36 Privatization 2/2 (1/2)
As for everyone’s doubts, Ouyang Shuo didn’t care to explain.
“I have decided to set up a Financial Division to be responsible for the financial affairs and taxation of the territory after privatization. The Financial Division will operate independently, and the Four Seas Bank will also be incorporated into the Financial Division’s jurisdiction. The Financial Division Secretary will also be Cui Yingyu.”
Everyone suddenly realized what was going on. The Financial Secretary and the manager of the Four Seas Bank, that was the real God of Wealth. The status of that position was comparable to that of the Director of Administration.
Yingyu was also incomparably excited, recalling her talk with Ouyang Shuo yesterday vividly. She did not expect that with this one move, he would not only unload her of the burden of the Material Reserves Division, he would then promptly make her responsible for the even more important Financial Division. She slowly rose and said crisply, “I will not fail to live up to big brother’s trust!”
Ouyang Shuo nodded at her. “With the Financial Division established, your first task is to establish an effective tax system. Here, I will set the general tone for everyone to discuss the specific details of implementation, and for the loans from the Four Seas Bank. The Financial Divison will be responsible for making the report.”
Yingyu nodded, showing that she understood.
“In simple terms, the tax will be divided into two types, agricultural taxes, and business taxes. The agricultural tax will be relatively simple, it should be set at 3.3%.
The business taxes will be divided into customs duty and business tax. For tariffs, we have to expand the territory and have business contacts with the outside world, only then can we set up checkpoints for tariffs. Hence, at this stage, we will be focusing more on business tax. In order to encourage handicrafts and commerce, we will also set the business tax at 3.3%.
“Tax will be an important financial source of the territory in the future, we must maintain the stability of the tax rate to foster growth. If you have any comments, you can speak freely.”
Fan Zhongyan stood up and said quietly, “The lord is generous and loves his people, this tax rate is already the lowest in history. My only fear is that such a low tax rate cannot maintain our daily expenses and military spending.”
“The two low-level tax rates are more conducive to the rapid development of the territory’s economy. As long as we make the cake bigger, even if we only have a small share, that share can still be very impressive. On the other hand, if the cake is small, even if we take half the cake, it is still not much.
“Most importantly, in the territory, there are industries that were not privatized, a source of income whose profits will all be turned over to the Financial Secretary, so that the government will not have to worry about the financial affairs of the territory,” Ouyang Shuo replied to him.
Hearing Ouyang Shuo says that the salt and other industries’ profits would be turned in to the Financial Secretary, Fan Zhongyan calmed down. As someone that worries about the country, his wish for the low-level tax had been met just as he wanted. He was actually worried that Ouyang Shuo would claim ownership over the industries, but Ouyang Shuo said he would not hold onto certain industries. Otherwise, if the territory was short on money, then, in the end, they could only grab it from the hands of the common people.
This was one of the limitations of historical figures. Even with the wisdom of Fan Zhongyan, he did not understand that the strength of a territory was the strength of a player. Ouyang Shuo, as a player lord, simply didn’t care if he didn’t have his own massive treasury.
After Fan Zhongyan was done, Zhao Dexian rose. “Lord, I have a question. For farmers, do we need to pay the agricultural tax at the same time as paying rent on the farmland?”
“The Secretary of Agriculture will be dividing the farmland among the farmers, and providing free property to be worked by them in the form of farmland rights that they own themselves to ensure their own interests. They are not, however, allowed to annex new lands. We will not allow new farmlands to be cultivated privately, only the Land Reclamation Division may do this,” Ouyang Shuo explained briefly. “As for the number of mu of farmland that each farmer can get, it is necessary for the department to discuss among themselves.”
Zhao Dexian nodded his head, understanding clearly.
Hearing Ouyang Shuo finish with the arrangements for the farmers, the temporary Secretary Zhao Youfang stood up. “Lord, we also want to know, how will we collect the taxes from hunters and fishermen?”
“First of all, the fishermen. There are two ways to tax the fishermen. One is to tax the sale of the fish directly on the market. In order to ensure that the tax is smooth and there is no evasion, the fish must be sold at a fixed stall, not privately. The other method is that they can sell it directly to the Material Reserves Division, they will be charged based on the business tax. However, sporadic tradings will not be taxed.”
“The taxation of herdsmen works similarly to that of fishermen. The buffalo will be a restricted animal and cannot be slaughtered for sale. It can only be sold to the Material Reserves Division, and the ranch controlled directly by the territory is not taxable.”
Ouyang Shuo knew that with such provisions there were still loopholes, and some tax evasion tricks were not blocked. For example, a cunning shepherd might think of keeping his livestock in the territorial ranch, thus avoiding the taxes. But right now, the Financial Secretary was new and the staff was undertrained. It was not advisable to carry out too complex of an operation, otherwise, it would be self-defeating.