Chapter 1802 - Industrial and Commercial Taxes
In some localities, the dysfunction had metastasized to the point where collection costs actually exceeded revenue, prompting authorities to simply abolish commercial taxation altogether and make up the shortfall through punitive land tax increases. Guangzhou's commercial taxes hadn't been formally abolished—they simply existed in a state of functional death. In their place had emerged an entirely separate system of local commercial levies.
After the coastal provinces finally suppressed the wokou pirate incursions, the Fujian and Guangdong Provincial Administration Commissions established Tax Bureaus operating independently of the original Ministry of Revenue commercial tax apparatus. New tax stations sprouted like weeds at bridges and ferry crossings, with rates determined ad hoc by local authorities. The revenue funded military provisions and regional defense. Since this silver never touched Ministry of Revenue coffers—and never passed through the layers of bureaucratic filtration that would have reduced it to a pittance—local government offices collected it with considerable enthusiasm.
Yet even accounting for that enthusiasm, Ai Zhixin found the actual amounts pathetically inadequate for a metropolis of Guangzhou's commercial stature. When he discovered that one prosperous market town under Guangzhou Prefecture's jurisdiction reported annual commercial tax revenue of a mere 170 taels, he knew the corruption must be extraordinary. That same town paid 450 taels annually to the Senate as its "Reasonable Burden"—nearly triple what it officially remitted to the Ming state.
Nevertheless, Ai Zhixin had no intention of making these commercial checkpoint taxes the centerpiece of his revenue strategy. They were essentially lijin transit duties by another name—easy to collect and superficially lucrative, but economically destructive. They strangled the circulation of goods and penalized productive commerce. He had set his sights on more sophisticated instruments: the store tax, the property deed tax, and the wine and vinegar tax.
The store tax was a commercial levy collected from permanent shops in market towns. Since Ming-era bookkeeping lacked anything approaching modern accounting standards, and the government made no systematic effort to calculate shop capital or profits, it functioned as a flat quota tax. Whether that quota proved ruinously high or laughably low for any particular establishment was essentially a matter of historical accident. Some enormously profitable enterprises—pawnshops, for instance—paid a mere 45 taels annually, while struggling corner shops might owe several taels despite razor-thin margins.
In Guangzhou, the various trade guilds collected the store tax on behalf of the government. Shops not organized into guilds had their assessments handled by officially designated brokers. The opportunities for graft embedded in such arrangements hardly needed articulating.
Ai Zhixin examined the aggregated store tax revenue for Guangzhou Prefecture and its two attached counties. The total yielded roughly ten thousand taels annually—a respectable figure on its face, but far short of what he knew the city's commercial activity should be generating.
The property deed tax was levied at three percent of transaction value for sales or mortgages. However, collection had lapsed in many jurisdictions for years; the counties and prefectures under Qiongzhou maintained no collection records whatsoever. Yet Guangzhou not only enforced continuous collection but generated substantial revenue—Nanhai and Panyu counties alone brought in approximately two thousand taels annually. The commercial dynamism of the great metropolis evidently drove both elevated real estate prices and frequent property transactions.
As for the wine and vinegar tax, this represented a Ming continuation of an old Song Dynasty levy. The liquor monopoly had been a major revenue source under the Song. But the Ming Dynasty's institutional capacity to regulate industry and commerce was so anemic that authorities had never successfully controlled production or circulation, rendering the tax essentially symbolic.
"The Ming's tax burden is not too heavy—it is too light," Ai Zhixin had declared at the Finance Work Conference back in the Wudaokou New Area. "The fiscal potential remains almost entirely untapped. Whatever inflated claims people make about the Great Ming's GDP, when it comes to actual revenue extraction efficiency, the Ming qualifies as a categorically backward state. Forget comparisons with European powers—even within East Asia, it trails Japan."
In Ai Zhixin's assessment, Ming tax collection suffered from catastrophically low efficiency at every institutional level. Revenue losses during the collection process were staggering: embezzlement, systematic skimming, and simple leakage plagued every stage from assessment to treasury deposit. Though the system conscripted vast armies of unpaid "runners" to handle the actual work—appearing to minimize costs—hidden personnel expenses remained unconscionably high.
Building a tax collection apparatus that maintained operational efficiency while ensuring even rough "integrity" would prove immensely challenging. Even in the twenty-first century, with modern tax agencies fortified by elaborate institutional safeguards and countless layers of audit controls, cases still regularly emerged of minor functionaries acquiring luxury cars and villas through systematic graft.
It was fundamentally impossible to assemble a team meeting Ai Zhixin's standards using the Senate's current educational and administrative infrastructure. Moreover, direct taxation presented multiple intractable problems. First, it devoured manpower—under the old timeline in China, before agricultural tax abolition in the early 2000s, administrative personnel costs in rural areas often consumed more revenue than the taxes collected. Second, it readily inflamed social tensions; history overflowed with examples of aggressive taxation sparking conflicts, riots, even dynastic collapse. Finally, sophisticated modern taxation depended upon sophisticated modern financial systems. Ming merchants still employed the primitive four-column balancing method in their ledgers, and smaller establishments often kept only running tallies of daily transactions.
Implementing a genuinely modern tax regime would require wholesale transformation of commercial bookkeeping practices. Merchants would need to grow accustomed to conducting large transactions through bank instruments rather than physical currency, to consolidating capital rather than hoarding cash overnight. Such fundamental behavioral changes couldn't be achieved through administrative fiat alone. They would take time. But tax collection was urgent—the new government needed revenue immediately.
