Kalistani Major History

[Doc]

"Tax Lag" shocks Kalistani Economy once moreLeading Economists call Government "Inept"
Kaliburg, Ananto
December 7, 4439


Premier Hashimoto, Governing from Weil Vanuku, issues support for tax and spending bills

Just when Kalistan thought they had hit the bottom of the trench, a new shock to the system shattered whatever confidence Investors had in the new Government.  The Premier, who is currently discussing an aid and investment package in Vanuku to attempt to shore up the Kalistani economy, issued support for the Finance Minister's proposals on taxing and spending back in Kalistan. 

What the new Government didn't know was that spending bills pass long before tax bills pass.  There is an 8 month lag between spending outlays and new Tax revenue generation.  This means that while the Government has approved a dramatic increase in spending, to the tune of 700 billion new Rubles, they will have to put a hold on the outlays until the money begins to be collected sometime next August.

The President was reportedly furious with Hashimoto and Finance Minister Westin.  Sources close to Reina-Rodriguez spoke on the condition of anonymity, and informed The Republic that the President railed against the stupid procedural rules in the Assembly.  "The President was livid when the Speaker of the Assembly informed her that due to a procedural matter, the spending bill passed immediately, but the revenue bill must remain on the floor for the entire 9 month.  'Why', the President demanded, 'is that stupid rule in place?'  The Speaker of the Assembly informed her that these were the rules.  And she went off.  I've never seen the President so agitated.  She's doing whatever she can to get this economy standing back up, and now we will have to wait for three quarters of a year to collect taxes."

To fill the gap, the President has authorized district governments to create a new series of 200 billion rubles worth of Scrip to hold out for another half a year, while Kalistan's revenue collection begins firing up.  In addition, District Governments and Ministries are freed to begin ad hoc planning for depression-relief programs and job programs to at least put the tens of millions of Kalistani citizens who are out of work currently to work somehow, and get them earning money.  Finally, the Finance Minister has permitted the payment of all taxes using district Scrip in lieu of Kalistani Rubles, with the aim of the Republic honoring the debts at the end of the crisis.  The aim of the proclamation is to cut down on speculation in the District Scrip market, which the Finance Ministry agrees has the potential to get out of control in the short term.

"I don't want speculators going around," said Finance Minister Westin, "and talking people out of their life savings for cents on the Ruble.  The Republic will honor the face value of the Scrip when the monetary crisis ends, and in the meantime, all District Scrip is legal tender for the payment of all debts within Districts, and any business caught either refusing the Scrip or raising prices on people who attempt to pay with the Scrip will be shuttered.  I don't care what the reason is.  This Scrip will be redeemed on a one for one basis when the Banks reopen."


Professor David Bianche of Vrassan District University lectures the Government

Liberal economists in Kalistan, who have long been a source of gloom and doom with regard to the Kalistani Economy, and as of late were behind such libertarian efforts as the RLU in Kalistan, called the Government's efforts to get control of the monetary and financial crisis "inept."  Professor David Bianche, who is one of the Nation's leading Rightwing pro-Market economists stated, "Well, yes, of course, we told them that there was no possible way they could have such a social safety system and low taxes in Kalistan.  And now look at them- like a worm on a hook.  Of course, my colleagues and I have written an open letter to the Finance Minister, to inform her about the proper way to run an economy, but we got no response.  The solution is to cut all social spending [emphasis was Bianche's], and lower taxes to a flat rate of 3% across the board.  Economic models prove, beyond a shadow of a doubt that this country will not only easily be able to manage with a MUCH smaller government, but people will be much freer, not having to accept the ignominy of a Government handout in the form of a UBI, which is akin to slavery and extortion of the making class for the benefit of the dozens of millions of leeches in this country.  The market will produce the winners and losers, thank you very much."

Finance Minister Westin brushed this sort of talk aside.  "Whatever Bianche and his friends say, what we need to do is reopen that banks.  This will be the priority of the Government over the next year.  Once the banks are re-opened, we can rebuild the trust and faith in the Kalistani economy, and begin to rebuild from this rubble.  I know there are likely some dark days ahead of us still, but once we get this right, we will be able to put our foot on the correct course, and will rebuild stronger than ever."