Economy of Cattala

The economy of Cattala is the 59th largest national economy in the world measured by nominal GDP and is the fifth largest economy in Southern Europe, behind Italy, Spain, Portugal and Greece.

Cattala is a member of the Commonwealth of Nations, Organization for Economic Cooperation and Development, the World Trade Organisation, the International Monetary Fund and the AIN.

Before the colonisation of Cattala in 1815, the island was a farming nation with limited industry and island-wide infrastructure. Under the colonial rule of Britain, the country prospered as wealthy aristocrats built country homes and emigration to the islands grew massively. Investment in public services, transport and the growth of a non-existent manufacturing sector led to an economic boom in Cattala which ended in 1861 after the Italian invasion. The country lost its trade links with the British Empire and unemployment rose to nearly 50% within ten years. The next seventy years of Italian occupation included decades of drought, economic stagnation and nationwide poverty.

The revolution of 1918 ended the occupation and the economy began growing slowly, although the falling population impacted on GDP, and better harvests during the ensuing two decades helped a largely rural society improve their standard of living. World War Two ended this growth, and the country was pushed back into abject poverty and became a military-controlled island under Mussolini's control.

Allied Liberation in 1943 ended three years of occupation and began 12 years of rebuilding. After the formation of a government, basic public services and millions of dollars of aid from the Marshall Plan helped restore economic growth, the Cattalian economy underwent its first economic miracle, the 30-Year Revolution. Since then, the country has turned from a rural, agriculture-based society into a wealthy Western state with strong manufacturing and financial services in the largest city, Jennai, which has grown rapidly thanks to the tertiarisation of the economy.

The Government has become more involved in the economy since Il Popolo came to power in 1991, and its involvement is exercised by the Lord Treasurer, currently the third in command of the government. The Bank of Cattala is independent of government control but does co-ordinate economic policy with the government as the central bank and issuer of the national currency, the Lira. The governor of the Bank of Cattala is currently Paul Sarrano.

Agriculture
Agriculture is intensive, highly mechanised, and efficient, producing about 89% of the country's food needs, with less than 10% of the labour force. Despite this, farming only accounts for 5% of national GDP. Around two-thirds of the production is devoted to arable crops, most notably citrus fruits, grapes, olives and vegetables. One third of production produces livestock, including cattle, sheep, mules, horses and donkeys. The country is a large exporter of fruit and vegetables, and is the world's fifth-biggest exporter of wine, having invested heavily in exporting its quality wines across Europe and some cheaper varieties to growing markets such as China.

Farming is predominantly focused in the northern and eastern regions, with Lessito province producing 65% of Cattala's agricultural GDP contribution.

The Cattalian government supports sustainable farming and has ceased all subsidies for farms that are not deemed environmentally sustainable, but increased them for farms that are. Fishing was once a strong sector in Ionia and Roumeli, however the collapse of fishing stocks in the Mediterranean has meant that fishing is now declining rapidly and the government is committed to an international law to support the rebalancing of fishing stocks in the Mediterranean and will not subsidise failing ports. Many farmers and fishermen boost their income through tourism, especially in Lessito Province, where agriculture is a large employer and the added income from marine tours, property leasing and holiday accomodation helps support families financially.

Industry
The industrial sector of the economy is not as large as it was under British rule and in the early post-war years, but still employs over a million people. Heavy industry is mostly found in the ports of Jennai and Calora, with almost 90% of the country's industrial output coming from these two cities. The southern Mediterranean's largest port is located in Jennai and shipping is a major part of the country's economy, with the largest multi-national ship registry in the Basin. Away from trade and shipping, Cattala's largest manufacturer is AriaRegale, a defence and aerospace corporation that produces most of the military's supplies and is closely tied to Galbadian military suppliers as well. The automotive sector is an important part of Calora's economy, with Motobura and Velogara producing engines, luxury vehicles and sports cars that are exported around the world. One of the fastest-growing parts of the manufacturing sector is the renewable industries, which benefit from substantial government subsidies and large infrastructure projects, like nuclear power stations and wind farms.

Cattala has a considerable motor industry, with Motobura producing specialist engines for sports cars and working alongside major car companies in Cattala to produce fuel-efficient engines. Its subsidiaries also manufacture engines for factories, power stations and heavy industry. Velogara is a specialist sports car manufacturer based in Calora, which produces several thousand luxury vehicles each year and operates in sports car racing in Europe, using Motobura engines.

Energy and Resources
More detail: Energy in Cattala

Cattala has few onshore natural resources, and imports 94% of its gas, oil and coal demands. Offshore however, natural gas and oil have been found in reasonable quantities and provide an additional boost to the country's industrial sector through refining of raw hydrocarbons. Sulphur is another mineral that can be found and mined in Cattala. Over 50,000 Cattalians are employed in the extraction of raw materials for use in the energy market.

