The Coprieta Standard discusses the Flanders’ government’s latest economic policy platform with President and Secretary of Finance, Integration and International Trade, Mateo Mattiassen.
CS: The new coalition government of Flanders has a significant economic policy platform to move forward during its tenure. One of its policies is the introduction of an unconditional basic income. What advantages do you see in the adoption of this form of social security and how will its value be determined in Flanders?
MM: In the past, Flanders had a complicated system to determine state wages. When someone accumulated functions – e.g. being an MP and a Cabinet member at the same time – the highest paying function would be paid out in full, and the other functions at a discount. As most citizens combine two or three functions, it is very labour-intensive to determine who earns what, which often led to a backlog of payments. At times it even became a political issue: in 2013, one of my campaign ads read: “The January wages were paid out on May 17. Core tasks are important.”
We have decided to simplify the public wage system by introducing the unconditional basic income: every citizen with a bank account will receive the same amount each month. In the current budget proposal, it is set at Đ 100. The basic income will also replace the Startersfonds, a fund which paid each new citizen a one-off starting grant (Đ 500).
CS: One can argue that the basic income system is not efficient for micronational governments, in that it is difficult for them to offset the associated large outflow of funds from the Treasury by raising tax revenue, especially due to a traditionally stagnant private sector. This represents a budgetary risk to say the least. How does Flanders intend to guard against this and make the basic income system sustainable?
MM: The basic income system will cost about Đ 6,000 in the coming budget cycle (four months in Flanders). We have found the funds to pay for it. In August, at the end of the budget cycle, there will be Đ 1,000 left in the Treasury, so there is an interesting policy debate to be had. I have been looking forward to this debate for years. It’s not interesting to have a lot of money in the Treasury – there are no tough political decisions to be made, which stymies the political debate. We’ll have to look for other sources of income in the future to guarantee the survival of the basic income. Decreasing the monthly amount being paid out is also an option.
CS: Your policy platform discusses taxing inactivity. This will certainly provide short-term revenues to support the myriad of reforms that your government desires to implement; however, I think we can both agree in the long-term that encouraging participation is better than taxing inactivity. Are you contemplating measures that will encourage your citizens, and foreigners alike, to maintain active participation in the economy and, if so, would you please describe some of these measures?
MM: Taxing inactivity has been the main source of revenue for years and will remain so in the future. In our current budget proposal, 86 pc of state income comes from this type of taxation. Other taxes discourage economic activity and are impractical to calculate (capital gains tax) or lead to capital flight (capital tax). Another motive for taxing inactivity is to gradually clear out accounts of former citizens and to bring their money back into circulation. I do agree that motivating a citizen is always better than clearing his or her account, and we have always acted accordingly. But the funds of those who remain inactive for a long time should flow back to the government.
Concerning your second question, I am not convinced that government can stimulate participation in the economy through fiscal policy. We have tried this in the past, most notably in the Region of Mayo, but it amounted to nothing more than doling out cash to the private sector.
CS: The international scope of your policy platform is as ambitious as any, with Flanders set to seek out SCUE reforms and host of “MicroWorld Economic Forum”. Would you tell our readers more about what your intentions on each of those are – particularly what SCUE reforms does Flanders desire, and what sort of things need to be discussed at the Forum?
MM: One of our key proposals would be to put a cap on the amount of money that can be printed each year. Under the current Treaty, currency is being created with each new memberstate joining the SCUE, whilst the bank account of the organization has about 30 percent of the total bank funds. There is also the issue of new memberstates not receiving enough currency, which should also be looked into. The Flemish government is presently preparing a white paper which will list our concerns in detail and suggest solutions.
Concerning the MicroWorld Economic Forum (MWEF), we want to organize this forum to stimulate new ideas and innovations in micronational economics. We are currently setting up the programme, which will include discussion groups and lectures. Some of the topics that will be discussed are private banking, trade taxes and public debt. All non-existent at the moment, but they would make the economic – and by extension political – simulation much more interesting, in my opinion.
CS: The creation of Flanders Investment Desks in various micronations is core to your plan to encourage trade with your micronation. What does Flanders have to offer prospective traders?
MM: The coalition agreement foresees the establishment of a Flanders Investment Desk (FID) in Alexandria, within our Embassy. It is a trial project which, if successful, can be expanded to other nations. The Federal Republic of Flanders has a lot to offer to prospective traders: founded in 1997, we are one of the oldest and most stable nations in Micras, with a strong judicial system and an enterprise-friendly climate – to my knowledge we have never taxed the capital of active private organisations.
CS: Your coalition has a secure majority in the Bondskamer to pursue its agenda; however, do you foresee difficulty in getting the necessary legislation through the Statenraad where you are disadvantaged in numbers?
MM: The only legislation that has to go through the Statenraad is constitutional reform and legislation pertaining to border issues. Our government is not planning to change the constitution as we have had a major constitutional overhaul only a year ago. As for border issues: our northern expansion concerns two regions: Laag-Vlaanderen and Ambetanterijk. One is governed by one of the coalition parties, the other by the opposition. We will organize negotiations between both regions regarding the division of the new territory. Any deal to come out of these negotiations, should easily find approval in the Statenraad.
It is true to that the National Royalist Union (the main and most vocal opposition party) has enough votes in the Statenraad to demand a second vote on any legislation passed by the lower house – including the budget. If that would be the case, we will work constructively with the opposition at large, including the representative of Bruswerpen, Cael van Gebar of the Conservative Federation.
CS: Mr. President, thank you for taking the time to answer some of the Coprieta Standard’s questions regarding your economic agenda. Are there any final thoughts you’d like to share?
MM: We are looking forward to working together with our partners and the international community to create an improved economic system. Anyone interested to participate as a lecturer at the MWEF shouldn’t hesitate to contact me. I would also like to thank the Coprieta Standard for the opportunity to present/clarify our fiscal and economic ideas to an international audience.