Chapter 1973 - Special Taxes

The Senate meeting finally adjourned close to midnight. The Finance and Tax Bureau trio were gathering their papers when Liu Xiang, as host, stopped them.

"I have a few additional questions—sensitive matters I preferred not to raise in the meeting. I'd like to consult with you privately."

The three exchanged glances, wondering what he had up his sleeve.

What Liu Xiang wanted to discuss was indeed taxation, but of a different character: "guidance-type" tax categories.

Using taxation to guide industrial structure and regulate social behavior was standard practice in economic governance. While many such taxes were criticized as "inventing excuses to extract revenue"—a charge often justified—it was undeniable that economic measures sometimes proved more effective than a million propaganda campaigns and exhortations combined.

The most successful guidance tax implemented by the Senate was the Slave Tax. Promoted throughout Senate-controlled territories for years, it had proven genuinely effective. Because slave-holding became a heavy financial burden, wealthy households generally deregistered their slaves. Though many former slaves remained in the household under the nominal status of "free employment" to perform various services, it represented significant progress in reducing personal dependency. The Civil Affairs transmigrators never tired of bragging about this achievement.

As a senior Civil Affairs transmigrator himself, Liu Xiang naturally kept this precedent in mind. He wanted to levy additional special-purpose taxes: a Foot-Binding Tax, a Concubine Tax, and a Clan Tax.

"Our slave tax collection has been very successful and is gradually being implemented across Guangzhou," Liu Xiang said. "Could these three taxes also be piloted and promoted? My intention isn't the revenue itself—though that wouldn't hurt—but primarily to use them as tools to guide public opinion and transform social customs."

Ai Zhixin reflected that Grand Magistrate Liu truly deserved his nickname "King of Tossing." Always scheming. In truth, the taxes Liu mentioned—along with several similar proposals—were perpetual topics of idle discussion in the Senate. But taxation professionals had never been enthusiastic about them. Apart from a few exceptions, most shared characteristics of difficult tax base investigation, trivial collection procedures, and low yields. High cost, low return. The Finance Department's standard response to such proposals was always "requires long-term research."

The Slave Tax worked solely because it was far easier to strictly investigate the few wealthy households capable of slave ownership than to assess the prevalence of foot-binding. Moreover, slave-holding required legal documentation. The Finance and Tax Department had roughly grasped the basic situation of local slaves by using the "contract stamp duty registration" method to re-confirm property rights.

Ai Zhixin pondered for a moment before responding. "Mayor Liu, regarding the Concubine Tax and Clan Tax you've proposed, those can reasonably be categorized as property taxes. We can research implementation methods. But the Foot-Binding Tax has no enforceability."

Liu Xiang's face fell. He'd been preparing to use this as his breakthrough point for "reforming customs and habits."

The "Anti-Foot-Binding" movement in Hainan and other regions had relied mainly on administrative orders—"campaign-style" governance. The effects were real enough, but so were the dramas of power-money transactions and families wailing in protest. Since then, Liu Xiang had been considering using economic levers to pursue foot-binding abolition.

Guangzhou teemed with bound-foot women. Both the proportion of the female population and the absolute numbers exceeded all the Senate's old territories combined. If he could achieve meaningful results here and establish it as "advanced experience" to be "promoted" elsewhere, his political achievements in "local governance" would be substantially enhanced.

"What's the difficulty?" he asked. "Is it the scope—too wide, collection costs too high?"

"Not just that. I'd say it's simply impossible to collect." Zhang Xiaoqi interjected before Ai Zhixin could speak, firing off her objections. "This tax sounds straightforward but has zero operational feasibility. First, our tax base is unbounded. Probably half the women in Guangzhou have bound feet. How do you verify and register each one individually? Second, collection mechanisms—do we send collectors door-to-door demanding payment? Set up checkpoints at city gates to inspect feet? Third, since it's guidance taxation, naturally some women will unbind their feet because of it. But once unbound, feet don't grow back to natural size. How do we classify them—bound or unbound?"

Hearing these three points, Liu Xiang found himself speechless, his expression deeply awkward.

Wang Qiyi inwardly groaned and hurried to smooth things over. "Mayor Liu, this Foot-Binding Tax truly is extraordinarily difficult. Even if we transported the entire twenty-first-century Guangzhou Tax Bureau here—personnel and equipment intact—this tax still couldn't be collected. Besides..." He hesitated delicately. "Women's bound feet in this era count as, well... intimate private parts. It seems inappropriate for us to openly demand that women display them."

Liu Xiang laughed at himself. "It seems I was thinking rashly."

"No, no—you're an administrative leader. Your job is to consider the general direction. Details are what we worry about," Ai Zhixin quickly added. "The line of thinking is sound. Economic means often are more effective than administrative ones. Our Finance and Tax Bureau can research this as a conceptual approach."

