Kalistani Major History

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Minister of Finance Signals Changes
Massive Tax and Spending Cuts Prerequisite to revaluation
Kaliburg, Ananto
January 18, 5159


Finance Minister Bruce Norris has taken most heat for last years tax and spending bills

The National Assembly passed a series of finance bills at the end of last year designed to get pernicious inflation under control. "The Republican Government eventually lost control of the monetary supply in Kalistan," said Imperial Finance Minister Bruce Norris at a meeting of high level economists in December. "As a result, our line item spending levels, which had not really changed in decades, was entirely out of tune with Kalistan's Zero Growth policies, and our revenues, also left under the status quo for an incredibly long period of time, were moving money into the Treasury at a faster rate than we were spending it. Though the Republican Government sure tried. Our National defense budget was three quarters of a trillion rubles, which is simply confounding. So, to keep zero growth during this period, the National Treasury was both a massive redistribution system, and it seemed to make money out of thin air. This is a problem, this is not how a national Government should operate."

Over the last ten years, the Empire has been working closely with economists and private sector stake holders to try to resolve the pell mell dumping of cash from the national Government into the economy. "This inflationary cycle felt permanent for about 20 years," said Norris. "At some of the worst points, we hit an annualized rate of inflation in the mid teens, and just before the Institutionalists came to Power, Kalistan was sitting at 19.2 percent per annum. The solution of the government was to cover the increases with direct supplemental payments, which seemed to make things worse. Slowly, we have been pulling back from that number so that we are now at an annual rate of about 7% but even this is too high, and so the measures that we have recently passed through the National Government aim to kill that last bit as well."

The new Taxation and Spending scheme passed in October of Last year aims to slam the breaks on price growth, cutting income taxes and spending on Kalistan's high inefficient public sector. This, according to the Finance Minister, is merely the prelude to more serious changes to the Kalistani economy. "Within the next two years, the Kalistani Ruble will be re-valued to reflect about a 40 percent increase in value," predicted the Finance Minister, aiming to produce a scarcity of Rubles in circulation, and cut spending by citizens dramatically.

At first the business community lauded the Government's new commitment to aggressive cuts. "It's about time the government did something," says Sulari grocer Tim Roberts, last September when the bill was proposed. "I was having to increase my prices daily. The labor involved in repricing alone was killing me. It was so bad that nobody could afford to buy from me anymore, and so I just stopped repricing and posted daily prices for the most popular commodities at the registers. I'm glad the government is finally starting to address this matter head on..."

But when it became clear that the spicket was to close not only for private money supply, but also for businesses who had grown up receiving generous payouts from the Government, resistance in the business community grew louder and more fierce. "How can I possibly protect my profits," screamed hedge fund manager Janice Wilson, of Kaliburg in December. "My firm employs 40 people. And through this crisis, we made a lot of money, but it was only possible because the National Government was essentially making my payroll. I can't possibly make the same amount of profit if I have to actually pay my workers out of my firm's income. I'll have to lay off my workers, and then it is my clients who will be the real losers. My clients. Have they no conscience? Why does this government hate those of us who, from our hard work and god-given ingenuity, have made our money from the sweat of our own brow? Why do they hate those of us who have turned this crisis into a personal success?" Sentiments like this echoed across the nation, and have in fact, at least partially led to the rise of a new Liberal party in Kalistan, ostensibly to promote the free market and economic growth, and shrink the size and scope of Government even further.

"The panic, especially among those in the financial services sector, is overblown," said Finance Minister Norris. "Working with, and taking the advice of the best economic minds in our Nation, liberal, socialist and everyone in between, we have instituted a 62% decrease in income tax revenue which will replace much of the direct supplemental payments we have had to make to keep people's head above water during this crisis, but we are also cutting spending by 61.9 percent across the board, and lowering our reserves to K28 Billion per annum, bringing our spending more in line with our revenue. Our new tax structure will be fair and progressive, and will decrease the burden on 98% of all Kalistanis, while not increasing the burden anywhere. And our new spending structure still keep relative levels the same but merely cuts the nominal figures in the Budget lines."

The new Progressive Tax Structure, passed last fall

But those who have made immense amounts of money during this crisis are the ones who are probably going to be hit the hardest. "It is a simple matter of fact. We have seen wealth inequality grow in Kalistan, as the finance and wholesale sectors have done particularly well, while workers have seen their own earnings stagnate and their real wages actually decline a little," reported Norris. "The way to help the working people of this country is to bring prices down. Even if that means those associated with moving money around the Kalsie won't be able to make such fabulous sums anymore, and will have to actually give some of that back. But this too will settle down, and Kalistan will return once more to zero growth, a far more equitable society, and the wealthy will have fond memories of unlimited profitability to revisit when they realize that they too are workers, and shouldn't profit off of other people's misery."

So far Minister Norris has been the most reviled in all of this, and business men and women are beginning to publicly call for his ouster, but Premier Bennots has assured the Assembly that Norris has the Emperor's full confidence and support in these draconian measures. Austerity is now the new buzzword, the brunt of which will be born by the upper classes. But, given the Emperor's considerable hesitation to name Dukes and Counts to Kalistan's jurisdictions, at least the nobility, such as it is, will be spared.