Chapter 1827: Tell Me One by One

Though Emperor Liu spoke lightly and casually, the ministers immediately perked up, all realizing that the fiscal and tax issue might be the true purpose behind Emperor Liu summoning them.

But at the same time, they could not help but feel a hidden worry—Emperor Liu's dissatisfaction with the current fiscal and tax system had been expressed more than once or twice, yet he had never made any major moves, at most offering some reform suggestions acceptable to all parties.

Now that he had just stepped down from the post of Finance Commissioner, bringing up fiscal and tax issues again likely meant he was scheming over the tax system once more, which inevitably made the assembled ministers more vigilant.

Like official governance, the tax system was likewise a matter of broad implications. From the perspective of prudent statecraft, it could not be lightly touched. Anti-corruption and eliminating evil only targeted corrupt officials and local tyrants, which could still be considered the empire's self-regulation and purification.

But fiscal and tax matters were different—they involved virtually every aspect of society, not just the meritorious nobles, bureaucrats, landlords, merchants, and local strongmen, but also all the common people across the realm who provided tax revenue to the Great Han. This truly could not be recklessly touched.

Of course, it was not that it could not be changed; what made people hesitate was simply not knowing how Emperor Liu intended to stir things up—that was what was most worrying. Even though Emperor Liu had not yet revealed his hand, the ministers present had already drafted their arguments of persuasion in their minds...

"We respectfully await Your Majesty's instruction!" Crown Prince Liu Yang spoke up, cupping his hands toward Emperor Liu.

Emperor Liu raised his eyelids slightly and, instead of answering, asked in return: "Tell me, Crown Prince, what are the principles of the Great Han's two-tax system?"

Upon hearing the question, Liu Yang pondered for a moment, then said in a cautious tone: "Households, whether native or guest, are registered by current residence; persons, whether able-bodied or not, are assessed by wealth; assets are the basis, not labor service; household grades pay in coin, and land acreage pays in grain..."

Clearly, Liu Yang had done some research on this matter, fluently reciting several core elements of the Great Han's two-tax system. The Great Han's tax system basically followed the two-tax law implemented since the mid-Tang, and though some details had been revised and perfected by the Great Han, its essential principles had changed little.

In terms of the tax system alone, the two-tax law was a great advancement born of social development, moving from the poll-tax-based system that had existed since the Warring States period toward taxing land rather than persons.

By the time of the Great Han, the system was inherited, adopting its advanced aspects. However, with the passage of time, the core principles of the two-tax law were gradually fading, and its binding power was steadily weakening.

At root, the level of socioeconomic development was still limited, insufficient to support the perfect realization of the two-tax law, and when the development of things exceeds objective conditions, problems tend to arise.

One important point: under the two-tax system, land was freely bought and sold, making land annexation inevitable, even spreading at an extraordinary pace. And all along, Emperor Liu had continued the ancient policy of official control over private land annexation.

The high land transaction tax established back then was one such measure. It naturally had some effect, but how much was hardly optimistic—as could be glimpsed from the fact that, in both past and ongoing cases, the cost of land annexation was trending toward being borne by the sellers.

On one hand, the legal system established the nature of free land trade; on the other, there was an attempt to intervene in land transactions and control land annexation. This self-contradictory phenomenon was not uncommon in the Great Han. It was also one of the reasons Emperor Liu always wanted to reform—from a personal perspective, this contradiction often made him uncomfortable.

After hearing Liu Yang's answer, Emperor Liu continued asking: "Well said. But how much of these principles have actually been implemented? The Great Han's annual fiscal revenue has been rising year after year, but in the actual execution of tax collection, has the tax assessment basis truly followed the tax regulations?"

"This..." Liu Yang fell silent at this.

Though he had not delved deeply into the matter before, based on his years of experience governing the state and his conversations with the relevant offices and bureaucrats, it was clear that there were significant shortcomings in this regard.

Especially as time went on, officials in various regions had become increasingly eager for quick results in tax work, tending merely to complete their assigned tasks. As for the tax system itself, most only took the simplest and most convenient approach; as for following the principle of equal assessment between rich and poor and balancing fairness, it mostly remained lip service, or had long been cast to the back of their minds.

Local governments that could earnestly and meticulously study the tax laws were rare—those who did could already be considered conscientious. Of course, given the current political environment of the Great Han, with the central court's authority at its peak, local governments did not dare act too wantonly; at least cases of inventing extra levies beyond the regular tax quotas and exploiting the people were few.

