[2018-04-17] The Gvt Dilemma: How To Tax Something One Pretends Does Not Exist

[DeadCoin]

https://news.bitcoin.com/the-government-dilemma-how-to-tax-something-one-pretends-does-not-exist/?utm_source=OneSignal%20Push&utm_medium=notification&utm_campaign=Push%20Notifications

Cryptocurrencies are often criticized for failing to replicate some of the basic functions of fiat money. Governments are always ready to warn you that you can’t spend, or save, or trade, or make digital coins. This state of mind, however, is slowly but surely changing, as more benefits become apparent. Paying, saving, investing – bitcoin can serve all these purposes, and sometimes that happens with approval from authorities. 

Also read: These Countries Won’t Tax Your Bitcoins Too Much

Failing to Be Fiat, Proving to be Money

Policy makers and central bankers often claim that cryptos are unable to perform basic functions of fiat money – means of payment, medium of exchange, store of value, and unit of account. Many times, however, they acknowledge one or more of these characteristics, especially when that serves their priorities. Filling the coffers is one such priority, if not the main one, for just about any government. Taxes are the major source of budget revenues for most countries with open market economies. Last year’s record highs have put cryptocurrencies in the spotlight of this year’s tax campaign.

Why Bitcoin Sounds Like Money to Your Government. But how do they tax something they pretend does not exist, or exists without permission?

Share your answers here?

[1714907930]

1714907930

[jjacob]

Most governments do not pretend that it does not exist - they do keep warning their citizens about the dangers of using virtual currencies. So they treat it like a vice, similar to gambling. While most governments discourage gambling, they are happy to enjoy the tax revenues that gambling generates. Similarly with Bitcoin - if it is taxable in some way, they will go ahead and do it.

[Kakmakr]

Bitcoin should be taxed, based on the way you use it. If you buy or pay for a service or goods and the merchant accept it as a payment option, then you should pay VAT. On the other hand, if you trade it as a commodity, you should pay Capital Gains on the profit you made. It should not be such a huge problem, if they define Bitcoin as a multi-use financial instrument.

The problem comes in when these governments wants to sabotage Bitcoin, by restricting it's use. They define it as a commodity, because they do not want it to compete with their reserve currency. <hidden agendas> 

[Gotottack]

Exactly. This is what I have observed since Bitcoin made its debut upon reaching its ultimate peak in 2017. Governments did not really bother having cryptocurrencies before said peak. It was only when news broke last year that a huge number of people have been earning through cryptocurrencies. Hence, of course, governments are interested with anything that is income-generating because it, in turn, give them good money through taxation. Any other factors incidental to it such as the rising criminality are merely indirect considerations for sure that are made to appear as if it they are its primal concern. You know, governments have to make it appear they have legitimate and compelling reasons before everyone else. Now, I am surmising they will think of other ways to ensure they are put in a good spot no matter what it takes.

[Betwrong]

Governments can't tax something they pretend does not exist and that's why they stop pretending. It's only a matter of time before corresponding legislative measures will be introduced and implemented  by the majority of governments around the world. And that is a good thing because only this way Bitcoin and other cryptos can become completely "legal" in the wide sense of the word. 

[maarx]

Governments can't tax something they pretend does not exist and that's why they stop pretending. It's only a matter of time before corresponding legislative measures will be introduced and implemented  by the majority of governments around the world. And that is a good thing because only this way Bitcoin and other cryptos can become completely "legal" in the wide sense of the word. 

When threads do question about taxing on earning crypto currencies. I would agree to pay tax if my government adapts bitcoin and bitcoin and other crypto currencies are in circulation around the country as a mode of payment. Unless and until there is a green signal from the authority who requires tax, how it can be paid? My government is yet to accept bitcoin and other crypto currencies. I don’t think it’s good or worth paying tax to our earnings on which the government is not aware of.

[Karartma1]

The Dilemma is more on our shoulder, if you ask me.
Why should I let any Gvt to tax something upon which they have no control?
Who's in charge of Bitcoin? Nobody!
Who maintains the network? Who cares!

This is the problem with anything that's too revolutionary to be understood with the old models. Bitcoin is a financial revolution! Hold on to it, if you can.

[CryptoBry]

This has been the problem with many governments we have. They are only interested with the taxes they can get out from Bitcoin or cryptocurrency for that matter so they are so willing to craft laws on this effect yet they are so reluctant to help and recognize the industry they are taxing. This is not fair and this can be the result of the great failure for them to fully grasp the concept of cryptocurrency and how it is revolutionizing the traditional financial system.

[BitcoinPanther]

First and foremost, i don't think bitcoin pretends to not exist. Yes, it may not be physically tangible, one can not touch nor one has ever seen how bitcoin really looks (or how it smells for that matter). But just like the air around us, it definitely exists though cannot be described in any physical appearance.

The reality of the digital currency is in check. The only question is how to embrace its value, purpose, strength and weakness, just like how the law of any land governs its jurisdiction.

[veleten]

pretty easily,just get certain laws in place,define cryptocurrency as money or asset,tax
nothing too complicated,the problem is how to monitor that the taxes have been paid in full
for that the institutions like IRS and similar would have to trace blockchain and exchanges
and we see this process is going on as we speak-Coinbase surrendered client's data,Japan forces exchanges like Binance to comply with their new  more stringent KYC rules etc.
no way in hell goverments would pass on this golden opportunity to squeeze extra from the populace
some are doing it already,those that cannot simply banning cryptocurrencies,which is a stupid move from my point of view

[danielschwerzer]

Government and authorities have easy and very powerful tool - claim something is good when it meets their interests. Crypto was created to move all standarts and replace fiat money, not to play its role

[HereisTommy]

It is all about how strong government want to have taxes from crypto assets. If strong enough - it will come up with  new bills or laws with the help of which it will be possible and easy