h2g2 The Hitchhiker's Guide to the Galaxy: Earth Edition

I think 'new alchemists' is a little bit too over the top.
Still, LETS are a very good idea. As I recall, there has to be something linking the group (usu. geographical area). Tax still has to be payed, but the Inland Revenue has problems banking strawberry jam.

So its just there for communal tax evasion? I can't really see that much difference in it between cash and credit.

I've seen something similar while I was on vacation. There's a pair of "twin cities" in Eastern Washington and Northwestern Idaho, called Clarkeston (WA) and Lewiston (ID), named after the famous explorers, Lewis and Clarke who where the first white men to discover the area. They have a currency (the name of which escapes me at the moment) that is accepted as cash at various participating stores and bussinesses in the area, and 10% goes to saving the wildlife of the beautiful Northwest. It's a great program and it's seeing good results. This was particularly neat for me, because the main reason I was in Idaho was to visit some components of the Wolf Recovery Program which has done so much to restore this endangered and misunderstood animal to it's former habitat. I think it's a great idea.

The cool points are
One, you can go overdrawn without anyone screaming -too- loudly at you (after all, the net amount of money in LETS is zero)
Two, it's optionally convertible for money, so odd jobs add up
Three, it lets you get to know people better.
But, tax evasion is quite a useful one too.

Unfortunately tax evasion it isn't.
If a business is a member of the scheme it would have to declare its LETS profit for tax purposes which it would have to meet with cash - but before you burst into tears if a LETS surplus can lead to a tax payment a LETS deficit can lead to a tax rebate.

So businesses that join the LETS should make sure they spend plenty on business items. Cafe's buying in live music to bring in more custome or art to decorate the place...

The way tax in the UK works is that if you do a friendly good turn it is not taxable but if you receive considerable payment in kind then it is.

Bottle of wine from brother-in-law for fixing car - no problem
Crate of Whisky for decorating the Pub - tax is payable.

It's all a matter of scale. Small 'oddjobs' aren't going to attract the taxman in the same way as say the pub.

And anyway, if the Whiskey is a -gift- ...

The Taxman cometh

While we're on the topic of booze it is illegal to sell home-brew on a LETS but it would be quite legal to sell sex. Isn't the law odd sometimes.

A similar law applies for the creation of industrial alcohol. Fermentation is a far cheaper way of producing alcohol, but all industrial alcohol has to be produced by another chemical method. This is to make the Inland Revenue's job much easier - all brewed alcohol is for drinking purposes, and therefore attracts tax at a higher rate.

They don't miss a thing do they?

I still don't quite understand about how they can tax it. I wasn't aware that there was a legal definition of a 'gift'.

I may have written this elsewhere but in the UK this is the situation:

If my friend decorates my bedroom and I give him a bottle of scotch that is seen as a gift and is not eligible for tax.

If the same friend decorates the local booze shop and they pay him with a crate of scotch then he should declare it for tax purposes.

Waiters and waitresses have to declare their tips for tax purposes too. Though proving exactly how much they get can be difficult.

Oh right, so if its done for a registerd company its seen as work?

That's partly it. If it is your normal line of work and the gift is not just a token but something with considerable value the tax office would see it as taxable.

The Internal Revenue Service in the US made commercial barter, without proper financial records, illegal many years ago. That's when the big commercial barter agencies started to be set up. They offer to exchange one company's surplus with another or they may split a large quantity of stock into smaller packages and obtain a range of goods and services for the bigger company.

So, for instance, if IBM had $1 million worth of computers that it wanted to get rid of, the barter agent would ask them what they wanted in return. They may request cars, hotel accommodation, stationery etc. The Agent would do their best to broker the package - for a cash fee from both sides.

So IBM gets some items it would have had to pay cash for and the other suppliers get brand new computers for their products and both sides pay between 5% and 15% to the broker.

Easy!