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The Rent Tax, legally titled "the lands and deeds rent levy", is the primary form of state income in the Balancín Kingdoms. While legally equivalent to a lease rent in other countries, it is considered a tax in the Balancín Kingdoms due to the fact that it is solely responsible for funding government services and the Crown. The Rent Tax was an informal practice between Balancín nobility until the Partial Parliament of 3024 certified it into law, outlining different rates and exceptions.
The Rent Act of 3024, which received royal assent from King Maximilian II, forfeited all non-Crown Corporation Rent Tax income to the Balancín Treasury and government. In exchange, Parliament agreed to extend the Sovereign Grant for Crown operations. The Rent Act of 3024 also determined that the Rent Tax shall be exclusively an ad valorem tax, meaning it is typically based on the value of a the land being leased.
The Partial Parliament of 3024 refused to make an exception for the Prince and Princess of the Newton. Thus, the entirety of the Principality of the Newton, which constitutes their domain, falls under Class II and they must therefore pay their rent bill on that.
Rates
The Rent Tax is a regressive tax, in which the highest rates are paid by the lowest earners in society. However, this is not specified into law and is simply a result of the use of different classes of land ownership to determine the different rates. Non-landowners in the Balancín Kingdoms are typically taxed through separate, namely the Exchange Rate and the Guild Fee. There is no value-added tax in the Balancín Kingdoms.
There is no central tax collection process in the Balancín Kingdoms because each class' rent is collected by the class' immediate superior in the structure. For example, the rent paid by a member of Class IV would be collected by the member of Class III who holds their lease. It is common, though not mandatory, that Class IV leases are granted by members of Class II (i.e., Dukes granting leases to ordinary citizens). An individual can only advance through the classes through noble promotion.
| Class | Property rate | Eligibility |
|---|---|---|
| Class I
The Crown |
0% (the Crown does voluntarily forfeit their revenues for outside of the Crown Estates and Corporation) | Holding the title of King of the Balancín Kingdoms |
| Class II
Princes, Dukes, and Incorporated Guilds |
2.3% (paid directly to Class I) | Holding the title of Duke, Duchess, Prince, Princess, or having been established by Royal Decree as an incorporated Guild |
| Class III
Earls, Barons, Landed Knights, and Patented Guilds |
3.4% (paid directly to their Class II landlords) | Holding the title of Earl, Count, Countess, Baron, Baroness, a Knighthood, or having been established by Royal Decree as a patented Guild. |
| Class IV
Ordinary citizen |
4.5% (paid directly to their Class III or IV landlords) | Holding a land lease without title or Royal Decree. |
Monthly instalments
Landlords are not legally allowed to increase a rent bill if a tenant wishes to pay in monthly instalments. However, the rent bill for the entire year will be taken as percentage of the property value at the start of the renting year. I.e., drops in value won't impact a rent bill until the next renting year.
Hypothetical Example 1
You are a Duke (Class II), leasing lands worth 1,200,000 CM from Class I (the Crown). Your yearly Rent Tax is calculated as 2.3% of the total value of your lands which equals (1,200,000 CM * 0.023 =) 27,600 CM. As a Duke, you may receive exceptions for providing certain services, including for facilitating a trade route (a 1,000 CM reduction).
While the Duke, holding lands worth 1,200,000 CM, owes a rent bill of 27,600 CM, he may also grant leases on that land to members of Class II or IV. So, he will receive a rental income on those lands.
You lease out 75% of your lands and keep 25% for your own personal estate. If you lease all 75% to Class III, you would earn a rental income of 30,600 CM. If you lease all 75% to Class IV directly, you would earn a rental income of 40,500 CM. Meaning, once you have paid your rental bill to Class I, you keep a profit of anywhere between 3,000 CM and 12,900 CM.
Hypothetical Example 2
You are a single mother with no titles (Class IV) and lease a farmstead worth 250,000 CM. Your yearly Rent Tax is calculated as 4.5% of the total value of your lands which equals (250,000 CM * 0.045 =) 11,250 CM. As a member of Class IV, you are unable to lease to anybody else to provide an income.
However, with farmlands worth 250,000, you are likely to be making an income of well over 50,000 CM in selling your produce. In addition, as a single mother, you will receive a tax exemption of up to 2,000 CM.
Hypothetical Example 3
You are a corporation with the status of being a Patented Guild (Class III). You lease your lands directly from the Crown (Class I). The lands you lease are worth 5,600,000 CM. Your yearly Rent Tax is calculated as 3.4% of the total value of your lands which equals (5,600,000 CM * 0.034 =) 190,400 CM. As a Patented Guild, you are unlikely to be leasing your lands to anybody. However, you may lease your lands to employees, which earns both rental income as well as a tax exemption of up to 250 CM per employee.
Land value calculations
His Majesty's Revenues and Customs (HMRC) department is a branch of the government's Treasury. Its primary job is to create a census of land value in the Balancín Kingdoms. It does this every year in time for rental collections which typically taxes place at the start of the tax year. Land value calculations will not take into account non-fixed pieces of property on the land (e.g., vehicles).
Penalties can be levied by HMRC for attempts at undervaluing properties for tax purposes. Penalties can be fixed amounts or can sometimes result in a temporary increase in your rate. Penalties are fixed to individual citizens and not pieces of land.
Guild Fee
The Guild Fee is a tax levied against corporations that have guild status (either as an incorporated or patented guild). The fee is fixed and is branded as an administration fee. It is paid directly to the Crown and grants them further right to operate within the Balancín Kingdoms. The Guild Fee is the closest thing the Balancín Kingdoms has to a corporation tax and is set at 2.0% of annual profits. It is flat and is paid by all businesses. It is included in the rent bill owed by a Guild.
Guilds can be exempt from the Guild Fee if they have co-signed on the establishment of a new Guild within the last financial year. This means that they have facilitated and supported the creation of new business within the Kingdoms.
The Guild Fee can also be increased as a penalty for Guilds who fail to comply with certain regulations and laws. The most notable case of this is those Guilds which continue to operate during national holidays without exemption. The Guild Fee can be increased to as much as 10% of annual profits.