How you can resist funding the government →
other ways the government is funded →
value-added tax
In much of Europe, and some other places, the value-added-tax — a tax that is applied to the price of the sale of goods — is a major source of funding for the government.
This tax, like sales taxes in many of the United States, is collected from the consumer at the time of the sale by being wrapped into the price of the goods sold, and then is remitted by the seller to the government.
This makes it hard for individual tax resisters to resist these taxes
directly. One reason I have heard for why tax resistance is less prominent in
the “conscientious objection to military taxation” movements in Europe (where
promoting varieties of “peace tax fund”-style governmental accommodation for
such objectors is more common) is that objectors there have less opportunity
to simply refuse to pay, because they are never asked simply to write a check
but instead the government squeezes the money from them in dribs and drabs.
Mainstream people who talk seriously and with some expertise about federal taxes and budget shenanigans in the United States frequently daydream about shifting our largely income- and wage-tax-based system to a consumption-tax system like the value-added-tax.
There would be enormous political hurdles involved in making that happen, but push may indeed come to shove some day.
On a previous occasion was discussed tax resistance as an anarchist action that aims to prevent the state from monopolizing the collective budget.
But being mindful of the limitation of the aforementioned, it was understood that it only spoke of this strategy as possible to apply to those taxes that people must pay voluntarily, that is to say those that are known as direct taxes.
But that which remains to be covered are those known as indirect, which impact our pocketbooks as much or more, extracted in a more shameless and silent form.
To be more clear, the direct taxes are those for which we fill in forms that we provide to the tax collector, while the indirect do not have to wait in such a line (that we make), but are collected by being included in the price of goods.
And what type of goods are those that carry this tax? It depends on how
cynical the current government is, but basically almost anything has, at
the present anyway, a value-added tax known as
VAT. True enough,
various populist governments decided to wash their consciences by leaving
some goods in your shopping cart out of this tax, but do we realize how very
many are not exempt? But that’s not all. At the same time before you buy
another tax is marked up: the tax on wages — have you seen how much is
deducted from your paycheck each month? These and other taxes, whose names
only accountants understand, are precisely those that take from us without
even asking and that are technically outside of our power to evade.
The practical, mathematical consequences of these taxes is ironic, because we are paying for the real value produced by the workers, but the extra profit — stolen — remains with the employers of these workers, with a new profit that is kept by the state; in this way the product increases its value not only exponentially but by it they, the employers and bureaucrats, manage to live well and parasitically off of the worker, who is its real creator.
While we think that this happens only with goods, it also happens with various services — maybe our time spent when we work in an internet cafe is recognized with the meager salary we obtain, while the boss, sitting on his bum, comes by every night to collect the rest of the profit?
Very well, but it is not only him who bums it: also presidents, senators, and bureaucrats at all levels live off or your work (your work? does it suit you?)
More irritating still is the deduction that they make for us in the same
salary when, because the government said so, 5%, 10%, and even more is
subtracted from your check long before you cash it. And us, hoping for
health and education, but all that comes is cronyism and corruption. And we
could go on about what they deduct from us when we use public transit, and
their famous fuel taxes, or when we pay the entrance to some amusement. Each
and every one of these occasions they are squeezing our pocketbook, and we
do nothing about it.
Enough already; if with direct taxes we can [resist], the indirect taxes cannot beat us.
First, we have to continue demystifying them.
These taxes are not natural, much less necessary, but are the base material that feeds that state that controls us.
Moreover, despite what they tell us, they can never be the only or the major way to fund the public works and tasks — for that we have autonomous self-government, mutual aid and horizontalidad, and while it may seem like rewarmed romantic anarchist rhetoric of the last century, the reality is that today more than ever we can realize these values.
To do away with indirect taxation can be done by dealing directly with the
producers of what we consume, going to find them before they become
supermarket or multinational profiteers of their products, creating
horizontal networks between consumer groups and workers, not mediated by
speculators, that allow a dialogue to be established in the relationship
beyond that which can operate in the “laws of the marketplace.” At first it
can be done with small producers, and gradually go looking for more. Though
we should not kid ourselves, if we do not seek as workers to take ownership
of the factories, the power of exchange will always be held by the owning
class.
Still, this possibility is a great way of demonstrating to the workers that to give money to the government is unnecessary, and also that they must not take it away from us, and neither should we let it be so easy for them to collect.
To propose tax avoidance is not so unrealistic.
