Economy of Kelssek
The economy of Kelssek is highly developed and best described as a form of market socialism, characterised a high degree of public ownership. The economy's performance is gauged primarily by measures of inequality (Gini coefficient), development (UN HDI), and happiness survey ratings, in addition to the more conventional GDP per capita. Poverty is almost non-existent, as is extreme wealth; income and wealth levels concentrate around the mean. This has largely been achieved through redistributive policies pursued even by avowedly capitalist governments, such as the Liberal Party, under political pressure from both public opinion and its more left-wing coalition partners. An extensive social welfare system keeps poverty levels low to non-existent and the government also operates a national health insurance program which essentially provides free healthcare to all citizens, with a nominal, subsidised charge for residents.
Kelssek's economy is reliant on its natural resources and primary industry, although in recent years there has been a large shift to tourism and service industries. Kirkenes is a major financial and business centre. Kelssek is noted for its strong environmental laws and its strict enforcement of workplace and product safety laws. Markets are permitted in most consumer goods industries, but all utility, energy, transport (excluding airlines) and primary industry companies are either nationalised or strictly regulated, many of the nation's largest companies are state-owned, and the government is generally expected by the populace carefully manage the economy. Worker ownership grew immensely during Kieran Pearson's government but stagnated in the late 20th century, and now Alan Kerk's government has once again begun to encourage such moves. Almost all unions are members of the Trades Union Congress and combined, organised labour controls about 25% of the economy.
Kelssek's main industries are manufacturing, tourism, agriculture and natural resources. With its educated, skilled workforce Kelssek has built a large skill-based manufacturing sector, with a very large civillian aerospace industry. Automobiles, microelectronics and consumer electronics are the other main manufacturing products, while aluminium, iron ore, and uranium are major primary products. Meats, grains, dairy products and citrus fruits are major agricultural products.
Taxation
Most of the government revenue comes from taxes on recreational drugs, which are fully legalised, corporate income, gambling, and capital gains. Income taxes are kept at around 30% for middle-income and low-income earners, while the high-income earners pay around 40%. The federal sales tax was abolished on April 1, 2006, however provinces impose their own sales and value-added taxes which range from 4% (Conroy) to 12% (Etnier) of the price of the good or service and may vary depending on the nature of the good; some provinces do not tax goods considered essential, such as basic foodstuffs.
Even before its entry into the IFTA, Kelssek's corporate taxation system had kept out many multinational corporations. Although there is no tax on incoming foreign direct investment, taking out funds can result in a tax on the outgoing money of 15% to 40%. All corporations are taxed based on their declared profit. Profit-making companies have 10% of their profit exempted from tax, and the rest is taxed progressively. The first $10 million of profit is taxed at 10%, the next $10 million at 20%, and so on. Over $100 million is taxed at a rate of 90% - this is referred to as the "profit limit".
Critics of the corporate taxation system say it removes much of the incentive for corporations, especially local ones, to perform well, hurting the economy in the long run, while supporters claim that by disincentivising profit, companies are encouraged to cut prices and increase wages, research, development, investments, and product quality, helping economic development and the community more, while the additional tax revenue allows the government to expand its programs and increase funding for critical areas such as education, infrastructure, and public safety. Since 2005, locally-owned businesses with annual turnover of less than $50 million have been exempt from the system, and generally receive tax incentives. Nevertheless, the lack of any significant international profile for Kelssekian businesses can be directly attributed to its punitive corporate taxation system.
Trade
Always a trading centre through its ports, Kelssek first opened formal international trade links after signing the IFTA in September 2004. Kelssek exports airframes, agricultural produce, motor vehicles, household appliances and electronics and several of its natural resources such as refined metal ores. Kelssek's primary trading partner is its western neighbour Coocoostan; a spurt of GDP growth was seen from increased trade as net exports skyrocketed following Coocoostan's entry into the IFTA.
Kelssek is also known for its liquor exports, especially Wenerderian wines and beer. Extensive microbrewery operations can be found in the Kirkenes metropolitan area (known as "Kelssek's financial and beer capital" for the profileration of both financial institutions and breweries), and the Kirkenes Microbreweries Union helps its members bargain collectively with retailers and exporters.
