Sales Tax Rears It's Ugly Head

[Sudane Erato]

Well, the announcement has been made, as we've previously noted here.

https://community.secondlife.com/blogs/ ... purchases/

We're now going to have to decide how we'll deal with it. Your current Estate Owner lives in a state with 9% sales tax, and it's these factors which dictate that that is the tax which will be applied to our tier. Our current tier is US$1026/month. After March 31 it will become US$1117/month. On top of that, Linden Lab charges 3.5% simply to convert L$s into US$s. While they haven't said that they're going to actually tax that conversion, the fact remains that in order to GET the $1117 we need to pay the tier, we'll need to convert more L$s... and therefore pay more exchange rate $$s. Effectively, it's taxed too.

Sadly, while our community DOES have "money in the bank"... and effective reserves of about US$10,000:

https://docs.google.com/spreadsheets/d/ ... sp=sharing

we remain "break-even". At risk of irreparably harming our financial situation, we cannot simply do nothing and pay the increased amounts. So we must raise tier.

I propose that in response to this difficult situation, we raise tier across the board by 11%. Yes, a bit more that the sales tax being imposed, but when the impacts of increased conversion fees are factored in, and considering the precarious state our finances are in already, it may be the wisest thing to do.

Let's have a discussion here and in-world about the matter. It's my understanding that the Chancellor has the authority to direct that these changes be imposed, but I am sure that he'll want as much feedback and discussion as possible. Once that decision is made, we'll need to go through and change the tier on every tierbox... there is no way to do that in bulk. So let's have this unhappy discussion promptly and come to a decision that everyone in the community supports.

Sudane...................

[Sylvia Tamalyn]

I completely support the suggestion that we raise tier across the board by 11%, and I'll be happy to assist with individually updating the tier boxes.

If my math is correct, a parcel that currently costs L$4,388 per month will increase by approximately L$483/month. I believe that L$483 increase equates to less than $2.00 USD/month. Many of us have parcels with much lower monthly rates than L$4,388, so this increase will be really minimal but necessary to keep our finances in good order. We'll still be the best value in SL, and worth every penny, even at the proposed new rates.

Thanks for doing the analysis on this, Sudane!

[Lilith Ivory]

It will hurt me, especially as I am supporting the Monastery, but I fully support Sudanes suggestion too.

I am willing to help with the tierboxes too and agree with what Sylvia said

[Lilith Ivory]

One more question.
What happens with the parcels that are in good standing for several month?
The Monastery parcel has tier on it´s box for about a year and I know about at least one more citizen who has a lot of money on his tierboxes.

[Sylvia Tamalyn]

I don't know that this is what we will do, but if you change a rental rate on Casper, you are given the option to adjust the time remaining on the unit appropriately. My suggestion would be we take advantage of that and send individual notices to those who have paid far in advance, along with the Chancellor keeping an eye on this being a possible cause if someone goes into arrears.

I don't think doing something like charging "grandfathered" rates to those who paid ahead would be fair, and it would be a bear to keep track of, I would think. Just my two cents.

[Sudane Erato]

One more question.
What happens with the parcels that are in good standing for several month?
The Monastery parcel has tier on it´s box for about a year and I know about at least one more citizen who has a lot of money on his tierboxes.

Ha! This is a good question... and Sylvia's answer is correct. We have the choice when resetting the tier amounts to apply the changes to existing balances on the box... or not.

I'm not going to take a strong position on this. As with Monastery, we have a number of citizens who have paid WAY into the future. So applying the new rates to existing balances would shorten that time... by 11%.

Sylvia states the case for applying the new rate to those balances... basically fairness. But I'll offer a justification, if you'd like, for NOT applying the rate to those balances. If we don't, and we say to people now: "Rates will go up on (whatever day we decide). Pay now and get future months for lower than if you wait." we may get some people wishing to take advantage of that. That would bump up our bank balance... i.e. increase our reserves. True, we'd take a hit on future revenues for awhile, til those wear off. But cash is good, and those new rates will eventually apply to the box.

Sudane........................

[Sylvia Tamalyn]

I'd be fine either way, really, but I'm also curious as to how we'd keep track on parcels that did pay ahead, so that those tier boxes got updated at the appropriate time. Do we shut off payments on the tier boxes after the cut off date, until we can go in and update to the higher amount? Or maybe there's a better process that I'm not thinking of.

