Charge Liquidity Tax - Manual run Option

Functionality discussions and feature requests

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mohsin
Posts: 27
Joined: Mon Jun 27, 2005 11:06 pm
Location: Melbourne - Australia
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Charge Liquidity Tax - Manual run Option

Post by mohsin »

Hello,

Version 20050608 Cyclos

The liquidity tax did not run in my PC version as Cyclos was not running, after end month and a few days later I checked and it does not appear in the list where Manage Liquidity Tax exists. Is there an option to run it manually like Charge Unit Contribution ?

Regards
Mohsin Jaffer
Services4u Pty Ltd
Melbourne - Australia

hugovanderzee
Posts: 98
Joined: Wed Apr 06, 2005 9:56 am

Post by hugovanderzee »

Hi Mohsin

If a liquidity tax was scheduled it should have run. Liquidity taxes always should showup in the manage liq tax list. If it did not run for any reason it (server problems) there should be an edit box that gives you the possiblity to recharge. I will retest on the new version (07/07/2005) and let you know soon.
Hugo van der Zee
Cyclos development team

mohsin
Posts: 27
Joined: Mon Jun 27, 2005 11:06 pm
Location: Melbourne - Australia
Contact:

Post by mohsin »

Hi Hugo,

Many thanks for this, your test results are much appreciated.

Have a good weekend
Kind regards
Mohsin Jaffer
Services4u Pty Ltd
Melbourne - Australia

mohsin
Posts: 27
Joined: Mon Jun 27, 2005 11:06 pm
Location: Melbourne - Australia
Contact:

Post by mohsin »

Hi Hugo,

I wanted to set the system to deduct liquidity tax above 200 Units, I checked the manual (as quoted below) and it should work but not having tried Liquidity Tax - I just wanted to double check.

So now after setting the limit if 200.00 units, if we also have a credit limit of 200.00 Units and we set liquidity tax 2% to run on balances above 200.00 Units would this still deduct liquidity on the negative balance? or should we put 400.00 in order to deduct liquidity above the positive limit of 200 ?

From Manual : The Liquidity Tax works like (converted) interest which means that it is charged on positive accounts. Like interest it is set in percentage; it is calculated at every account balance change but it is charged only monthly.

Kind regards
Mohsin Jaffer
Services4u Pty Ltd
Melbourne - Australia

hugovanderzee
Posts: 98
Joined: Wed Apr 06, 2005 9:56 am

Post by hugovanderzee »

Hi Mohsin,

Even if the liquidity tax (or demurrage) works very much like (converted) interest it is confusing to many persons.
Methodologically seen Liquidity tax is far different than ‘converted interest’. The effect on a community system is not simply the opposite. With Interest, negative amounts (like debts) grow exponentially. With liquidity tax payments (on positive accounts) you will pay every month a bit less tax. This is far less radical then monthly contribution for example. If a member would be away for a time his account would be considerable lower if contribution is set in the system. The liquidity tax will stabilize at a certain positive amount (asymptote curve).
The liquidity tax is only charged on positive accounts so persons that have no money (units) won't be charged. If a free-base is set. For example 200, persons under 200 Units will never be charged.
With liquidity tax the money on your account will slowly diminishes over time, just like the goods it represents.
There have been various experiments and community currencies that worked with liquidity tax. One of the most famous was in the Austrian village of Worgl. The following site has good texts about liquidity tax (demurrage). http://www.reinventingmoney.com/worglCurrDemurr.php

Let me explain how Cyclos calculates liquidity tax. Every month on the 1th it takes the whole transaction volume of the last month and collects the liquidity tax. If a Member has 1000 Units during on month and the liquidity tax is set to 1% he will be charged 10 units. If the free base would be set to 200 he would be charged 8 Units.
A good way to get an overview of the liquidity tax calculation is to draw a diagram with at the left a vertical line divided in Units and horizontally line with the days of the month. You can draw a line following the account history (transaction points). The area between this line and the zero line (or free base if set) will be the transaction volume where the liquidity tax is charged on.

There are quite a few advantages.
Firstly the organization will know the exact amount of units that will become available from the liquidity tax payments. With contribution and transaction taxes this is not so clear.
Further persons that have a debt don’t see their debt grow exponentially.
For persons with many Units on their account it is not interesting to leave the Units there unused because they won’t gain interest. In the contrary it will cost you units if you leave them unused. This is the incentive to spend it. Of course there might be good reasons for persons to have a savings account. In the next version of Cyclos a Member can have various accounts and it will be possible to create member accounts that are not charged liquidity tax. We are actually working on this now. A savings account will hold units that you cannot touch for some time. Those Units will become partly available for the community for giving loans. If the Member does wants to open his savings account in an earlier stage he will have to pay a fee. All very much like saving accounts with current banks.

I hope it is more or less clear.
Hugo van der Zee
Cyclos development team

mohsin
Posts: 27
Joined: Mon Jun 27, 2005 11:06 pm
Location: Melbourne - Australia
Contact:

Post by mohsin »

Hi Hugo,

Excellent - thanks for this.

So from what you said - I should be able to move ahead more now as it seems quite clear for the moment thanks.

Sorry for keeping on asking on this, I think I am getting there now. I will check up on the link as well to get more familiar and this way I will set it up correctly and fairly in the system. Your promt assistance despite your busy schedule is much appreciated at this time of my pre-live setting up and testing - take care and be well.

Cheers
Mohsin Jaffer
Services4u Pty Ltd
Melbourne - Australia

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