Starting with a Wei Wu soldier

Chapter 267 Tax Reform

The literary debates sparked by the imperial examination system and the subtle turmoil between scholars in the north and south are still unfolding. Meanwhile, another major reform concerning the empire's purse and equally affecting countless people has quietly been put on the agenda and is beginning to show its more direct and sharper impact on interests—tax system reform.

If the Equal-Field System aimed to solve the problem of "land," and the Imperial Examination System aimed to solve the problem of "people," then tax reform aimed to solve the problem of "money"—that is, how the state could extract resources from the people to maintain the operation of its vast imperial machine and provide the lifeblood for its ambitious construction and development plans. The old tax system, having endured wars and dynastic changes, was riddled with problems: the poll tax burdened the poor, the land tax collection standards were chaotic, local levies and miscellaneous taxes were numerous, and powerful gentry used their privileges to hide land and evade taxes, resulting in a situation where "the rich owned vast tracts of land, while the poor had no place to stand," while the national treasury became increasingly strained.

It was early June of the first year of the Qiming era. Cicadas began to chirp, and the summer heat was just beginning to rise. Inside the Hall of State Affairs next to the Taiji Hall, however, the atmosphere was somewhat solemn. Today was not a grand court assembly, but a small-scale economic meeting before the emperor. In addition to Chen Xing and Jia Wen, the attendees included the newly appointed Minister of Revenue, several relevant vice ministers, and a special attendee—the Imperial Concubine Su Xiaoxiao.

Today, Su Xiaoxiao was not dressed in her magnificent palace attire, but rather in a simple and practical apricot-colored casual dress. Her hair was neatly styled in a single bun, adorned only with a jade hairpin. She sat to the side of Chen Xing, several thick ledgers and charts spread out before her. Her expression was focused, her gaze sharp, fully embracing her role as both "Chief Steward of the Imperial Household Department" and "Emperor's Economic Advisor." Since her coronation, in addition to overseeing the ever-expanding imperial assets and the expenses of the Imperial Household Department, she had devoted most of her energy to assessing the empire's current financial situation and planning a new tax system. Leveraging her keen business acumen honed over many years and the information advantage brought by her vast commercial network, her understanding of the actual tax situation in various regions, the hardships of the people, and even the methods of official corruption was sometimes more concrete and vivid than the Ministry of Revenue's reports.

"Your Majesty, Prime Minister Jia, and all officials," Su Xiaoxiao said in a clear voice, getting straight to the point, "Since I was ordered to assist the Imperial Household Department and investigate taxation, I have combined the Ministry of Revenue's documents with secret reports from merchants in various regions. The existing tax system is riddled with problems, and it cannot be left uncorrected."

She picked up a chart, on which clear lines and numbers outlined a chilling reality: "First, there is the harm of the poll tax. The legacy of the previous dynasty levied 'polonation silver' or 'polonation rice' based on the number of adult males. The standards varied from prefecture to county, but without exception, it was a burden unbearable for the poor. Many people, to avoid the poll tax, either gave birth without registering it or fled with their entire families, becoming vagrants or unregistered residents. This not only deprived them of state registration but also increased social instability. Wealthy households, on the other hand, often concealed their population and evaded taxes by bribing officials and splitting their households. Without abolishing this tax, the population cannot be accurately recorded, and the people's hearts cannot be at peace."

"Secondly, there is the unequal distribution of land taxes." She then showed another picture. "Land varies in fertility and yield, but taxes are mostly levied based on the number of acres, and the conversion rate in silver varies from place to place. In addition, there are extravagant practices such as fire loss and excessive taxation, which add layers of burdens. The actual burden on the people far exceeds the quota set by the court. Powerful families annex land, but they often collude with the government to shift the tax burden to tenant farmers or small households in the surrounding area. They even use methods such as 'deceptive taxation' and 'flying taxation' to disperse or transfer their land taxes to poor households or households without descendants, resulting in the bizarre phenomenon of 'having land but no tax, or having tax but no land' being commonplace."

"Furthermore, commercial taxes are chaotic, and checkpoints are everywhere." Su Xiaoxiao's tone became more serious. "Various regions set up their own tax checkpoints, levying taxes on passing merchants and travelers repeatedly under numerous names and at arbitrary rates, severely hindering the flow of goods. The profits from the monopolies on salt, iron, tea, and wine are mostly pocketed by local powerful figures or officials in charge, leaving the imperial court with limited income. In addition, although the various 'military pay' and 'donations' levied by the previous dynasty to cope with the war have been officially abolished, many places still find ways to collect them under different pretexts, causing deep resentment among the people."

The data she presented was detailed and the examples specific, causing the Minister of Revenue and others to break out in a cold sweat, while Jia Wen's expression also turned solemn. They were not unaware of these issues, but the fact that Su Xiaoxiao revealed them so systematically and frankly still had a tremendous impact.

Chen Xing tapped his fingers on the table and said in a deep voice, "The problems are deeply entrenched and require drastic measures. What reform measures does the Imperial Concubine have?"

Su Xiaoxiao's spirits lifted, clearly indicating she had already prepared a plan: "In my opinion, tax reform should be guided by the principles of 'simplifying tax categories, ensuring fair burden-sharing, facilitating collection, and replenishing the national treasury.' The most important step should be to pilot the 'equalization of land tax and poll tax'!"

"Equalize the poll tax and land tax?" the Minister of Revenue asked in confusion.