Not that they didn't exist—but whenever they appeared, they were dealt with severely and strictly. But it was easy to imagine that once central oversight slackened, or other situations arose, given the greedy nature of those who fed on the people, exorbitant levies and oppressive miscellaneous taxes would come flooding in.

The problems existed—not just Emperor Liu, but these ministers who had governed the state for years were equally aware. Yet no one had ever spoken up about them. The reason was simple: conservatism was one important factor—to ensure stable tax revenue and "peaceful" livelihoods, they had to cling to the old ways. More subtly, under the current tax system, it was very favorable to the meritorious nobles, bureaucrats, landlords, and merchants.

Interest-driven behavior often leads to action. Even those who saw the problems either held low positions with little say, or were thoroughgoing conservatives. Besides, the current tax system had been operating stably for decades, and the court's annual fiscal revenue was equally stable with ample margin—far from the point where change was needed. Why stir things up?

"Seeing how hesitant you are, you must have witnessed quite a few malpractices!" Seeing Liu Yang deep in thought, Emperor Liu remarked, then turned his gaze to the chief ministers Li Fang and Zhao Kuangyi, saying: "All of you here were promoted to the central court from the provinces, all with ample local governance experience. Tell me, what problems exist in the execution of the Great Han's current tax system, and what malpractices have emerged?"

Facing Emperor Liu's question, the ministers fell silent in unison. Emperor Liu was not angered by their silence, and naturally turned his gaze to Wang You: "Minister Wang, the northwest is quite a representative region. You served there for many years, from prefectures and counties up to the circuit offices—you could be said to have seen much. Tell us what you think!"

Having been called upon by Emperor Liu, Wang You naturally could not continue playing dumb. After thinking it over, he replied: "The household tax is paid in coin. In the early years, to pay their tax money, large numbers of peasant households had to sell their silk and grain at low prices to exchange for copper coins. This caused money to become dear and goods cheap, increasing the burden on the people. However, as the court increased the minting of circulating coinage throughout the realm, this situation has already been alleviated..."

Wang You's words raised a problem phenomenon, but also pointed out that the problem had already been alleviated, as if reminding Emperor Liu that the problem was not serious and there was no need to stir things up.

However, Emperor Liu was not buying this. He asked Lü Duan: "Minister Lü, you also share your views!"

Lü Duan, looking as immovable as a mountain, rose calmly upon being asked, cupped his hands, and replied: "The court sets tax quotas annually, one point being that quotas are determined by the wealth disparity between the various circuits; each circuit also grades its prefectures by development level, and the prefectures likewise grade their counties—all to ensure fairness, with the rich paying more and the poor paying less.

However, below the county level, the situation changes dramatically. The petty officials and clerks, in the process of collecting taxes, often lump everyone together, disregarding the principle of graded assessment by wealth, seeking only to complete the tax collection tasks assigned by their superiors, ignoring the actual circumstances of the households under their jurisdiction—their persons, lands, and property.

This results in rich and poor being assessed equally, with those living in great cities and those working small farms paying the same taxes. At the same time, many local governments simply apportion by region, so that wealthy areas and impoverished villages pay equal tax quotas—on the contrary, making the rich pay less and the poor pay more.

Over time, the poor grow poorer and the rich grow richer. The poor, unable to make ends meet, would rather abandon their plows and livelihoods to flee the regular taxes and move to prosperous regions..."

Lü Duan's speech exposed a major and conspicuous problem in the execution of the two-tax system. Not just Emperor Liu, but everyone else also wore grave expressions with furrowed brows.

"Minister Zhao, what discoveries have you made?" Emperor Liu's tone seemed to have grown several degrees harsher as he stared at Zhao Kuangyi.

Zhao Kuangyi felt a chill in his heart, but showed no hesitation and spoke directly: "In recent years, there have been many people across the realm who lost their land, yet the land was gone while the tax remained, with quotas undiminished and burdens worsening. As a result, some evaded taxes, some fled, and some were reduced to tenant farmers or hired laborers..."

After Zhao Kuangyi finished, Emperor Liu turned his gaze to Li Fang. This time, without even needing Emperor Liu to ask, Li Fang took the initiative to sigh: "The court's regular taxes are assessed by wealth grades, but each household's property and land holdings are truly difficult to ascertain clearly. At the same time, there is no shortage of cases of concealing property and underreporting land—all such matters affect the court's annual regular tax revenue!"

After Li Fang finished speaking, Emperor Liu finally asked no more. He was silent for a while, then finally let out a somewhat chilling laugh: "Heh heh..."