sender's purpose description and declaration with every ordinary transfer from a B-account categorised as "gift", and shall reject the transfer if either is absent.
  8. The CBPS shall apply uniform automated analysis to records of transfers involving B-accounts categorised as "gift" to identify evidence that the accounts are being used for commerce or tax evasion. It shall preserve the records required for audit by the public service responsible for preventing tax fraud.

Section 4 — Automated Operation

  1. The CBPS shall operate as a mechanistic, computer‑based subsystem of the Central Bank, applying the transfer and taxation rules of this Constitution automatically and without discretionary judgment. Its function is limited to executing fixed rules governing monetary transfers between Central Bank accounts.
  2. The tax system shall be implemented automatically by the CBPS. Consumption tax shall be collected and distributed to UBI and public services without human intervention. The CBPS shall collect consumption tax if and only if a transfer is a taxable event under Section 5.
  3. The CBPS shall automatically block every transfer prohibited by this Article.
  4. The CBPS shall automatically reverse or credit consumption tax as required by the refund rules in Section 6.

Section 5 — Taxable Event

  1. Consumption tax shall be collected on every ordinary external C → R transfer.
  2. Consumption tax shall be collected on every ordinary internal or external C → G transfer.
  3. No other monetary transfer shall constitute a taxable event.

Section 6 — Permitted Transfers

  1. Every transfer is exactly one of the following:
    • a refund;
    • an administrative transfer expressly authorised by this Constitution; or
    • an ordinary transfer.
  2. Every ordinary transfer is exactly one of the following:
    • an internal transfer; or
    • an external transfer.
  3. An internal transfer is an account-management transfer initiated through the account owner's Central Bank account between two accounts owned by that Person.
  4. An external transfer is any ordinary transfer that is not internal. A commerce transaction is an external transfer.
  5. An administrative transfer shall not credit an R-account unless it restores value previously debited from that same R-account and does not exceed the unrestored amount of the earlier debit.

The following tables completely specify the rules for ordinary transfers.

The notation X → Y denotes transfers from an X-account to a Y-account, where X and Y substitute G, B, R, or C.

Table 1 — Internal account-management transfers
From \ ToGBRC
GUntaxedUntaxedBlockedUntaxed
BBlockedUntaxedBlockedUntaxed
RBlockedUntaxedBlockedUntaxed
CTaxedUntaxedBlockedUntaxed
Table 2 — External transfers
From \ ToGBRC
GUntaxedBlockedBlockedBlocked
BBlocked𝜥-compatibleBlockedBlocked
RBlocked𝜥-compatibleBlockedBlocked
CTaxedBlockedTaxedBlocked

Table 2 describes ordinary external transfers and does not include refunds, which are governed separately below.

Compatibility requirement for external B → B and R → B transfers

An external transfer from a source account s of type B or R to a destination account d of type B is permitted only if:

𝜥(𝜬(d), 𝜬(s))

where:

This constraint shall not be construed as regulating, directing, or influencing production, investment, or trade beyond the minimum necessary to enforce the tax provisions of this Constitution.

Refunds

A refund reverses all or part of an earlier permitted transfer. It is governed exclusively by this subsection, is not a taxable event or new commerce in the reverse direction, and need not satisfy the ordinary transfer or tax rule for that direction. The four restricted external refund paths are R → C, B → R, G → C, and a B → B transfer for which the reverse direction is not 𝜥-compatible.

  1. A refund shall return value between the same two accounts in the reverse direction and identify the original non-refund transfer.
  2. Cumulative refunds shall not exceed the unrefunded amount of the original transfer.
  3. A partial refund shall reverse or credit the corresponding proportion of consumption tax collected on the original transfer.
  4. A refund of an untaxed transfer is untaxed and causes no tax adjustment.
  5. A refund shall not itself serve as the original transfer for another refund.
  6. Where protected information has been purged, an anonymous refund credential shall establish these facts without reconstructing the protected transaction history.
  7. Where a Non-Citizen funds their C-account by an internal G → C transfer and uses that value in a C → R transfer, a refund may return the value through R → C and then C → G. The C → G step reverses the original G → C transfer and is untaxed. It shall reference the original G → C and C → R transfers, use the same C-account and G-account, and not exceed the amount returned by the corresponding R → C refund.

Section 7 — Privacy of Private C-account Payments

  1. The CBPS shall not provide any operation by which a Person or authority can obtain information capable of identifying the payer of a private C-account payment, linking separate private C-account payments, or reconstructing a private C-account's transaction history.
  2. Once an external payment from a private C-account lies before the certified retention vector time, the CBPS shall irreversibly purge information capable of identifying the payer, linking separate private C-account payments, or reconstructing the private C-account's transaction history.
  3. The CBPS may retain anonymous refund credentials and aggregate tax-allocation information only where they cannot identify the payer, link private C-account payments, or reconstruct protected history.

