Governments co-opting crypto is bad news for Liberty-Minded people - Looking at Dutch gov. blockchain experiments
Many governments have started experimenting with blockchain technology.
Technology is changing rapidly and it looks like blockchains and cryptocurrencies hold much potential. Governments around the world are aware of this: since last year, the government of the Netherlands has run many pilots to test what integrating blockchain technology can mean for them.
While blockchain technology can significantly improve the administrative process of the government, there are also some other aspects that I'm not that keen on. The most important aspect is, as you might suspect, tax collection. If you read this, you probably don't like to be coerced into contributing to an immoral and inefficient system (in other words, taxation is theft). Let's see what the Dutch government has been up to.
Collecting tourist tax via the blockchain
Last year, the Dutch government looked at the possibility to use blockchain technology to collect tourist taxes. In the Blockchain Pilots report, they say that the municipality of Rotterdam - that's where the test took place - lost € 400,000 of tourist taxes due to the emergence of platforms such as Airbnb that don't take taxation into account. In the pilot, they looked at the option to remove the entire tourist tax all together and make it voluntary.
Wait... VOLUNTARY TAXES?!
Yeah, in this test case they thought about it. When I dug a little deeper into the reports, however, I found some other clues.
When looking at the details of the test case, it wasn't just about collecting taxes that the government currently miss out on in fiat currency, but also missed taxes in Bitcoin. The government envisions the following situation:
- Step one: a hotel or person receives a booking of one of their rooms.
- Step two: they accept the booking.
- Step three: the hotel or person automatically pays the tourist tax in either fiat or Bitcoin.
A script should be integrated in the platform that automatically calculates the amount of taxes to be paid in Bitcoin.
So, platforms that currently avoid the tourist tax through accepting Bitcoin, would have to report their wallet addresses to the government, so that they can monitor all transactions.
The real intention of blockchain integration?
Maybe it doesn't seem like a big deal now, the intentions of this innovation are worrying:
The added value of blockchain technology is that it creates an incentive for a hotel/platform to have their administration in order and that there is more trust in the available data on taxes....wait for it... * The chance of an invisible 'tax gap' becomes smaller *
Further tax collection with crypto
Up until now this test case only addressed tourist tax: a relatively small part of all taxes that are collected in total. However, it seems like the government's intention is to collect more than only that.
They actually want to fork OpenBazaar! I wrote about OpenBazaar earlier and said that it's a great platform that promotes agorism. It seems like this is too big a threat to the current status quo.
Note that on top of the list is not hotels, but entrepreneurs (ondernemers) in the city of Rotterdam
Moreover, today it became clear that the Dutch government is also interested in a new project called bitJob. This is an Ethereum-powered platform that allows students to find part-time jobs and get paid on the blockchain. While this is a great opportunity to introduce many young people to cryptocurrencies, it also undermines one of the main uses of them: financial independence and the absence of middlemen.
Younger people often tend to work off the record, as they only work part time and so they earn smaller amounts of money. For businesses, smaller amounts of money are also easier to hide from the tax man. Now, that 'problem' can be fixed via a public ledger where all income is registered. You can find more information about bitJob in @kingscrown's recent article.
In conclusion, technology gives us the opportunity to render governments obsolete. However, they aren't giving up without a fight. As I have shown, the Dutch government is especially interested in integrating blockchain technology into their administrative processes, as if they know about the power of crypto.
And they are already looking at putting the entire Dutch tax system on the blockchain:
One of the main intentions of crypto is to cut out the middleman. With government co-opting blockchain technology, the middleman jumps right back in.
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