Fwurg

[Senator Acehtoo of the Miomanian Colonists]

"Fellow Senators,

In accordance with our election promise to promote the development of technology, we have developed the following bill to reduce the cost of technological development to Union Members.

Any income spent on the development of technology shall not be subjected to taxation.

To qualify for this, the technology must meet the following criteria:

1. It must be new - only technologies not yet developed by a Union member qualify
2. It must be shareable - only technologies that can exchanged qualify ((OOC: Genome Correctors do not qualify))
3. The nation must make and keep the technology available for purchase to other Union members within two turns of completing the technology ((OOC: Post on the Trade forum))
4. The selling price of this technology must not be more than half the total cost of the development of the technology.

For example, suppose a nation gains an income of 2000 . Normally it would pay 300 , 10% on the first 1000 and 20% on the next 1000.

If this nation spends 500 on researching a qualifying technology, it would deduce this amount from the total taxable income, which would then be 1500 . The taxes due to the Union would then be 200 - 10% on the first 1000 and 20% on the next 500.

To offset the cost, we would propose ending the subsidy on Mass Transit Cargo Freighters currently in effect. As prices for these have recently fallen, we feel that the impact of this will be minimal, however we are open to alternative solutions.

We would like to hear the opinions of our member worlds to see what they think of this bill, and on the means of financing this endeavour."

[Nehket Aeka]

Senator Nehket Aeka conferred with Senator Ardios Eldrilith. Their interaction seemed to be one of heated discussion. After they concluded their short discussion, Ardios Eldrilith nodded in a manner that would probably be agreement.

Senator Nehket Aeka sent one of her aides away with a short written note before standing up and addressing the senate.

"Chancellor Acethoo, while we applaud the effort to make technological development more important throughout the Union we do have some comments.

It seems to us that this bill has some bias towards large economies, especially if taken with the rescinding of MTCF subsidies which are clearly aimed at helping smaller economies. For example, suppose a nation gains an income of 14.674 . Normally it would pay 5.487 , filling out the first four tax brackets and going 4.674 into the fifth. If this nation were to spend 4.674 on research, it would deduce this amount from the total taxable income, which would then be 10.000 . This is a tax reduction of 50%, meaning that half of the research has been funded by the Union.

This example faction will have to sell the technology to those interested afterwards, and will probably ask the maximum price of 50% of the total research costs. Thus they have effectively gained the technology for free."

[Senator Ardios Eldrilith]

Senator Ardios Eldrilith nodded in agreement.

"Furthermore, with regard to the first qualification criterion.", he started, "There are a lot of factions within the Union that have not made their technological breakthroughs public. The newest members have all kept a public record of their technological efforts, but no such information is available about the older members.

The first qualification criterion can not be determined unless all Union members make their technological breakthroughs and acquisitions public."

[Nehket Aeka]

"Thank you Senator", Senator Nehket Aeka replied.

"I would like to point out that the current proposal does not promote cooperation as much as we would like to see. A large economy can increase its technological knowledge faster and cheaper than a small economy, and will most likely do so; cooperating with a smaller economy will only assure that there is less tax reduction for the wealthier partner in the cooperation.

No provisions have been made for the case of two factions researching the same technology independently, thus giving both a tax reduction while it would have been more efficient for them and for the Union were they to cooperate. However, the bill does not take into account the current workings of technological research. Most cooperation is done based on the transfer of funds from all partners to the partner hosting the research facilities. It might be just a point of interpretation, but as we see it these funding partners are not granted any tax cuts.

And lastly, while almost surely only a theoretical possibility, the bill in its current form allows a single faction or small group of factions to deny others the right to tax reductions. Should a cartel be formed to research some technology without claiming the tax reduction, they are not forced to sell it at any set price, but none of the other Union members are eligible to claim tax reduction for their research which they do intend to share with others. The cartel could then sell the technology at 80 or 90% of the actual price, thus negating any benefits of this bill."

Senator Ardios Eldrilith nodded in agreement again.

"We therefore propose that this bill not be put to the vote as is. Instead we ask the senate to give us until 31 to confer with the Chancellor and other ministries to come up with a counterproposal based on cooperative research."

