Proposed text for P2P Wiki Re:Commons Taxation, including 'tax under license' for #culturebanking. Contributions before publishing welcome.

Commons Taxation:

A ‘Proof Of Concept’ for the #culturebanking project incorporating considerations for 'Community VAT' (CVAT) and/or ‘Tax Under License’.

One principle for Commons Taxation is to adopt a position where firms or individuals take commonly held resources and ‘do work’ in order to add value, have use and possibly be rewarded. This example uses a common pool resource (CPR) of shared intellectual property assets from a page on Facebook called ‘Witty Captions’ which has been set up as a receptacle for commoners to share public domain images and use their collective wit and humour to annotate them out of this collective process. A common stock of greetings cards are being produced from this activity and are then ‘stamped as #culturebanked' to identify their collective ownership. In the proof of concept, selection and design of the cards is being done by myself, using one local print shop in order to, at first, carefully audit and control sales. In future though, the process can be opened to all. For this pilot project the crucial features we need to create and protect the are the collective or public nature of the goods themselves and the means of acknowledging this i.e. Commons Taxation. the wider project is also using this trial to design tools (with Kendraio) to develop p2p methods of digital rights management for shared assets and to collect and disburse contributory commons payments ('tax under license' to appropriate destinations - we're using the generic term; 'culturebanks' for these but they will be specifically defined as per below for this project)

An ‘escrow’ or holding account has been set up with Norwich Credit Union, which will collect no more than £10,000 at any one time in Commons Tax as the aim is to build a community wealth fund out of sales taxes. The terms of participation dictate that, in the absence of a community of contributors organising themselves to co-create and manage this shared wealth fund, it’s contents will go to Norwich City Council Cultural Services Department, as part of the Norwich Sharing City initiative (Link: https://norwichsharingcity.co.uk)

Under the scheme, a minimum of 10% Commons Tax must be added to all sales. As common stock is effectively free at the point of use we ask firms to acknowledge the value of the CPR by paying 10% on purchase (eg,wholesale / rights acquisitions etc) and 10% on resale or retail sales. In the case of firms or individuals doing work which contributes to the cultural commons, a maximum of 100% might be deductible which would effectively represent a 100% tax credit.

(Note: It has been acknowledged that this aspect of the project will need ongoing development but ion principle, in this way, non-profit organisations, providing they meet agreed criteria, can use the CPR as a fundraising tool and access existing markets without being taxed)

#culturebanking is working with Kendraio and other developers to build tools which integrate processes of common stock creation and open accounting and to provide fintech solutions for deductions and transfers of payments into their ‘culturebanks’ #culturebanking in this sense, is simply an identifier for a socio-economic process of collecting rent via Commons Tax levies via tax under license or through public equities or other means from commonly held resources

Since the function of a commons tax regime mimics, to a large extent, the VAT (sales tax regime) which already exists, a note for commons politics and policy may be to begin to consider the introduction of a community or Commons Value Added Tax (CVAT) as a ‘shadow’ to the existing system. This might, in time, replace large parts of VAT, which is ultimately a tax borne by consumer spending. Instead, CVAT is borne by those adding the value and extracting some profit, who, since they have had access to free resources should either pay something to maintain it or contribute to it’s co-production. In the Witty Captions greetings cards example, it is the collection curation and creativity of commoners who produced the resource who are being compensated. In this way, it may also be possible, in future, to re-imburse co-producers out of the common tax pool or shared wealth fund.

Critical differences between CVAT and VAT are that the burden is lifted on commoners for commoning: Commons taxes or CVAT is also a tax on or for the activities of commoners alike in order to encourage firms to contribute; why spend fortunes developing private stop if I open stockist freely available?

Some tax relief for contributions to the common stock might be considered (reflecting trends of prosumption etc). Payment for contributions to common stock images or designs is typically made under a licensing regime. (Hence the term ‘Tax Under License’). By using Contributory Commons reciprocal licenses (insert link) and with the technologies #culturebanking is developing with partners alongside existing tools such as opencollective.com, it will be possible, in future, to begin to pay contributors of new work and designs for their creativity out of the common tax pool or wealth fund.

Liam Murphy

August 2019
#culturebanking