"Exactly," Su Xiaoxiao explained. "It means abolishing the separate poll tax and merging the original poll tax into the land tax, collecting it uniformly. Those who own land will pay taxes according to the amount of land they own and their social class; those who own little or no land will have their poll tax burden greatly reduced or even eliminated. In this way, the problem of concealing population and evading poll tax can be fundamentally eliminated, and the tax burden will be directly linked to the ownership of land, the most important means of production, making it fairer. At the same time, population statistics will be closer to the truth, which will be conducive to the implementation of the equal land tax decree and local governance."

Jia Wen pondered for a moment and said, "This policy is well-intentioned, but it will not be easy to implement. Incorporating the poll tax into the land tax means that those who own more land will pay a heavier tax. How can those powerful gentry with vast tracts of land be willing to accept this? They will definitely oppose it fiercely. Moreover, the data on land and population in various regions are still being sorted out. How can we determine a reasonable incorporation ratio? If it is inflated too much, it may harm ordinary self-cultivating farmers; if it is inflated too little, the national revenue will be damaged."

"Prime Minister Jia's concerns are very valid." Su Xiaoxiao nodded. "Therefore, I suggest that we first conduct a pilot program and then gradually expand it. We can select pilot areas that have completed or are currently conducting land surveys and household registration checks, and whose data is relatively clear, to pilot the 'equalization of land tax and poll tax.' Based on their existing total land tax and poll tax, we can calculate the amount of poll tax to be allocated per mu. At the same time, we should strictly verify the grade of various types of land, and the poll tax allocated to different grades of land can vary, with more poll tax allocated to fertile land and less to infertile land, to further reflect fairness."

"Regarding the opposition from powerful clans," a glint of shrewdness flashed in Su Xiaoxiao's eyes, "the court needs not only determination but also strategy. First, legal protection: enshrine 'integrating land tax into poll tax' as the core principle of the new tax law into the edicts, proclaiming it to the world and demonstrating the unwavering will of the court. Second, incentives: for powerful clans who cooperate with the tax reform and truthfully declare their land holdings, certain compensation can be provided in other ways, such as allowing their sons priority in participating in certain government-run commercial projects under the same conditions, or providing policy support when constructing water conservancy projects or roads in their hometowns. Third, severe punishment: those who resist the investigation, conceal land holdings, or resist the new taxes should be severely punished in conjunction with the implementation of the land equalization decree, with their land confiscated, heavy fines imposed, and even prosecuted for deceiving the emperor and resisting taxes. The people must understand that obeying the new law benefits the country and oneself; resisting the new law will result in the loss of both people and wealth."

She paused, then continued, "Besides the 'equalization of land tax and poll tax,' commercial taxes also need a major overhaul. I suggest: unifying tax checkpoints and establishing tax rates. Abolishing privately established tax checkpoints in various regions, and having the court directly establish 'customs offices' at major water and land trade hubs, creating a unified national tax rate table for goods passing through, and publicly posting it so that passing merchants can easily see the rates, thus preventing extortion by clerks. Expanding government monopolies and regulating monopolies: Salt, iron, tea, and other highly profitable sources need to be directly controlled by the court, with reforms to production, transportation, and sales processes, the introduction of competition and auditing, and strict prevention of corruption. At the same time, some categories can be appropriately liberalized, allowing powerful private merchants to participate in operations under strict supervision, collecting franchise fees and taxes to increase revenue sources. Encouraging maritime trade and establishing Maritime Trade Offices: General Shen Qing's navy has gradually gained control of the coast; Maritime Trade Offices should be established in Guangzhou, Mingzhou, Quanzhou, and other places to regulate overseas trade and collect customs duties, which will be extremely profitable."

Su Xiaoxiao spoke eloquently, outlining a clear and ambitious blueprint for tax reform, from agricultural tax to commercial tax, and from inland to coastal areas. Her arguments included both macro principles and specific operational details, and more importantly, they were imbued with the pragmatism and flexibility that comes with a business-minded approach.

Chen Xing nodded repeatedly as he listened, and finally looked at Jia Wen and the Minister of Revenue: "What do you all think of the Imperial Concubine's plan?"

The Minister of Revenue wiped his sweat, bowed, and said, "Your Highness, the Imperial Concubine, has considered all this thoroughly, and we are all deeply impressed. The 'equalization of land tax and poll tax' is indeed a good policy, but its implementation will be as difficult as Minister Jia and Your Highness have said. I believe that pilot programs should be launched sooner rather than later, and should be initiated in selected areas as soon as possible to accumulate experience. The reform of commercial taxes and the establishment of the Maritime Trade Office are also good ways to increase revenue, and require the cooperation of the Ministry of Works and the Ministry of War."

Jia Wen stroked his beard and said, "This old minister also agrees. The tax system is the lifeblood of the nation, and reform is imperative. The Imperial Concubine's plan balances fairness and efficiency, and is quite bold. However, it is crucial to remember that 'stability' must be paramount. The pilot program must be thorough, the data must be accurate, the publicity must be effective, and the punishment must be just. The Censorate and the Ministry of Justice can be instructed to intervene in the pilot areas in advance to ensure the smooth implementation of the new tax."

"Very well!" Chen Xing approved. "Then let's proceed as proposed. The Ministry of Revenue, in conjunction with relevant ministries and the Imperial Household Department, shall produce the 'Pilot Program for Integrating Land Tax and Labor Tax' and the 'Outline for the Reform of Commercial Taxes and the Establishment of the Maritime Trade Office' within ten days, and submit them to me for imperial approval. The pilot areas will be the three counties of Bianzhou and the two counties of Jingzhao Prefecture. Preparations shall begin immediately. Remember, this matter concerns the national treasury and the people's livelihood; success is the only option, failure is not an option!"

"Your Majesty, we obey!" The crowd solemnly responded.