Chapter 2057 - Land Tax

Though Zhang Xiaoqi spoke these four words lightly, Ai Zhixin knew that according to the penalty regulations in his hands, just six months of late fees alone would be enough to doom the Lin family, not to mention the fifty-fold penalty afterward. If this chain of charges went through, the Lin family would probably hang themselves without anyone else having to lift a finger.

"Do you think the Lin family will try to rescue him or not? I think they will. I don't believe they could anticipate this angle, and even if they did, we'd only lose one bite at most—no big deal. Anyway, once they lose their city properties, they'll just become landlords, and we'll have plenty of opportunities to deal with them later." Seeing Ai Zhixin remain silent, Zhang Xiaoqi picked up her cup, gently blew away the tea leaves floating on top, took a large gulp, then "pfft" spat the tea leaves back into the cup. "Director Ai, I think we shouldn't focus only on this one case. We also need to work with Commerce to stimulate the economy and cultivate tax sources. Looking at this Lin family situation—food and entertainment in the city plus rental income, land and property in the countryside. A typical damn landlord, no technical content whatsoever, and stubbornly uncooperative. If we want to prosper the market and establish our own economic system, we first need to knock down people like this."

Zhang Xiaoqi's attitude toward the Lin family wasn't without reason. During previous dinners with Zheng Shangjie and Pei Lixiu, both had mentioned more than once that in Guangzhou's dining and entertainment industry, the Lin family had monopolized nearly half of the upscale establishments. With so many properties, they naturally also held considerable sway in the city's rental market—and the high rents were obviously seriously affecting Zheng Shangjie's plans to stimulate small-scale private capital.

"Wait, there's a loophole in your plan. If those temporarily deposited funds aren't claimed by creditors in the end, they should still go back to the Lin family, not directly into the national treasury." Ai Zhixin struggled a bit.

"What if all the claimants are gone?" Zhang Xiaoqi looked at the ledger without raising her head.

"Director Zhang, you're..."

"Yes. Kill them."

Zhang Xiaoqi's blunt words nearly made Ai Zhixin choke on his tea. Wang Qiyi quickly changed the subject. "Actually, all three families are easy to handle—it's just a matter of degree. Besides, there's no need to take their lives. Send them to Fu Youdi's place to work, or arrange for them to colonize Jeju or Taiwan. Let's talk about the Liang family instead. Are we really just going to sit on the sidelines?"

"Going to Fu Youdi's place is no different from execution—might as well just hang them and get it over with. If we really want to spare their lives, there are plenty of options. For now, this is how things stand." Ai Zhixin was a bit deflated. "That fellow was ruthless—a clean break to save himself. I'm sure that steward didn't commit suicide, or if he did, it was 'assisted.'"

With a soft sigh, Ai Zhixin still felt unwilling to let this big fish, the Liang family, slip away. "Are we just going to wait for news from Political Security? I have an idea—see if it makes sense. We may not be as good as Political Security or the Police at interrogating and catching people, but doing bad things—especially big bad things—costs money. The bigger the crime, the more money it takes. That's our strength. I'm thinking we should start with the Liang family's rural properties and put a noose around their neck. That's their foundation. If they jump, they're rushing to die. If they don't jump, they're waiting to die. I'd like to see how they thrash about."

"Director Ai, I was just thinking about that land tax discussion we had earlier. Hearing you say this gives me an approach." Wang Qiyi subtly flattered Ai Zhixin, helping smooth things over for his wife.

"Brother, tell us quickly."

The reason Wang Qiyi's "land tax" had such an awkward name—rather than "land use tax" or "land ownership tax"—was entirely because even after eight years since the crossing, the Executive Committee still hadn't worked out the land ownership question. Every year at the Executive Committee meetings, certain land issues invariably triggered a full-scale battle.

Though the Executive Committee had basically reached consensus on "state ownership of land," articles in The Morning Star debated endlessly about what form and title should be used to certify current private land holdings, and whether land transfers involved ownership, perpetual rights, or use rights. For many, this was a matter of "national foundation" on which they absolutely could not compromise. Wang Qiyi naturally kept as far away from this as possible.

Though land tax hadn't yet been implemented on the mainland, it had already been fully rolled out across the Hainan Region. With October approaching, the annually levied land tax was about to enter its collection period. The Executive Committee's land tax crudely sidestepped various multi-layer subletting issues by directly designating the primary holder as the collection target. For land originally belonging to natives, the primary holder—the person named on the deed—was the collection target. For land allocated by the Executive Committee to natives or naturalized citizens, the recipient naturally became the collection target—this was mainly to prepare policy for future colonial expansion. Land was divided into agricultural land and urban land, with land type determined by local county-level (or higher) government.