The partnership of consumers and producers is the way out.
But there is something better: a certainly effective practice that they also
have demonized, but now we can make of it an ethical and political
opportunity: According to the Royal Academy of the Spanish Language, the
definition is: Trade or production of goods prohibited by law to
individuals, and the word can be no other: Contraband. This is precisely
the opportunity of inflicting damage on the state by reducing taxes,
maintaining consumption without tax. While contraband is normally illegal
smuggling of merchandise from outside which are not worth it for us to buy,
it also is to cheat the edicts [bandos] of the government,
to go against [contra] the law, to make and promote
Contraband [contrabandos].
Contraband is the way of producing and exchanging without taxation materializing in-between, and this can be done by coming to agreement with the producers, but also promoting autonomously self-managed enterprises that sell directly without intermediaries.
Another alternative is to encourage the informal sector, that is not in hiring, but in registration with the state.
If there is no registration with the state, neither should there be taxation, and this would permit prices to fall steadily.
Contraband is not only a form of struggle against capital, it’s a lesson in generating social relations that are not mediated by written law but by the agreement between those involved.
It is to open paths of respectful consensus between consumers and producers, and is just as respectful to allow for disagreement.
It is to create a market without tariffs, without restrictions of access beyond the necessities and capacities of everyone.
To create a world without taxes is possible, and is as easy as beginning to
conspire among ourselves as equals.
Teatre Bescanó, a theater company from Girona, Spain, responded to a 21%
rate of value-added tax applied to theater tickets in a clever way. Now,
instead of selling theater tickets, they offer a free performance for anyone
who purchases a kilo of carrots from their produce stand (at a 4%
VAT rate).
Some bits and pieces from here and there:
In some countries, a value added tax is a major source of government revenue, and there are periodic calls (for instance the so-called FairTax) for something similar in the U.S.
For this reason, I like to keep my eyes peeled for news about value added tax evasion and resistance strategies.
The Telegraph reports that VAT evasion “has exploded” in Great Britain in recent years.
It attributes half of this to “professional fraudsters” and half to “general non-compliance and deliberate evasion by legitimate businesses.”
Organized evaders use a technique known as “missing trader” to avoid paying this tax to the government, or, in the case of the “carousel” variety of the scheme, to double the gains by applying for tax refunds on taxes that were never paid in the first place.
All of the thunder and lightning about taxes and the “fiscal cliff” recently resulted in a major tax bill that ended up being so much about reestablishing the status quo that I’ve had little to say about it here.
The major effect on folks like me who are trying to stay below the income tax line is that our payroll and/or self-employment taxes are going back up to where they were a couple of years ago.
If you’d like to investigate further and see if there have been any tweaks to your favorite deductions or credits, take a look at the report Tax Provisions in the American Taxpayer Relief Act of from the Tax Policy Center.
The Mackinac Center for Public Policy compares the reported tobacco smoking rate in various states with tobacco sales in those states, and how this comparison changes as the tobacco tax rates change in those states and in neighboring states, to estimate how tobacco taxes contribute to tobacco smuggling.
Some states, the Center says, have raised their tobacco taxes to levels that amount to a policy of “prohibition by price,” and smuggling has risen to match — New York’s huge $4.35/pack cigarette tax is matched by the Center’s estimate that fully 60.9% of the cigarettes smoked there are smuggled in from other states.
When the IRS tries to crack down on tax evasion, their gains from increased revenue from enforcement can be offset by the loss of goodwill from innocent taxpayers who get caught in the net or who have to endure more paperwork or encounters with a suspicious bureaucracy.
For a good example of how the IRS turned a loyal taxpayer into an enemy, read David Hanger’s letter It Is Not Ineptness of Incompetence, the IRS Is Stealing from You.
The government relies on voluntary taxpayer compliance much more than on IRS enforcement and threats to fill its coffers, and so stories like this may represent a big threat.
The Early Retirement Extreme blog now has a wiki that will capture in a more encyclopedic fashion the wisdom of folks who are using voluntary simplicity principles to escape the rat race in style.
In earlier Picket Line entries, I’ve attempted to
translate sections from the latest edition of the Spanish
Handbook of Economic Disobedience (see , , and ).
I was starting to attempt to translate another section, but it looked familiar,
and it turns out I already translated an earlier version of it as it appeared
in a booklet called ¡Rebelaos!
last year.