Section 8 — Death, Incapacity, UBI, and Abandonment

  1. Incapacity does not change account ownership or make an account abandoned. A guardian or other Person with delegated account authority may operate it for the owner under the same account-type, Product Category, transfer, tax, and privacy rules.
  2. When \(M_{\text{IS}}\) records a verified death event for a Person, the CBPS shall automatically place every Central Bank account owned by that Person into estate settlement, reject new owner-authorised transfers, terminate all delegated authority over those accounts, cease UBI payments to that Person, and begin the account-closing procedure.
  3. While an account is in estate settlement, the CBPS shall process transfers committed before the death event and valid refunds. After liabilities and disputes have been resolved and the applicable legal process has provided the lawful recipients and allocations, the CBPS shall execute the estate transfers and close the account. Remaining value in a G-account may be transferred to a G-account nominated by a Non-Citizen recipient or a "gift" B-account nominated by a Citizen recipient. Remaining value in B-, R-, and C-accounts may be transferred to "gift" B-accounts nominated by the recipients.
  4. Estate transfers under this Section are untaxed administrative transfers. If there is no lawful recipient, the remaining value shall be transferred to the UBI pool.
  5. Universal Basic Income payments shall be deposited only into the C-account nominated by each eligible Citizen.
  6. An account may be declared abandoned only after the constitutionally defined period has elapsed without owner-authorised activity and the required account-recovery and notification procedures have failed. It shall then be closed and its entire remaining balance transferred to the UBI pool as an untaxed administrative transfer.

Section 9 — No Additional Regulation

  1. Nothing in this Article shall be construed to permit the State to regulate production, investment, trade between producers, or any other non-consumptive economic activity.
  2. The CBPS shall not impose any requirement beyond those strictly necessary to enforce the provisions of this Article.

Section 10 — Universal Basic Income (UBI)

  1. For any taxable transfer at tax-inclusive amount p, the component of consumption tax allocated to UBI equals: \[ T_{\mathrm{ubi}} = T_{\mathrm{ext}} + p\,R_{\mathrm{ubi}}. \] Here \(T_{\mathrm{ext}}\) denotes any externality cost (e.g., pollution) associated with the relevant supply and is zero where no externality cost applies.
  2. UBI shall be distributed only to Citizens who are resident, as declared under Article XVIII: Citizenship.
  3. Citizens aged 18 or older shall receive the full UBI amount.
  4. A dependent is a person who:
    • is under 18 years of age; or
    • is an adult who, due to significant disability, is unable to manage their own affairs and has a declared guardian.
  5. The UBI for a dependent shall be paid to the dependent’s declared parent or guardian.
  6. Each day, the total UBI pool collected by \(T_{\mathrm{ubi}}\) shall be distributed to all eligible citizens. The individual payment \(U_{i}\) for an eligible citizen \(i\) of age \(a_i\) is determined by the formula: \[ U_{i} = \frac{\sum T_{\mathrm{ubi}}}{\sum W(a_j)} \times W(a_i) \]

    where \( W(a) \) is the UBI weighting factor by age \(a\):

    \[ W(a) = \begin{cases} f_{\mathrm{start}} & 0 \le a < a_{\mathrm{ramp}} \\ f_{\mathrm{start}} + (1 - f_{\mathrm{start}}) \frac{a - a_{\mathrm{ramp}}}{a_{\mathrm{adult}} - a_{\mathrm{ramp}}} & a_{\mathrm{ramp}} \le a < a_{\mathrm{adult}} \\ 1.0 & a \ge a_{\mathrm{adult}} \end{cases} \]

Section 11 — Funding of public services

  1. Public-service funding shall be calculated for each tax allocation period. Each tax allocation period shall be one day.
  2. For a taxable transfer from a C-account whose owner is in \(P_{\text{cit}}\), the tax shall be allocated according to that Citizen's tax choice. For every other taxable transfer, the tax-allocation algorithm shall not use any tax-choice preferences retained for the account owner, and the tax shall carry a score of zero for every public service.
  3. For any taxable transfer at tax-inclusive amount p, the component of consumption tax allocated to public services is: \[ T_{\mathrm{svc}} = p\,R_{\mathrm{svc}}. \]
  4. Although expensive Products purchased for Consumption (such as houses and vehicles) have their full consumption tax paid at the time of initial purchase, the corresponding tax allocations to public services shall be distributed gradually over the expected lifetime of the product, as if recurring tax liabilities were incurred by its successive owners. To prevent any temporary reduction in the money supply, the initial tax revenue from such products shall be credited directly to the UBI pool, and all subsequent scheduled allocations to public services shall be drawn from the UBI pool.
  5. Each public service shall have a defined tax budget for each tax allocation period, representing the maximum tax revenue allocable to that service during that period.
  6. \(T_{\mathrm{svc}}\) shall be distributed automatically as follows:
    1. The Greedy Weighted Allocation Algorithm defined in Appendix C: Tax allocation algorithm shall be used together with one of the following algorithms to calculate tax‑allocation factors by score, depending on whether Article III: Constants specifies the parameter \( \omega \) as null or as a weighting function:
    2. The tax allocation algorithm shall:
      1. Avoid significant overfunding of services.
      2. Adjust tax rates to avoid surplus if \(T_{\mathrm{svc}}\) exceeds total budgets.
      3. Prioritise funding for the Central Bank and the Tax Office.
      4. Allocate funding to registered services in descending order of total score.
      5. For each service processed:
        • Weight citizen allocations by their score on that service and their remaining unallocated tax.
        • Ensure that negative scores imply no allocation.
        • Treat score 0 as eligible to cover shortfalls.
        • Treat tax from non‑citizens as though they assigned a score of zero to every service.
      6. Allocate any remaining unallocated tax to UBI.
    3. Score 0 represents taxpayers who did not express a preference on this service, including non‑citizens whose tax enters the system. Because score 0 carries no directional information, it is used only to prevent underfunding, and never to influence the relative weighting for tax allocations among positive scores.