Wind Rises in North America 1625

Chapter 315 "Dare to Cut Your Own"

"Ladies and gentlemen, at present, our New Continent China implements a ******** system, in which the government exercises **strict** control over the national economy, resulting in a relatively simplified fiscal and tax system. This is the current situation. However, we must not mistakenly believe that we do not need to establish a scientific and reasonable fiscal system."

"Back then, oh no, it should be shortly after the establishment of the ***** in later generations, the majority of the central government's fiscal revenue came from the profits turned over by ** enterprises. Even so, the necessary tax system was gradually established, making it an important supplement to the national fiscal revenue."

"Sometimes, a highly efficient system can indeed allow us to concentrate our efforts on major tasks, fully mobilize all resources in the society, and accelerate our development."

"However, it must be acknowledged that it has its unavoidable flaws and shortcomings, namely, its inability to respond to the market in a timely manner, its lack of price signals, which may lead to a serious supply-demand imbalance at some point in the future, and consequently cause the economy to lose its vitality."

"Therefore, we cannot ignore the cultivation of the market economy. We should appropriately encourage and develop diversified private businesses to inject momentum into the all-round take-off of Xinhua's economy."

"Before that, we need to establish a standardized tax and fee management system, which will not only set a clear and unambiguous rule for the development of various economic entities in the future, but also lay the foundation for achieving fiscal sufficiency in advance."

After criticizing Xinhua's current chaotic fiscal and tax issues and economic development problems, Finance Committee member Deng Zhichen then changed the subject and made suggestions on how to clarify the tax system and how to establish a standardized fiscal system.

"Given the current state of economic development in Xinhua, the design principles of the fiscal and taxation system will be based on the following points: First, we must reduce taxes and simplify administration to avoid giving people the feeling of being subjected to the exorbitant taxes of the Ming Dynasty. We must reassure the people and appease their hearts, while also stimulating production and trade with low tax rates."

"Secondly, practicality should be prioritized, and the tax system should be simple and easy to implement, adapting to China's current economic situation and the public's ability to understand it."

"Third, we will incentivize development by leveraging tax incentives to stimulate and support the rise of key industries, such as mining, shipbuilding, metallurgy, and agriculture."

"Fourth, gradual reform. For example, agricultural tax should not be required to be paid in cash in the early stage. It can be mainly taxed in kind. As the market economy gradually develops to a relatively mature state, it can be transitioned to a monetary tax. The pace should not be too fast, but steady and cautious."

“Yes, these principles are very good.” Committee Director Luo Zhenhui nodded slightly, his eyes full of approval, and then raised the key question, “So, what specific taxes will your Ministry of Finance collect?”

"Directors, members." Deng Zhichen nodded to everyone present, a hint of excitement on his face. He spread out a stack of documents on the table, glanced at them briefly, then cleared his throat and said loudly, "Based on the current development of Xinhua, the Ministry of Finance will levy the following taxes nationwide and has set corresponding tax rates."

"First and foremost, the agricultural tax is of paramount importance, as it concerns the survival of our more than 40,000 citizens. Previously, we made many basic mistakes when collecting agricultural taxes, such as demanding payment in monetary form under the pretext of manpower shortages, which caused difficulties for farmers in transportation and sales; and simplistically and crudely levying a fixed amount based on land area, which added an extra tax burden to farmers when grain production was reduced."

"Therefore, when we collect agricultural taxes in the future, we will allow farmers to pay directly in kind. The tax rate will remain at 15%, calculated based on the average yield of the land over three years. In the event of a disaster year or reduced production, the tax amount will be adjusted accordingly based on the actual yield to ensure that farmers do not face livelihood problems due to excessive tax burden."

"Secondly, there is the industrial and commercial tax, which is levied on economic entities such as Xinhua State-owned Companies, private workshops, and vendors. According to the previous tax collection practice, after collecting 10% business tax, all state-owned companies and monopoly trading companies also need to pay 20%-40% of their operating profits for fiscal redistribution."

"This 'one-size-fits-all' approach completely fails to take into account the actual situation of specific industries and companies, and lacks corresponding rationality. For example, if sufficient development funds are not provided for industries such as iron smelting and shipbuilding, which Xinhua strongly encourages to develop, it will be detrimental to their further expansion of production scale, and may even, to some extent, restrict the growth of such pillar industries of the nation."