This seems to be an expansion of the original, however, so I’ll work my way
through it again:
Tax resistance as a strategy of rebellion
As has been explained earlier, civil disobedience is a fundamental tool for
raising popular empowerment on the path to self-management.
The General State Budget for 2013 poses another attack on the needs of the
people. It cuts among others 14.% from the education budget, 19.6% from
culture, 3.1% from health (added to 6.9% from last year), while increasing
by 33% the payment of interest on the debt.
While a progressive privatization of all that is public takes place, while
blaming the crisis for causing a lack of resources, while pilfering public
money in the interest of those on high, the genuinely public projects on which
we are working below generally suffer from a lack of such resources which
would enable them to develop. To reverse this situation, it is necessary to
derive a significant amount of these resources by direct means through tax
resistance.
For this reason, with this publication, we share in the call to begin and
extend an action of tax resistance against the Spanish State and towards
those who control it, with consequent action to demonstrate that we will not
pay their debts, because we do not recognize the present Constitution. Tax
resistance that serves to fund the self-management of assemblies and
collectives, and from them, to give absolute priority to the participatory
funding of resources that we consider genuinely public.
Practical guide to income tax resistance
This is a suggestion for people who make their tax return for 2013 and
subsequent years.
It is a manageable option for people who want to (or need to) remain part of
the official economy, and therefore cannot afford fines or similar penalties.
This is a proposal inspired by war tax resistance, which for years has worked
successfully in the Spanish State, performing this action concerning the 6%
of the tax return that corresponds to military spending. But in this case,
added to this percentage would be other items that we consider unjust.
You can choose these items according to your own criteria, or join in the
proposed campaign of tax resistance launched by Right of Rebellion, which
will be more than 25% of each participant’s income tax, and consists of the
following parts of the State budget, from a total of €408,033 million,
which is the budget for 2013.
In these budgets for 2013, the % of items that we have chosen as the most
repulsive, rose up to 31.39% while in 2012 they remained about 29%.
Similarly, and because the main thing is to reach more and more people, we
have fixed on this 25%, that is ¼ of the State budget, which is already a
major challenge.
Item
2013 Budget
Percentage
Total Tax Resistance
€128,083,979,200
31.39%
Total State Budget
€408,033,918,210
100%
Public debt redemption
€62,319,842,350
15.27%
Public debt interest
€38,589,550,000
9.46%
Military defense
€13,708,330,000
3.36%
Security police
€1,209,238,886
0.30%
Prison system
€1,129,743,730
0.28%
Monarchy
€7,933,710
0.01%
Senate
€51,900,640
0.01%
Elections and political parties
€67,439,960
0.02%
Church
€110,000,000
0.03%
The filer, as a tax resister, must file the tax return; it won’t work not to.
If you work as an employee, your company already pays your taxes directly to
the State for you, so your tax resistance can only be applied as an
application for a refund.
With your tax return, you can declare as tax resistance all of those items
that you don’t agree to pay taxes for, and reclaim the money.
You can then distribute this money in a manner that you consider more
consistent with your notions. To do this, at the time of filing, you must
follow these steps:
Always make out your tax return.
Do not simply assent to the estimates filled in by the Treasury. It could
be that the Treasury had some error in the data. It is difficult to have
considered all of our possible deductions, or if it has, on more than one
occasion there have been errors (and often not in its favor).
In the case of not reaching the established minimum it is not advisable to
stop filling out your tax return.
Anyone can do this. You do not have to be an employed worker or to have
formal income. You can object as a retired person, a student, or an unemployed
person, since the state grabs taxes from everyone with both hands and this is
the only real opportunity to recover some of this exaction.
If you do not reach the minimum established by law for making a tax return,
it is still important that you do (or at least that you do the calculations),
since you will probably come out with a refusal (they have to refund money).
If you determine that you come out with a payment, it does not follow that
it is necessary to submit it.
How to make an income tax return for individuals practicing tax
resistance
The first thing you have to do is to fill in the forms for your income
tax return. This can be done by hand or with the
PADRE program. The other methods
(confirmation of the statement by telephone or Internet) do not allow
for tax resistance.
At this point your return is filled out up to the point of the tax
liability (box 741) with the amounts withheld by your employer and by
banks. Next, in box 752, you must specify a percentage of tax resistance,
depending on one or many budget items you have chosen to resist (see the
image below) and fill it in. If box 752 is already filled in, you can use
one of the other free boxes between 742 and 751. From here, we end the
tax statement by calculating the resulting tax.