Because of its lack of natural resources, Cattala has to produce its own energy using other resources or pay for expensive imports from the Middle East and North Africa. Renewable energy, such as solar and wind power, has grown rapidly since the 1990s and Cattala is now a major producer of renewable products and renewable energy, both domestically and on the national grid. The wind power market is growing commercially thanks to large scale government subsidies through the national energy provider, Energie Verdi, which also operates commercial solar energy farms and helps subsidise domestic solar power. The growth in the renewable marketplace is thought to have created tens of thousands of jobs and boosted GDP by several percent each year. Until 2010, Cattala operated a nuclear power plant in Celeste, but it was closed down due to its age. Two new nuclear power stations are due to be built by 2028, thanks to foreign investment from Lower Columbia.

Services
The tertiary accounts for 64% of the country's GDP, or $80,054 million. One million people work in financial services, tourism and the public sector. Since the 1960s, the financial sector of the Kingdom has grown to become one of the largest parts of the economy, especially insurance and banking, most notably in the city of Jennai, which is a regional hub for financial services and is the fiscal and economic capital of the country. Jennai is home to the Cattala Stock Exchange and many technology-based jobs and professional services. Jennai Harbour, the central business district, includes the headquarters for NEG, AriaRegale and Cattala Airways Group.

Tourism is another vital part of the economy - Cattala has 9 million visitors a year and is one of the most-visited countries in the Mediterranean and is a major tourist destination in the AIN. Jennai is the most visited city in the country, with a large contingent of business and upper class tourists, whilst Celeste is the cultural capital of the nation and Lessito province is the third most-visited region thanks to its plentiful beaches and rural villas.

East/West Divide
Cattala's economy is defined be an east/west economic divide - in the west, heavy industry, services and international tourism are the main sectors, and over 80% of the country's GDP is produced west of the Bosco di Seina, in Monte Calida. In the east of Cattala, agriculture, light industry and tourism are the main sectors, and much of the country's food production takes place here. Lessito Province contains some of the region's most fertile soils and the Kingdom has reached near self-sufficiency in recent years thanks to the growth of agriculture in this region, despite it only producing 5% of national GDP. Industrialisation, colonisation and closer proximity to Italy and Africa are the three main reasons for the distortion in economic activity.

Taxation
Taxation in the Kingdom may involve payments to a minimum of two different levels of government: The central government (HG Treasury) and local government. Central government revenues come primarily from income tax, Individual Health contributions, value added tax, corporation tax and fuel duty. Local government revenues come primarily from grants from central government funds, business rates in Royal Cytheria proper, Constituency Tax and increasingly from fees and charges such as those from on-street parking.

Royal Tax is seperate to that of the government as it's a direct tax from the Queen which finances the Monarchy; such as palaces, state visits, security etc. Income tax forms the bulk of revenues collected by the government. The second largest source of government revenue is Individual Health contributions. The third largest source of government revenues is value added tax (VAT), and the fourth-largest is corporation tax. The second largest source of government revenues is Individual Health contributions (IHC), payable by employees, employers and the self-employed. There are separate arrangements for self-employed persons, married couples, and voluntary sector workers The Kingdom's source income is generally subject to the Kingdom's taxation no matter the citizenship nor the place of residence of the individual nor the place of registration of the company.

For individuals this means the Kingdom's income tax liability of one who is neither resident nor ordinarily resident in the Kingdom is limited to any tax deducted at source on Cytherian income, together with tax on income from a trade or profession carried on through a permanent establishment in the Kingdom and tax on rental income from Cytherian real estate. The tax year in the Kingdom, which applies to income tax and other personal taxes, runs from 1 June in one year to 31 May the next (for income tax purposes). Constituency tax is the system of local taxation used in the Kingdom to part fund the services provided by local government in each constituency. The basis for the tax is residential property, with discounts for single people, the elderly and those who are registered disabled. Disabled discounts is an option made available as the Kingdom recognises that some do not see their disability, such as ADHD, Deafness etc, as no hinderance.

Value Added Tax
Corporation tax is a tax levied in Cattala on the profits made by companies and on the profits of permanent establishments of non-Cattalian resident companies and associations that trade in the AINEROzone. Corporation tax forms the third-largest source of government revenue. and is currently charged at 20%.

One of the main ways the government raises revenue is through the tax on consumer expenditure, known as VAT. The current rate of VAT is 15%, lower than many other European countries as Cattala is not a member of the EU and is therefore exempt from regulations enforcing a minimum VAT rate. Most goods and services are taxed at this rate, whilst some are exempt from VAT entirely and others, such as home renovations, construction goods and farming products, are charged a lower rate of 5%. The good exempt from VAT include food, water, medications, medical supplies and equipment, children clothing, public transport and literature. These are intended to reduce the burden of tax on essential items.

Tax Rates
VAT: 15%

Corporate Tax Rate: 20%

Recent Growth
Q1 2013: 0.2% Q2 2013: 0.3% 2013 Forecast: 1.2%