AH is needed to make the economy more alive because people need to buy and sell in a more convenient faster way.

Frequent buying and selling will bring the economy to a reasonable format in the long run as soon as SE manages to get people interested in using the economy as a tool in the game.

Biggest problem isn't the lack of taxes but the fact that SE is handing free money through leves that kills the motivation to craft for gil. Also the gear stats aren't finalized yet so buying expensive gear is not that necessary to proceed in the game. (Darkhold in bikinis anyone?)