Chapter 1779 - The Invitation
"Actually, you guys rushed the real estate and business registration a bit," Chen Ce said with a touch of regret. "Ideally, the opportunity of issuing deeds and exchanging contracts could have collected a huge sum in stamp duty. It would have been better to wait until the new currency was rolled out."
Stamp duty had the characteristics of light burden, abundant source, and easy collection. Invented by the Dutch in 1624, it was quickly imitated by governments everywhere. The Senatorial Council naturally was no exception.
Stamp duty had already been implemented in Hainan, but there it used Grain Circulation Coupons as the monetary unit. Since Guangdong was about to roll out Silver Reserve Notes, the tax hadn't been immediately transplanted to Guangzhou.
"We thought about that. That's why the licenses and land deeds we issued have an annual review system," Zheng Shangjie said. "Business licenses once a year, land deeds once every three years—"
Chen Ce said, "You've thought of everything."
"We sort of have to; it's revenue, after all," Liu Xiang said. "Stamp duty is a good tax. Guangzhou has a lot of commercial trade; drawing up contracts and deeds is a daily occurrence. With stamp duty, grains of sand build a tower—it's a constant stream of revenue."
"But merchants and commoners in this timeline, though they use middlemen, guarantors, and witnesses when drawing up contracts, rarely register them with the yamen. Yet when they go to court, these documents are treated as evidence. I fear pushing stamp duty will meet resistance—after all, registering with the yamen wasn't a mandatory requirement before," Zheng Shangjie said.
"That's easy." Chen Ce was confident. "Contracts without tax stamps cannot be used as evidence in court. Fight a few lawsuits, and the people will understand naturally."
They discussed several other collectable taxes. Customs reorganization was a matter for Customs; waiting for them to issue specific policies, Liu Xiang decided to collect indirect taxes from circulation channels first.
The plan was to set up a wholesale market in the south of the city and another in the east, handling bulk goods. Through market acquisition and release, they would regulate supply and prices. Liu Xiang did not intend to implement a state monopoly on purchase and marketing of daily necessities like grain and cotton cloth—that was beyond the capacity of the Municipal Government and the Senatorial Council.
Although there was no state monopoly, trade in three major commodities—grain, cotton cloth, and fuel (whether entering or leaving)—had to be conducted within the wholesale markets to ensure tax payment by both parties. Taxes collected would primarily be the simpler stamp duty and business tax. Only after merchants paid taxes and obtained tax stamps were they allowed to transport and sell.
"Will forcing bulk commodities to trade and pay tax in wholesale markets deter merchants?" Liu Xiang worried.
"When they transported goods to Guangzhou before, they were exploited by brokers just the same. Were the broker commissions, warehouse fees, and exploitation not money?" Chen Ce laughed. "Why did dynasties establish systems like brokers, which seem to yield little revenue and clearly violate market laws? In reality, traditional Chinese governments lacked the power to manage complex commercial behavior effectively and couldn't extract benefit from it, so they ceded benefits to individuals in exchange for a small income. You can view brokers as a kind of government tax farmer. The Ming and Qing salt monopoly is a similar example: extract revenue the simplest way, simplify management. As for the result, we all know: the state's huge revenue sources actually ran deficits year after year under disguised tax farming."
"This is like letting beggars beat the watch and handle public order..."
"Exactly," Chen Ce said. "Traditional governments can't handle many essential public services. What to do? Cede partial public power in exchange for service. As for the quality of service or the actual social maintenance cost, the government doesn't care—the commoners bear the cost anyway. That's why on the concept of socializing public services, we are ahead of the world." He warmed to his subject. "We always say Ming commercial taxes are low. Are they really? You don't need an investigation; just reading history shows merchants' burdens aren't light. Where did the money go? Mostly consumed by 'hidden rules.' Our tax system is just formalizing these hidden rules, making tax collection legal, and reducing gray areas."
"Zhang Juzheng had the same idea with his 'Single Whip Law,'" Zheng Shangjie said suddenly. "I worry..."
Chen Ce smiled. "Zhang Juzheng's Single Whip Law failed not because his tax law was flawed, but because the Ming government system was backward. Modern tax systems, barring certain bizarre countries, basically haven't caused major problems."