[Fred]

"The Enlightened Kingdoms are against this proposal. We don't want to trade in the subsidy that is currently more than 25% for a subsidy on technology of only 10%. We agree on most of the points mentioned by the Veolian Commonwealth and then Praetorian Empire. This does not stimulate cooperation at all."

[Senator Acehtoo of the Miomanian Colonists]

"We value your insights into this matter - that is why it was brought before you. Naturally this matter will not be put to a vote until there is at least some agreement on the merit of the proposal.

We are not too worried about nations claiming too large a tax deduction running the risk of "free technology": those nations which operate at this scale have already indicated they do not plan to make use of the subsidy - otherwise it would be quite unaffordable as well. Actually, the technological interest of the older member states usually lie in different directions than those of the newer members, so we do not expect this to cause conflict between them.

However, it does concern us that nations might place a cartel on certain area's of research. The goal of this law is to stimulate cooperation, so we take the concerns in this area quite seriously. This matter must be addressed in any new version of the bill.

Regarding the subsidy, as mentioned, we are open to alternative means of financing this proposal - there is no reason why there could not be a subsidy on technology and Mass Transit Cargo Freighters both, we simply need to find the means to pay for both. Perhaps there are alternative sources of funding?"

[RemcoSwenker]

The unified republic of darya is in agreement with our good comrades of the preatorian empire and the veolian commonwealth.

[Senator Acehtoo of the Miomanian Colonists]

"Based on your feedback, we have come up with a second draft of the bill. Does this resolve the primary concerns with the law itself?

When cooperating to develop technology, nations may reduce their amount of taxes due by 20% of their spendings on this development. For example, if a nation develops a technology and spends 100 in a turn, their taxes due to the Union may be reduced by 20 .

The following conditions apply:

1. At least two member worlds must cooperate in the development of the technology, with each contributing at least half of the amount of the biggest contributor.
2. It must be shareable - only technologies that can exchanged qualify ((OOC: Genome Correctors do not qualify))
3. The nations must make and keep the technology available for purchase to other Union members within two turns of completing the technology ((OOC: Post on the Trade forum))
4. The selling price of this technology must not be more than half the total cost of the development of the technology.

Does this seem more acceptable?

We also haven't found an alternative source of income yet. Perhaps a cut in the infrastructural budget would be appropriate?

[Senator Afra Mesti Vanlind of Komès]

"What!? How dare you suggest cutting into the infrastructural budget, when the conditions of our hyperspace lanes are already abysmal! Half of our members are not even connected directly to the Bozzy Spine! This is outrageous!"

[Senator Ardios Eldrilith]

"The new proposal looks much better than the old one. I will speak with the Veolian Senator about this proposal and we will consider this information for our proposal.
What is the infrastructural budget currently used for? I am afraid we need an overview of the current Union budget and what it is generally spend on. We can't just decide to cut the infrastructure like that. All the new Union members still have trouble trading. I hope we can get some insight into the current Union expenses."

[Lady Peinaili de Montrève]

" The proposal is indeed much better the first one, but as I understand the funding is a bit problematic. To that end I propose the following in order to resolve this issue:

First off, the Reduction of tax in the bill which is now 20%, will be lowered to 15% to make it easier to cover to the costs of this subsidy

Secondly, the fee of 40 per turn for the housing of a Union Defense Fleet, can be reduced to 25 which covers the costs of the supply fleet attached to it. Its my opinion that the stationing of a UDF should not be motivated by an economic gain. The taxes saved in this way, can be diverted to cover the costs of this new bill.

Finally, I propose to pull the available budget on the Subsidy for MTCFs and this new Technology Subsidy into one big pot, from which both can be funded for this budget. This means that total estimated available budget should be sufficient to cover applications from both laws. "

[Senator Ardios Eldrilith]

"The Praetorian Empire supports the measures proposed by Lady Peinaili de Montreve. Together with the rules proposed in the latest proposal of Chancellor Acehtoo we have a working bill now. No further budget cuts should be necessary."

[Nehket Aeka]

"The Veolian Commonwealth also supports the proposed method of funding."

[Senator Acehtoo of the Miomanian Colonists]

"With the matter of funding resolved and most issues agreed upon, I shall make a formal bill to be put to a vote at the start of 32."