To complete the statement you must pay the calculated amount of resisted
tax to the usual account of the entity, collective,
etc. you have
chosen. Specify on the accounting: “Income derived from the 2013 tax
resistance” and keep the statement that the bank provides. It is
important that you allocate this money to projects near you, so you can
directly verify how you yourself, with your taxes, are nourishing a
nearby project, while at the same time your money is not going towards
purposes you do not believe in.
Then all that remains is to send a letter from the resister to the Treasury Department, which will be attached to the return, along with a receipt of payment to the chosen entity, collective, or project.
You can take as a model the letter in the appendix; download it from the website of Right of Rebellion:
www.derechoderebelion.net/modelo-de-carta-para-hacienda/ or else go to the nearest office of disobedience.
It is very important that in the letter you specify the budget items to which you are declaring your tax resistance, and that the amount calculated is the sum of the percentage of these chosen items.
The next step is to deliver the return to whichever tax office or else
to the bank branch where you have an account. In doing this, whether in
one place or the other, they will certainly tell you that they want only
the tax return and not your other statements. You have to explain to them
that we are doing tax resistance (and we can seize this opportunity to
explain to that person what this consists of), that the responsibility is
ours, and that we want to put into the tax return envelope the three
documents: the tax return, the letter of resistance, and the bank
receipt.
Finally, it is important that you provide the information about your
resistance to the Office of Economic Disobedience, so that it does not
remain an individual act between you and the Treasury. It is critical
to know the number of people who have used their right of tax resistance,
so we urge you to fill out the tax resistance census sheet. You can also
ask for a paper version. This census is purely statistical.
Some reflections on the experience of tax resistance last year
It appears to be the case that if the tax return is filled in by hand, it
is more expensive for the Treasury to examine it and therefore it is more
difficult for them to detect the resistance.
There have been some cases in which the Treasury has sent a request asking
for the amount resisted, ignoring the declaration of resistance. These
cases have always been of large quantities. It appears that in general,
they don’t examine quantities less than 150 euros.
Based on the previous points, it is especially important to strengthen
the tax resistance budget so that it can respond in a collective form to
the needs for help from resisters. You can make this helpful resistance
with your resistance budget. Also to be attempted will be a crowdfunding
campaign on the internet to help this resistance budget throughout the
year.
Auditing the national debt, a tool to defend the refusal to pay an odious debt
As you have read on previous pages, the principal item toward which tax
resistance is directed is the external debt (23%). So we added information
specific to the motivation of tax resistance against this item.
As has happened in other countries, and in the light of 15-M, in Spain a
campaign to audit the external debt has been generated. The reform of the
Spanish Constitution that made the payment of interest and principal on the
debt the top priority of the general budget, gave more force, if anything,
to the need for this audit.
As auditoriaciudadana.net says:
“A debt that we were never aware of and that we were unable to review or
assent to. A debt that is essentially of private banks. A debt that, now,
they point out to us as the worst of the problems and that they make us
directly responsible with a constitutional obligation to repair it. A debt
that forces us to cut our investment in our social services and that condemns
us to the worst of the social distresses.”
We do not want to pay your debt!
Consequently, the Spanish people are put with the debt under the blackmail
of the financial markets. It is illegitimate debt which is newly contracted
to pay old debt and to implement policies that harm the social and economic
rights of the citizenry.
A large part of the debt is illegitimate because it stems from a policy that
has favored a tiny minority of the population at the expense of the
overwhelming majority of citizens.
The State has guaranteed the private debt of private companies and financial
institutions to enable them to borrow at an adequate rate of interest. This
implies that, subsequently, the ratings agencies issued a poor assessment
of the capability to repay the debt and that the risk premium of the State
soars. Therefore, the fact of endorsing private businesses or financial
institutions make the State (and therefore the citizens) have to pay higher
interest on the debt.
To guarantee private entities entails that creditors require an increasing
ability to pay on the part of the State which stops concerning itself about
other essential functions which, itself, it has to take on.
Can a government legally decide not to pay its debt because its population is
in danger? Yes, because the legal argument from necessity of the State fully
justifies it. The State of necessity corresponds to a situation of danger to
to the existence of the State, for its political or economic survival. The
economic survival relates directly to the resources that a State can provide
to continue to satisfy the needs of the population, in matters of health,
education, etc.