"...Also, we need to set up one or two large foodstuff wholesale markets outside the city, letting peddlers, restaurants, and farmers trade directly." Zheng Shangjie gestured on the map. "One, we can collect taxes on the spot; two, we can effectively regulate food prices—the bullying and monopoly in the wholesale sector right now is too severe."
The Guandi Temple gang violently monopolized the wholesale channels for vegetables, poultry, eggs, and aquatic products at various city gates, forcing farmers and peddlers to trade through them. Such monopoly not only lost tax revenue but also increased the citizens' burden. Breaking it would directly benefit winning hearts and expanding revenue.
The Municipal Government wouldn't intervene directly in market trade, existing only as market management to collect taxes and service fees like stall rents.
But the Council needed agents in the market to influence operations. Manipulating the market by buying and selling required a commercial entity. The government decided Dachang Rice Shop would handle grain trade, Wanyou would handle foodstuffs, and the Cooperative would handle bulk daily necessities, while also acting as agents for salt and tobacco monopolies.
"With wholesale markets, we basically control the circulation channels for bulk commodities," Zheng Shangjie said. "Next is to see the results."
Zhang Yu's father had been beaming lately. Since the Australians entered the city, relying on his sign as a supplier for Da Shijie, his business had boomed. And recently, the Tithing Chief sent a notice: he was to attend the First Representative Assembly of the Guangzhou Federation of Industry and Commerce as a representative of Small and Micro Businesses.
Though Zhang Yu's father hadn't read many books, he had a son who was proficient in Australian studies. He understood the meaning of the lines on the big red invitation far deeper than most.
Truth be told, the Australians inviting him to a meeting was somewhat unexpected—not only to him, but to Zhang Yu as well. Their walnut-cookie shop, though prosperous of late, was really just a mom-and-pop store. Having a few assistants and apprentices now was something unseen in decades.
Small shops of this scale were everywhere in Guangzhou. Opening and closing every moment; lasting three generations was amazing, but in the Guangzhou business world, they were insignificant. The government classifying them as "Small and Micro Businesses" was certainly accurate.
Most merchants in Guangzhou who received invitations were pulling long faces. Since ancient times, when the government "invited" merchants to a banquet or meeting, it invariably boiled down to the word "money."
Troop movements, disasters, major construction... the government would surely think of merchants, demanding joyful donations. So hearing of "attending a meeting or banquet" gave wealthy merchants like Gao Ju a headache.
In the past, Zhang Yu's family wasn't qualified to participate in the grand occasion. Small fries like them couldn't scrape up thirty or fifty taels even if they sold everything. The government naturally had no interest in wasting effort on them: small shrimp were left for small fish to eat.
Now, with this sudden invitation, Zhang Yu's father thought his family had finally made it. In the past, only rich merchants he dared not even dream of were qualified to be "invited" by the government; now it was his turn!
Zhang Yu's thoughts were more complex. Though he didn't know the meeting's purpose, he had read many Australian magazines and was a talent in Australian studies. From articles in those magazines, he guessed the Australians wanted to integrate the merchants—just like in Lingao.
Whether in magazines or newspapers, there were reports on Federation activities in Lingao and Australian-ruled areas. Contents varied, but he understood the core.
The Australian Federation was actually similar to Guangzhou's various guilds and guild-halls, except it was a guild for all industry and commerce, no longer divided by trade or region. Orders from the Australians were conveyed and executed through the Federation; likewise, merchants' and workshop owners' requests were submitted through it. They also held activities—though he couldn't see the point of things like planting trees together.
At first glance, it seemed no different from local guilds. But reports suggested the Australian government was easier to deal with; problems brought to the government via the Federation were solved quickly and well—convenient and fast, without regulatory fees or benefits. Zhang Yu had been skeptical. But since his family started trading with Da Shijie, it was a fact they had never paid a penny in benefits. In regular business, even delivering to big households required kickbacks or snack money. Moreover, since the Australians arrived, though police passed his shop daily, they had never extorted a single coin from any shop on the street. That was a heavenly rarity! No wonder the tofu shop boss across the street said: The sun has risen from the west.
(End of Chapter)