For agricultural land, using the county as the unit, the local government-certified normal annual yield served as the tax base, with land area (excluding homestead) as the bracket standard. A progressive bracket system applied—the larger the area, the higher the rate. The lowest bracket was 10%, the highest 40%, with no separate agricultural products tax. Wetlands, marshes, and similar terrain were taxed at half rate; cleared wasteland was exempt for five years and not counted toward total holdings. This rate was determined by comprehensively considering various factors, basically ensuring that with the same land area and fertility, using old farming methods would result in significant losses, while using Tiandihui services and technology would yield obvious surplus improvements, while still maintaining a gap with state farm earnings.

The progressive rate was adopted because the Executive Committee was locked in fierce internal debate over land distribution, especially rural land. Currently, though, there was relatively little dispute over Wu Nanhai's proposal to suppress land consolidation and hit rental landlords while supporting operational landlords, so the Finance Ministry was tentatively basing its plan on this approach.

For urban land, a tiered fixed-amount levy was implemented. There were three tiers, with the lowest standard at 5 fen per 100 square meters per year, increasing with each tier. Properties under 100 square meters were exempt. Regulations also specified that regardless of land type, multiple holders registered under the same household would have their areas combined for taxation.

Having land tax naturally meant property tax had to follow. This was simpler—a direct 0.5% annual levy based on the general fair market value of comparable properties in the same location and type, assessed every five years or upon application. This meant the two major components of real estate in Ai Zhixin's property tax had been separately itemized, with the remaining portions—loose assets, production tools, and other miscellaneous items—all lumped into an "Other" category. This arrangement had deep reasoning: first, property tax was the first tax category Director Ai had personally designed after taking office, so dismantling it so quickly would be quite a loss of face. Second, there was policy continuity—the Executive Committee had liberated Guangzhou less than two years ago, and changing tax categories left and right wouldn't do. Adding items was much more subtle. Third, landlords still had enormous amounts of silver hidden away, out of circulation. Though the Tax Bureau and Guangzhou municipal government had already jointly planned a scheme called "Pulling Radishes," as long as the big households hadn't generally reduced their hoarding behavior, rashly abolishing taxes on non-real-estate assets would obviously cause tax revenue loss. Moreover, if this provision were eliminated, the Tax Bureau officials today would have trouble hanging the entire Lin family from lampposts.

To complement the property tax reform, the Tax Bureau had also preliminarily drafted a land and property appreciation tax as a safety net. This tax was mainly to combat hoarding and speculation in land and property. Since timing wasn't urgent, it was planned for implementation in Year 37 or 38. The tax was based on the appreciation amount at the time of land or property transactions, using the appreciation rate as the bracket standard in a super-rate progressive system. Given the financial costs of the new timeline, the threshold was tentatively set at 25% appreciation rate. Appreciation over 25% but under 50% would be taxed at 30% on the appreciated portion; over 50% but under 75% at 50%, and so on. Anything over 100% would be taxed at 80%.

With tax categories set, the next step was collection. The city was easy; the countryside was hard. How to collect agricultural taxes had the three Tax Bureau leaders racking their brains. Facing the vast rural areas, strict collection meant insufficient manpower, while loose collection wouldn't satisfy the Executive Committee. After much deliberation, they adopted a tiered management model, dividing all territory under Executive Committee rule into three levels based on degree of grassroots control: Newly Occupied Areas, Advancing Areas, and Consolidated Areas.

Newly Occupied Areas referred to regions just brought under Executive Committee rule or where Executive Committee authority couldn't effectively control the grassroots. For these areas, the Tax Bureau would in principle assign two cadres as components of the local military commission or government, under dual leadership of both local authority and the Tax Bureau, responsible for fiscal and tax work respectively. Taxes throughout—urban and rural—would uniformly use "Reasonable Burden," with rural tax collection potentially retaining the current model of the Executive Committee's public-private Dachang Rice Shop collecting on their behalf.

Consolidated Areas referred to regions where the Executive Committee had achieved "government reaching the village level," most representatively the counties and cities of the Hainan Region. In these areas, through the Executive Committee's good reputation, higher purchase prices, and years of effective disaster prevention and relief systems, ordinary people regardless of landholding size had generally developed the habit of selling grain to Delong. According to recent field surveys by the Tiandihui and Civil Affairs Ministry, farming households—including large landowners—had all seen significant drops in their stored grain surpluses. Given this, and considering their own manpower constraints, the Tax Bureau proposed an improved "unified purchase" collection method for Consolidated Areas.

Next update: Volume 7 - Two Guangs Campaign Section 170

(End of Chapter)