The discussion on Clan Tax and Concubine Tax didn't continue. The Finance and Tax Bureau trio departed the Municipal Government but didn't go their separate ways. Instead, they headed straight to the Bureau for a closed-door debriefing.

The night's meeting had gone better than expected. While the wolf-like reaction of the transmigrators to tax funds at the outset had been mildly surprising, remarkably, there'd been little pushback on the most critical issue: tax revenue distribution. Everyone had accepted the second plan—Tax Sharing—with relative calm. Was it because they'd vigorously disparaged the National/Local Separation plan? Or because transmigrators already harbored deep resentment toward the old timeline system?

Ai Zhixin's speculation seemed most plausible: "We buried them in jargon they didn't understand. They didn't understand and didn't want to admit they didn't understand."

Actually, before the meeting, Wang Qiyi had prepared a supplementary plan: refining tax items and expanding tax categories. He'd intended to deploy it as a sweetener if the second plan stalled. Refining tax items meant formulating separate applicable tax rates and budget tiers for specific items under existing tax categories. For example, Property Tax could be subdivided into land, real estate, means of production, and so forth. Assets unrelated to the Center and settled locally—like land and real estate—should naturally carry high local sharing percentages. When the locality prospers, these assets gain value and generate more tax revenue. High local sharing incentivizes economic development. As for expanding tax categories—more accurately, expanding tax and fee types—the idea mimicked the old timeline's Urban Construction Maintenance Tax, Education Surcharge, Local Education Surcharge, and Water Conservancy Construction Fund. These taxes and fees functioned as surcharges on main taxes (like VAT and Business Tax in the old timeline), collected directly at a fixed ratio of the main tax amount. Collection was convenient and costs extremely low. Moreover, being earmarked taxes and fees, all revenue could be assigned to localities.

It appeared this supplementary plan could be shelved for now, but Ai Zhixin and the others knew it was an inevitable trajectory. The several "custom reform" taxes Liu Xiang had proposed tonight were essentially this. Even without Senator requests down the line, they'd gradually roll them out as grassroots administrative capacity strengthened.

"How do you propose we collect the Clan Tax?" Ai Zhixin asked. He'd promised to "research" it, and "suppressing clans" was consistent Senate policy. Whether for Liu Xiang or the Administration Council, he needed to produce a responsive plan.

"Well, that's straightforward enough—following your approach, Director Ai. Start from the Property Tax angle." Wang Qiyi was confident. "Though I haven't specifically investigated local conditions, based on historical patterns, the foundation of clan existence is ancestral halls and clan property—especially the latter. As long as we levy high tax rates on these two categories, we can effectively strike clan forces economically. At minimum, we'll weaken their economic capacity."

In Wang Qiyi's assessment, both ancestral halls and various industries held under clan names were easy to identify through basic situation investigations. Whether house deeds or land deeds, the fundamental circumstances could be clarified through "stamp duty rights confirmation." Far easier to collect than that absurd Foot-Binding Tax.

"Actually, if we really wanted to collect some form of Foot-Binding Tax, it's not entirely impossible," Ai Zhixin mused. "We could levy a surcharge on embroidered shoes for bound-foot women sold locally. Pity that most women's shoes here are homemade. There are virtually no shops selling embroidered shoes."

"So there's completely no enforceability," Zhang Xiaoqi said flatly.

"We won't dwell on that problem," Ai Zhixin said. "But what about refining the 'Customs Industry' tax Mayor Liu proposed tonight?" This was the second topic Liu Xiang had given the Finance and Tax Bureau.

"What 'Customs Industry Tax'? Let's call it what it is—the 'Flower Donation'!" Wang Qiyi said.

"Collection isn't inherently difficult. The Senate already has a very mature Yellow Ticket system in Hainan," Zhang Xiaoqi observed. "We could continue using it, adopting the taxation method for catering service industry—levy a fixed-amount tax. The main question is how to assess specific income."

Ai Zhixin shook his head. "No, Guangzhou's situation is far more complex. There are individual sex workers and also very large brothels. Within brothels you have 'house owners' and 'guests'—the latter category includes both free agents and those controlled by pimps. The Police Bureau conducted a customs industry rectification earlier and cracked down on many madams and pimps. The current situation is clearer than before, but we still lack sufficient understanding of specific business operations and ownership structures. And Liu Xiang's attitude toward this industry is contradictory: he wants to limit its growth, yet squeeze revenue from it, while also guaranteeing sex workers' basic human rights."

"Basic human rights? That's truly the best joke I've heard tonight." Zhang Xiaoqi's tone dripped with scorn. "If they're calculating how to extract flesh money from prostitutes, why bother erecting memorial arches? Hypocrisy taken to its extreme!"

"That may be so," Ai Zhixin conceded, "but the Senate now has a large operation and increased expenses. Looking to open revenue streams everywhere is understandable."

Wang Qiyi shot his wife a pointed look to forestall further commentary, then said, "This matter is complicated. Let's discuss it more thoroughly later."

(End of Chapter)