Microeconomics: Could Taxation, Terminal Solve Illegal Immigration?

Guest Post by David Stephen who looks at possible solutions for Illegal Immigration

There was a recent story about at least 59 migrants from sub-Saharan Africa, losing their lives in the Mediterranean while fleeing to Europe. The story highlights an outcome by some people from developing countries, seeking refuge or better lives elsewhere. Aside from Africa to Europe, there are several others who take the treacherous journey from Central America to the United States.

Some are getting away from oppression, others from difficulties, while some are particularly migrating for economic reasons. For these migrants, some complain about the lack of jobs, hardship and uncertainties back home that necessitated the trip.

Microeconomics: Could Taxation, Terminal Solve Illegal Immigration?

Many of these countries have large informal economies, with lots of small businesses and several unstructured commerce. It is an opportunity for nations to reach most of their nationals.

Taxation

For most developing countries, taxation is monetary. There are cases of non-monetary seizures for defaulters, but the tax structure is monetary. In the countries, with their abundant informal economies, income tax and several other brackets constitute lost revenues.

Some government officials complain, but there is little that can be done, as the ways to track incomes are difficult, even if reported. Some people also refuse to pay, believing that the government does nothing for them, or that if paid the money would not be put to good use. Though they often easily pay their market or space levies, for kiosks, stands or shops at their locations, tax payments are diminutive.

Rather than seek out new ways to collect monetary taxes, governments in developing countries can collect taxes as products and services from people in the informal sector. Most of the countries have national ID, some have tax identification numbers and so forth. The purpose is to provide a taxpayer identification number for everyone of working age in the country, so that any small business any citizen does, there is a way to pay taxes from product or services from that business.

The purpose of this is to create a reserve system for the region or country, first as an alternative way to pay, and next to have reserves of some things in that locality. Then, those who pay with products and services can get access to the marketplace of these, to get other products and services, without the need for money.

So, taxes are paid in products or services to grow the tax revenue. It creates a reserve system for the government, which can be outsourced to private firms for efficiency. This reserve system becomes a marketplace, first for the government to have more assets and next, where people can also get things with what they have without the need for money.

This reserve system can be useful for some of these countries too, in the event of an epidemic, a pandemic, a disaster, conflict and so forth. It can also provide new means of employment, generally and where some can offer their services to the marketplace, in a contract for others, but for services or products in short supply.

There will be a digital means to have this, regulating it within microeconomics to avoid it failing the demand and supply curve.

Economic Stimulus Terminal

Another channel for developing countries is an economic stimulus terminal. Usually, central banks in many developing countries have intervals where they stimulate their economies. Sometimes, per quarter, sometimes because of situations like COVID-19. Most central bank stimulus is monetary. There are countries where their currency values have plummeted against the dollar, others where their bonds are junk and their credit rating in international markets is down.

Several past stimulus have somehow gone without anything to show for it. One way to prevent this in future is to have an alternative stimulus model for central banks.

It will come through a terminal that lets central banks buy directly from businesses, mostly small and medium, with say 30% of each stimulus or relief package. This would be [a form of] consumer spending – and a boost that doesn’t just come as credit, but to create demand. It’d also make the central bank, finance, treasury or other departments have reserves or collection of certain resources.

The terminal will determine what sector, what quarter, what products, what state or province, what amount, what storage, what durability, what duration, what potential and what index would have a by-direct purchase of X or Y products.

This will be important to the country or region as a reserve of stuff, which could be exported, traded for exchange with other markets, sold back internally in the event of scarcity, hedged against inflation, used as buy made-in-the country policy or just reserve as a means for self-sufficiency.

This plays into any kind of system – protectionism, multilateral agreement, globalization, blocs or whatever, such that in a crisis, local or otherwise, it gives more power outside just currency, and can be something else to inject aside liquidity.

It will be a parallel to the taxation reserve collection and can be useful in ensuring that necessities for citizens are met, against some of the hard desperation that drives many to risk peril in a bid to flee.

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