Taxes, Stupidity And CBDC

in LeoFinancelast month

We started a new year three weeks ago and some people in my country started the year protesting in front of the city hall. It's not a good start, protesting is never pleasant, especially if it leads nowhere.

One of the city councils ended the year by deciding to raise car taxes by 55% vs last year. This is a steep move no matter how you look at it and nothing justifies a raise like that. The press saw an opportunity to make some waves, so they asked the council what it is the raise for, how can they justify a raise so high.

The local council says there were two reasons why they decided to raise car taxes with 50%. One of them was because the level of tax collection is very low. The other reason was to encourage citizens to buy hybrid or electric cars to protect the environment, reduce pollution and use public transport. If I say this is shocking, that's an understatement.

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Image by Mikes-Photography from Pixabay

Reality Check

Hybrid And Electric Cars

Hybrid cars have 95% tax exemption, electric cars have 100% exemptions, so if you look at taxes only, obviously hybrid and electric worth it. However, everyone knows these vehicles are not cheap at all, especially compared to wages in my country. These are still considered luxury cars and are affordable for just a few.

The other problem is charging. An average electric car battery of 60kWh battery will take 8 hours to charge from empty. A 50kw/h rapid charger will give you about 100 mile range is 35 minutes but needs a lot longer to charge. Most users of electrical cars need take their battery to empty as it takes too long to recharge. Most electric cars have a range of a suggested 200 miles but to be honest it is not advised and is best to limit to 160 miles. Chargers are not laying around at every corner, that's the other problem.

Public Transport

Public transport is so and so, it's good in some cities, and bad in others. It depends on the administration and the infrastructure of the city. Some cities are just too crowded and avoiding traffic jams is not possible.

Roads

Roads unfortunately are not the best, you find holes all over and repairs last a year or two, then we're back to square one.

Taxes

This is the most shocking part. The city council decided to offsets its own inability to collect taxes with raising taxes. Instead of finding a way to collect, they are trying to make everyone pay more. How stupid is that?

Consequences

After the scandal broke out, the prefect filed a lawsuit against the city council. Until the case is resolved, the contested administrative act is suspended by law. So I guess we wait and see what is going to happen.

Unfortunately city council members are elected based on political affiliation and in some cases professional experience doesn't count, which can have serious consequences.

CBDC

Looks like collecting taxes is not exactly easy. You have a 10% discount if you pay till the end of the first quarter of the year and some penalties if you neglect to pay till the end of the year. What happens after, I don't know as I've never been in that situation. Possibly more penalties are added.

Starting from this year, banks have the obligation to make a digital report to taxman about every account they are administrating. This way taxman can check your account anytime and freeze your account if you don't pay taxes. Till now, a court order was necessary to do that. Now the court is eliminated from the process. However, if they freeze your account, you still have cash and can survive somehow.

Central bank digital currency (CBDC) will change that completely. In case cash is eliminated and we'll have only digital currency, skipping taxes will be nearly impossible. I'm a good citizen though, always paying taxes in time, to avoid problems with authorities and also avoid paying extra. Better stay away from trouble :)

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For me sounds somehow logic because it is encouraging people to go with the public transport. The less cars are on the road, the fewer the traffic jams and the faster the public transport. I've see a plan for the next years for the Cluj metro line 1 and 2, which was presented at an exhibition in Munich. If it is build, it will help a lot. I don't know the public transport situation in your town, so I can't give here anything. In my old hometown I could go without a car and when I visit my parents, I go by foot or public transport, where my friends call me crazy.

In 20 years fewer people will own cars, that is for sure. Here is a trend of car sharing as the taxes get increased every year. For example in Munich the city is massive growing in size and population, but the roads are downsized from 4 lanes to 3 or 2. Bicycle lanes are enlarged for that. But the public transport is functioning, that I can say.

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For me sounds somehow logic because it is encouraging people to go with the public transport.

The problem with that is that you first offer an alternative, then you do this move and we both know that's not the case in my country. Everything works backwards here. In other countries they offer a healthy public transportation, then raise taxes.

The plan for Cluj's metro is nice and needed as well, but again, a plan and reality are two different things here.

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Honestly i wouldn’t put up with shit like that and I’m sure some would feel the same way eventually your tax base either leaves or they find cheaper ways to avoid paying the tax so this isn’t going to drum up as much revenue just be a pain for eveyeone involved

I don't think it's going to fly. It's absurd. Obviously they have to wait for the court to decide but I don't think it's going to win.

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