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Mars: The taxation attraction

Using the fictional Mars Colony as an example, Alberto Asquer examines the advantages of different sources of public revenues in this short article.
Rocky surface of Mars as seem from Mars Rover craft
© SOAS

“I do not need to remind you that part of your budget is funded by the Earth Space Governance Body,” replied Sophie.

“It is not unreasonable that they expect that you follow their directives, and that all of your investment decisions should be subject to their approval.” Sophie sipped the last of her cup of tea, as the Director prepared his answer.

“The share of local revenues is increasing, though,” he replied. “Transfers of financial resources from Earth are still important for funding operating and capital expenditures, but we expect to become less and less of a burden on the budget of our motherland in the future.”

“I think that you should carefully consider your next move, however,” said Sophie. “Your decision to lower corporate income tax was not welcome on Earth, especially together with the generous tax credits that you provide to high-tech companies to relocate. During the last quarter alone, all the main economies on Earth have been hit, in crucial industries like artificial intelligence, genomics and nanotech.”

“Well, they will always find a business-friendly environment here; I’m sure lower taxes aren’t the only reason that many have opted to make such a huge journey.”

So what now? What are the pros and cons of these different revenue sources? What can Mars Colony do to bring these sources into line and reassure the governing body that these policies are for the public good?

© SOAS
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Understanding Public Financial Management: How Is Your Money Spent?

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