"Therefore, some taxes can be reduced or exempted for these key state-owned enterprises, and they can pay less operating profit, which will help them to expand their scale at full capacity."

"For private workshops or individual vendors, ... well, of course, the number of such business entities is still very small at present, but we should also plan ahead and set tax rates for such private capital in advance."

"Our Ministry of Finance's consideration is that, in order to 'let the water flow to nourish the fish,' the tax burden on private workshops or individual vendors should not be too high. Depending on the industry and sector, a tax of 5%-10% should be levied based on turnover. Some vendors with very small business scales and annual turnover of less than 500 yuan will be exempt from business tax, allowing them to first establish a firm foothold in the market."

"...an additional licensing fee will be levied on certain franchised goods, such as salt, wine, and tea."

"...Regarding tariffs, a 5%-10% tax will be levied on the export of primary products such as furs and timber; a 20%-30% import tax will be levied on luxury goods such as silk and porcelain; and a low tax of 3%-5% will be levied on some commodities urgently needed by Xinhua, such as grain, copper ore, guano, and saltpeter, or they may be exempted from import duties." "...Transit tax, namely a 10% goods tax levied on goods transshipped to countries and regions such as the Ming Dynasty, Japan, and Southeast Asia."

"...The poll tax, uh, everyone, don't misunderstand, this tax is not the pure poll tax or village tax of the Ming Dynasty. To be precise, it should be called the labor service tax. It is levied on adult males within the territory of Xinhua, with each person paying a small fixed amount of currency or equivalent labor each year to meet the needs of various domestic infrastructure constructions."

"..."

After listing in detail the seven or eight taxes that the Ministry of Finance had determined and would collect, Deng Zhichen paused, glanced around at the assembled ministers, and his expression became serious.

"After much deliberation, our Ministry of Finance has decided to introduce two taxes for future generations—income tax and property tax. These two taxes may face a lot of controversy. This is because Xinhua has only been developing for ten years, and everything is just beginning. The people of Xinhua have not yet accumulated a solid financial foundation."

"Therefore, if income tax and property tax are to be levied, the first to be affected will be ourselves and the base of support attached to us!"

Upon hearing this, everyone couldn't help but reveal a wry smile.

Whether it's income tax or property tax, it's clearly aimed at high-income earners and high-net-worth individuals.

In Xinhua, which people have relatively high incomes, and which families possess large amounts of high-net-worth assets?
Aside from the transmigrators, the group consisted of senior crew members, skilled craftsmen, mid-to-senior level managers from industrial and mining enterprises and trading companies, as well as some senior officers from the army and navy.

In terms of class, these people are undoubtedly the core ruling class of Xinhua, and the core group of transmigrators.

Now, the Ministry of Finance, in order to clarify the tax system, expand the tax base, and increase government revenue, has directly turned its "scythe" against "its own people."

What the hell is this?!

"Isn't it a bit too hasty to start collecting income tax and business tax now?" someone whispered.

“Ahem…” Zhang Ruosong, a member of the Ministry of Science and Technology, coughed lightly and frowned as he said, “I understand the Ministry of Finance’s considerations in introducing new taxes, but the industrial sector is currently going through a difficult period, and various industrial and mining enterprises are still gradually expanding their production capacity. If income tax is levied, the companies will have less profit left, which may affect the pace of industrial upgrading.”

"Income tax will not be levied on companies for the time being, only on high-income individuals," Deng Zhichen said with a smile. "After all, business tax has already levied one tax on companies, so there's no reason to levy another one."

"With Xinhua's current population, how much money could we possibly make from levying personal income tax?" someone muttered.

“How much tax we can collect is not actually important.” After a moment of contemplation, Deng Zhichen said solemnly, “The key is that we need to take a symbolic step, which is to make ‘officials and gentry pay taxes together.’ Whether they are ordinary people or high-ranking officials, everyone has the obligation to pay taxes, without exception!”

"One more thing, before we lose our ambition, before we still have some courage, and before the whole society forms a fixed vested interest group, we should establish some rules as early as possible."

"Otherwise, he'll end up like Emperor Chongzhen of the Ming Dynasty, unable to collect taxes and ultimately forced to hang himself from a tree in the southeast!"

"And we should take this as a warning."

"Sometimes, it's more dignified to take the initiative and make changes yourself than to be forced to change by someone at knifepoint at some point in the future, isn't it?"
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(End of this chapter)