The simplest approach would simply replicate their previous "Reasonable Burden" practice: the Senate would announce a total revenue target, then convene the taxpayers to collectively assess and self-report their individual shares. This method provoked minimal resistance and, now that Guangzhou's Federation of Industry and Commerce existed as an institutional framework, would yield quick results.
But Ai Zhixin considered this merely an expedient from their days of political and administrative improvisation. It was beneath the dignity of a properly constituted tax authority.
Adopting such a method would render the elaborate tax rate schedules his bureau was developing completely meaningless. Either the collected amounts would fall below prescribed statutory rates—effectively giving away fiscal capacity to private businesses—or they would exceed those rates, transforming official "taxation" into arbitrary "apportionment" that increased the burden beyond what law specified.
More fundamentally problematic: any such practice would inevitably operate through the Federation and the trade guilds, effectively delegating the sovereign power of taxation to these semi-private organizational structures. This would invite systematically unfair tax distribution and legalize evasion for the well-connected.
Ai Zhixin believed that, while Guangzhou's shops lacked sophisticated modern accounting, most employed at least rudimentary versions of the four-column balancing method. Their business conditions could be meaningfully audited through examination of their ledger books. Since official and private bookkeeping throughout the Ming Dynasty largely followed variations of this standardized format, many literate people understood the basic principles. Finding adequate temporary "accountants" for audit work would be feasible.
Leveraging these characteristics, he would adopt a model of "self-assessment and payment, with severe penalties for evasion." Businesses would calculate and remit their own taxes based on statutory rates; the tax bureau would conduct periodic random audits of reported revenue and claimed profits, with draconian sanctions for deliberate underreporting.
Ai Zhixin was deeply absorbed in the documentation when several soldiers entered carrying dozens of hardbound ledgers. A clerk announced: "Chief, this is the Compilation of Guangzhou Industrial and Commercial Households that Chief Lin requested we transfer to your custody. Please sign for receipt."
These volumes had been compiled by the City Government working from lists submitted by the Federation of Industry and Commerce and supplementary materials gathered by the City Works Department. They catalogued every "permanent shop with a fixed storefront" operating within the city walls—from great maritime merchants like Gao Ju down to humble corner grocery stalls. The entries detailed business addresses, operational scope, current trading conditions, owner names, and employment situations.
Beyond the City Works Department's accumulated institutional records, this compilation relied on administrative foundations established since the city's conquest: census registration, house number plaques, business licensing requirements. Without this bureaucratic infrastructure already in place, Ai Zhixin would have had no realistic alternative to the crude old "Reasonable Burden" apportionment system.
He had already devised his basic taxation framework. Broadly conceived, he would impose three major categories: property taxes, circulation taxes, and stamp duties.
The first category, property taxation, would target holdings of productive and valuable assets: agricultural land, commercial real estate, substantial residential properties, commercial vessels, and industrial or mining facilities. Specifically, he planned to levy a real estate tax, an urban land use tax, vehicle and vessel licensing fees, vehicle and vessel purchase taxes, deed taxes, inheritance taxes, and—controversially—a slave ownership tax.
The second category, circulation taxation, would maintain commodity market order and capture value from commercial activity. The business tax structure wouldn't fragment into dozens of minute subcategories; generally speaking, any commercial activity generating business income fell within the scope of taxation, subject to certain de minimis exemption thresholds. The most significant collections would come from the circulation channels of Guangzhou's newly established wholesale commodity markets.
The third category, stamp duties, would be imposed on contracts and legal instruments requiring formal recognition and Senate legal protection. Taxable documents included ship departure permits, land deeds, house deeds, business licenses, and equity certificates—essentially any documentation requiring the Senate's authoritative seal to possess legal force.
Finally, there would be local administrative surcharges levied atop the circulation tax base. In consultation with Liu Xiang, Ai Zhixin had determined four specific assessments: a city sanitation fee, a local security fee, an urban construction fee, and an education fee. These would directly fund Guangzhou's municipal administration. Other tax categories would constitute national-level taxes, with portions returned to local governments based on revenue-sharing formulas.
Customs duties, anchorage fees, and tonnage dues fell outside his administrative jurisdiction, so he had developed no immediate proposals for them. As for the salt and tobacco monopolies, he lacked new ideas for the moment—a properly functioning monopoly system required complete, dedicated organizational teams. When he couldn't even fully staff the tax bureau, establishing an entirely separate monopoly enforcement apparatus was simply out of the question. So he would continue the Lingao operational model: a single tax payment extracted at the wholesale source, followed by dealer distribution. Regarding direct monopoly control at the production level—those matters were complex, requiring resources and coercive power beyond a Tax Bureau Director's institutional reach.
Ai Zhixin skimmed several pages of the commercial household ledgers, forming a preliminary mental picture of the taxation landscape. At that moment, a City Government messenger hurried in: Mayor Liu was convening an immediate meeting.
"What meeting?" Ai Zhixin had just arrived in the city with mountains of urgent work before him. He'd barely occupied his office for a few hours. If this had nothing to do with fiscal affairs, he would respectfully decline.
"A meeting regarding rectification of the prostitution industry."
"Tell Mayor Liu I have far too much on my plate and won't be attending..." Ai Zhixin frowned, irritated. Liu Xiang was apparently beginning to put on bureaucratic airs, padding his schedule with meetings held purely for appearances.
"Mayor Liu specifically said this meeting concerns you directly." The messenger had evidently anticipated resistance and came prepared with additional instructions: "Tax policy issues related to Guangzhou's prostitution industry will be discussed at the rectification meeting..."
Ai Zhixin immediately reconsidered. "I'll come at once."
(End of Chapter)