Chapter 17: Tax

Consumption tax

The constitution requires the state to be non‑discriminatory. That principle restricts what kinds of tax are possible.

• The state cannot tax wealth. That would discriminate against people based on what they own.
• The state cannot tax land. That would discriminate against landowners.
• The state cannot tax income, because deciding which kinds of income are taxed, and what counts as a deduction, inevitably discriminates.

Instead, the constitution mandates a single tax to fund public services: a flat consumption tax. This tax is non‑discriminatory, because all consumers pay the identical tax when purchasing the same good or service.

Account-based scope of consumption tax

All consumption associated with an R-account is subject to consumption tax, which the Central Bank Payment System (CBPS) collects automatically.

This treatment does not depend on where the Product is purchased or consumed, whether it is shipped across the State boundary, the citizenship or location of the Person who purchases it, or the citizenship or location of the Person who consumes it. It applies whether the purchaser and consumer are the same Person or different Persons.

Because none of these facts affects the tax treatment, the tax can be determined and collected fully automatically at the time of purchase. Because the same account-based treatment applies universally, it makes no distinction based on personal characteristics and therefore cannot violate the Non-Discrimination Principle (NDP).

This prevents the tax system from encouraging high-income Persons to leave the State Territory while continuing to derive and consume value generated within its economy.

The system should also not give a Person a financial reason to reject citizenship merely so they can consume profits extracted from B-accounts or R-accounts without paying consumption tax. Citizens and non-citizens may participate in different forms of commerce, but profits earned within the B,R account system remain subject to the same consumption-tax boundary.

Business profits cannot become untaxed consumption

All consumption funded by profits extracted from B-accounts or R-accounts should be subject to consumption tax, regardless of whether the Person is a citizen or non-citizen, whether they are resident or non-resident, and where the consumption takes place. Money may remain in B-accounts and R-accounts and be used in production and commerce without consumption tax, but extracting that value for consumption must not provide a route around the tax.

The system is intended to support supply chains conducted mainly by Citizens through B-accounts and R-accounts. Payments may flow through productive supply-chain relationships without consumption tax while the value remains part of production, trade, finance, or investment.

This eliminates nearly all of the usual loopholes through which a wealthy capitalist might operate a successful business and then consume its profits without paying tax. The result does not depend on the owner's residence or citizenship, or on the use of companies, trusts, nominees, special legal structures, offshore accounts, foreign currencies, or other payment arrangements. None of those devices changes consumption into production or permits value held in B-accounts or R-accounts to become untaxed consumption.