Mechanisms for resistance to the VAT
There are a variety of techniques available to a self-managed company or
cooperative to stop paying the
VAT to the State
and to dedicate that payment to a self-managed project.
Some of them are:
Declaring, if the
VAT is yours to
pay, an amount smaller than that which would apply, and with this,
financing an assembly or project of your choice.
To justify this lower payment you must gather various invoices in your
name. These invoices can be made in various ways without endangering the
legal cover of the action.
If you are certain that your company will not continue and is going to
close, in place of paying the State you can begin to send the
VAT amounts, or
the part of them that you assume, to the assemblies in your zone or to
self-managed projects, whichever you most prefer.
If you want to continue as a company and need a way to make this process
sustaining, you can open and close a business every 3 or 4 years. In this
way, when the Treasury goes after you to pay your
VAT, the
company would be bankrupt and you would generate another.
If you are a member of a cooperative or nonprofit entity that declares
VAT, you can
ask for a receipt for your personal expenses with the
VAT
identification number of this entity and donate these receipts to have
them deducted from your income and not to have to pay
VAT.
If, after all of these receipts, your self-managed cooperative has to
pay VAT,
you can make receipts with your personal
ID number;
simply after receiving the money billed, donate it back to the same
cooperative.
To put these options in context, we have to take into account that the
inquiries the Treasury makes to people or businesses who send receipts,
in order to monitor the payment of taxes, are limited and easy to foresee.
By model 347 of
VAT, by 30 April,
you must present a list of clients and suppliers with whom you have had more
than €3,000 in annual business. Therefore, nothing prevents us from making
receipts, as an individual and in a completely anonymous form, to a
cooperative for less than €3,000 and not to make a
VAT declaration.
Even though the cooperative does make one. That is, while the cooperative
accounted for it in order to deduct it from the
VAT to pay, the
individuals who billed do not declare it as income.
Since the cooperative is not obligated to declare who are its suppliers,
the Treasury will not have information about our irregularities. The only
information with which it can count on is the global balance of
VAT, from which
they cannot identify this type of irregularities, since one cannot know that
the VAT has passed
between individuals and has also been interlinked between businesses.
Resistance to the quarterly personal income tax: usually the cooperative
will pay the Treasury the quarterly personal income tax from the person who
has invoiced it, but it is not required to do so if this is not specified on
the bill, so also in this case if there is any irregularity, it is the
individual who is responsible for it and not the cooperative.
In this sense, the current Individual Income Tax Law, Law 35/2006 of
28 November, established four tax brackets and a top marginal rate of 43%.
Brackets:
Up to €9,050 gross annually, the withholding is 0%.
Between €9,051 and €17,460 gross annually applies a marginal rate of
24%.
Between €17,361 and €32,360 gross annually applies a marginal rate of
28%.
Between €32,361 and €52,360 gross annually applies a marginal rate of
37%.
After €52,361 gross annually applies a marginal rate of 43%.
Therefore, it is reasonable to have receipts without quarterly personal
income tax and that the cooperative does not have to withhold, because,
when this happens, it can be understood that the party issuing the invoice
is in the 0% personal income tax bracket, and for this reason does not pay
said tax.
So, to sum up all that has been said, the only irregularity on the part of
individuals corresponds to the action of not paying the
VAT. To this end
it is important to add that the people who enlist in self-managed projects
that have a low billing rate are not so obligated, so in order to protect
themselves legally, a person can bill the cooperative, and at the same time,
pay another professional for certain services (or pay daily expenses) to
balance their VAT.
So, in a totally legal manner, he could declare each trimester a
VAT near zero.
It would be indeed a way of moving from an individual
VAT payer to an
individual who cancels out his
VAT.
Another circumstance entirely would be that of bankrupt persons. You can
issue bills for your work in a completely carefree way, because in the
course of an inspection, the most that you could receive would be a fine,
which they would have no way to make you pay. This way, bankrupt people
have the easiest time of anyone in supporting these processes of reducing
VAT payments in
favor of cooperatives and entities who collaborate.
Note: There are some guidelines to follow so that you avoid the
risk of criminal sanctions from actions of this sort:
It is necessary to have a document that certifies the expense.
Invoices must be sent by someone who really does engage in the activity
being billed for, so that it can be demonstrated that the activity took
place. And there must be economic transactions or billing declarations
between the two parties (see the graph on the center pages)
Okay… with that I’m going to call it a day. There’s a lot more that follows,
but there’s only so much translating I can do at a stretch.