Random thought: We'd need to figure out how to handle the occasions when someone wants to move to a different parcel and have their unused prepaid lower rent transfer over. I'd assume that if someone did pay way in advance, then decided they wanted a different parcel, they would not get grandfathered rates on the new parcel. It could get pretty convoluted trying to do the math otherwise, and we do have folks who like to move around, so we should probably have a plan for that scenario.

[Lilith Ivory]

Not sure if that makes sense but what about changing the tierboxes of those parcels with a lot of tier paid in advantage at the same time as all others and adding the missing 11% days afterwards on the casper website?

also for me it is clear that if someone moves to another parcel the new parcel will not be grandfathered and we move the tier from the old parcel to the new excatly like we do now

[Sylvia Tamalyn]

Thinking on it again, I guess the very easiest way would be to just not check the little box that would have Casper adjust time to match the new monthly rate at the time we go through and update the tier amounts on the boxes.

I agree about what happens if someone moves. Some of the questions I'm throwing out here, even ones that seem a bit obvious to some of us, are just to get them in the open and have as few surprises as possible for everyone once the time comes to make the changes.

[Tor Karlsvalt]

Tier paid to LL is of course our required and largest expenditure. In addition to having to pay more tier, we will also have to pay more to convert Lindens into dollars in order pay our tier.

I propose that the RA raise the tier by 11 percent across the board for all parcels effective with 30 April 2022. The tier on each parcel being as shown on the attached Master Parcel List under Column G (Blue).

I also propose that parcels that have been pre-paid prior to April 30, 2022, be grandfathered though the end of their prepayment.

I refer to the Master Parcel List, Blue Column G on the Region Tabs, for the exact new tier rate for each parcel.

[Sudane Erato]

I can see that this grandfathering issue is going to become a source of infinite confusion. Let me try and explain what is meant here, and why "grandfathering" is NOT the right term to use.

When changing the tier rate on parcels in CasperLet, the system we use, a checkbox is offered when the change is made. It says this:

"Adjust time remaining on unit appropriately"

If I check the box when making the change, this causes the Casper system to recalculate the number of days left on the box which have already been paid for, so as to apply the new rate immediately. If I have 11 days left on my box before the change is made, and I check the box, the end result will be that I have 10 days left on the box.

If I DO NOT check the box, then after the change is made, I will still have 11 days left on my box. The next time I pay, of course, I will be buying days at the new rate. That is the case whether I check the box or not.

WE DO NOT HAVE THE OPTION HERE OF GRANDFATHERING RATES, unless we turn down the tier increase completely. We have ONLY the option I describe, of preserving the number of days already paid for at the old rate, OR reducing those prepaid days by applying the new rate to them.

PLEASE remove the word "grandfathering" from the discussion. That option is not on the table unless this proposal is completely rejected, and I for one will vigorously oppose it, as it would seriously further degrade our financial position.

Sudane......................

[Sylvia Tamalyn]

I think what Tor is saying is that we won't check the "adjust time" box when we update the tier rates on all parcels.

Having thought it over from several angles, I agree with this plan. When people have pre-paid for a specific number of days in advance, then that's what they should receive (if at all possible).

[Tor Karlsvalt]

I think the term, grandfathered, causes some confusion. I did qualify that that statement as to apply only to the extent of their prepayment. Nowhere did I suggest that rates be grandfathered in perpetuity, only through the extent of the prepayment.

Perhaps a better turn of phrase for that suggestion can be developed. Perhaps refer to it as a protected period of prepaid days.

I was thinking too that if we do not protect prepaid days, we might have a number of citizens who are current immediately fall into arrears once the new rate is applied. That would provide provide even more confusion.

With full disclosure, I have to say I would benefit from this protection of prepaid time. Consequently, I suggest that the Chancellor, me, not benefit from prepaid parcels.

[Sylvia Tamalyn]

I think the Chancellor's rentals should be treated the same as everyone else's.

[Lilith Ivory]

I want to thank Tor for writing this proposal and I do agree with Sylvia
Anyone can decide if one wants to put more money into the tierbox before April 30th or not, including the chancellor