Chapter 52: Agricultural Tax Reform I

October 26, 1938. Headquarters of the New 2nd Division in Qifeng County.

"Ten people? Isn't that a bit too few? Those mountain folk are notoriously fierce." Gu Yufei thought to herself that she would have preferred to dispatch an entire company equipped with heavy weapons to assist. Yet you, on the other hand, made a huge fuss and only provided ten people—no, eleven including Li Ya. Even with all his skills, Li Ya wouldn't be able to handle those mountain folk alone.

"Coercion is never a good solution. Let's be generous instead. As long as any local resident completes the land registration, we'll give them a pound of salt. Not that black salt sold on the open market, mind you, but top-grade, coarse sea salt from the Northeast." Wang Yue believed that the root cause of the saying "harsh mountains and treacherous waters breed unruly people" was simply poverty. As long as the common people saw tangible benefits, they would rally around you. Never underestimate this small commodity of salt; under the Japanese blockade, the price of salt in the mountains had soared to nearly one silver dollar per pound, forcing many peasants to consume harmful saltpeter instead.

As for coarse sea salt, it was a luxury that only the wealthy in big cities could afford; it simply never appeared in a place like Qifeng County. The vast majority of common folk probably had never tasted truly good edible salt in their entire lives. As for the source of this salt, they naturally had to thank the Japanese merchants in Jiangcheng, who ran a massive smuggling operation, buying salt cheaply in the Northeast and selling it at high prices in the interior. During this period, he had already managed to acquire 1,570 tons of salt successively, all of which had been brought back this time.

"Division Commander, procuring salt in the mountainous regions is extremely difficult. We—" He Dana, the Major and Quartermaster of the New 2nd Division who had been sitting quietly in the corner with little presence, softly reminded him. The New 2nd Division was not short on salt, but they were certainly not wealthy either. If they gave it all away, buying it back would be a completely different story. Were they seriously expected to march toward Datong and raid the salt lakes?

He Dana actually felt as though he were dreaming. He had clearly been nothing more than an inconspicuous cook, yet somehow he had become the quartermaster and even earned the right to attend such a meeting. Suddenly, he didn't care as much about his children and grandchildren far away in Shuntian Prefecture; at worst, he could just have He Daqing bring his golden grandson over later.

"Old He, don't you worry. We have procured plenty of salt through special channels, enough to last us for many years, and there will be more in the future. We are not short on supplies for the time being," Wang Yue smiled and said. Logically speaking, He Dana should have been the first to know about changes in inventory levels, but the things he brought back this time were a bit too numerous and stored rather dispersedly. He figured He Dana hadn't finished counting everything yet. Actually, He Dana was only in his early forties, but in this era, he already looked somewhat aged. With his thick eyebrows and big eyes, how on earth could he have fathered someone like Teacher Ni? Could he not be his biological father?

"That's good, that's good. Then let's not touch the Morton sea salt we have on hand. A single package costs over twenty silver dollars; my heart skips a beat every time I use it." Hearing Wang Yue's words, a smile returned to He Dana's face. He didn't have any grand ambitions; as long as his troops weren't lacking supplies, that was enough.

"Land registration is also tied to subsequent taxation. I'm afraid the common people won't be willing to re-declare their land. The current land records date back to the Guangxu reign of the previous dynasty; they simply cannot be relied upon," Gu Yufei said after a moment of thought.

"That's easy to handle as well. We will directly buy grain from the common people. We'll pay five cents in silver dollars per pound for this year's millet, but we'll only purchase twenty pounds per mu. The peasants aren't fools; they won't miss a chance to make money." Wang Yue smiled. The price of millet on the open market had dropped slightly recently, but it still hovered around five cents. However, that price was in fiat currency, which would lose about half its value when exchanged for silver dollars. If the peasants went to the money shops to exchange it, they would suffer even greater losses. By purchasing directly with silver dollars, Wang Yue's offer was exorbitantly high.

"Isn't this price much too high? There's no guarantee people won't exploit this loophole." Xu Zhongyi found himself unable to make sense of the situation. Usually, everyone was trying to collect taxes, yet his own division commander was throwing money away. This truly baffled him. Without wringing blood from the soldiers and exploiting the common people, how on earth did the division plan to maintain an army?

"Therefore, this price applies only to land with confirmed titles, and the landowner must be a local. By doing this, we aim to benefit the broad masses of farmers. The people are already poor enough; how could they possibly withstand being tossed back and forth?" Wang Yue smiled. He didn't have time for propaganda, nor did he have a well-established grassroots organization, but he had money. As long as he allowed the common people to make a profit and guaranteed their most basic security, they would follow him wholeheartedly all the way.

"Division Commander, will we still collect taxes in the future then? Qifeng County is the convalescent base for the New 2nd Division. If we don't collect taxes, that meager military allowance every month certainly won't be enough to sustain us." Gu Yufei frowned. She felt something was amiss; why did her division commander look more and more like the Eighth Route Army?

"Taxes will still be collected, but we will implement a progressive tax system, roughly structured as follows:

1. Households with less than 1 mu of land per capita are exempt from grain taxes.
2. For those with between 1 and 3 mu of land per capita, a tax of 5 pounds of millet per mu will be levied annually.
3. For those with between 3 and 10 mu of land per capita, a tax of 50 pounds of millet per mu will be levied annually.
4. For those with 10 mu or more of land per capita, a tax of 100 pounds of millet per mu will be levied annually.
5. Unclaimed land will escheat to the state after a 90-day public notice period.
6. Confirmed mountainous land, wasteland, and barren beaches will be taxed as farmland. Failure to confirm titles within a set timeframe will be treated as an active relinquishment of rights.
7. Farmers are permitted to identify and reclaim land independently within designated reclamation zones.
8. If farmers fail to complete reclamation and title confirmation within 90 days of claiming reclaimable wasteland, the ownership of that plot will be revoked.
9. Newly reclaimed land, once declared, will be taxed at 5 pounds of millet per mu annually for a period of five years. If it meets the criteria of Article 1 above, it will be handled according to Article 1.
10. Furthermore, common folk who operate their own workshops and possess specialized crafts should also be granted tax exemptions after passing a review."

Wang Yue spoke as he thought it through. He didn't care about that little bit of grain tax, but completely abolishing the agricultural tax all at once would make him stand out too much from the rest. It was better to quietly substitute it; under the current conditions, the vast majority of common folk would no longer need to pay taxes at all.

"Division Commander, isn't this a bit too farcical? Collecting tens of thousands of catties of grain a year really won't accomplish much." Gu Yufei frowned, inwardly hesitating over how to phrase her report to her superiors—she couldn't let them suspect Wang Yue, nor could she conceal anything from them.

"It doesn't matter, I'll figure out other funding and supplies. Even if we scraped together all the grain in Qifeng Town, it wouldn't be enough to support our New 2nd Division. Once reorganized, the daily training ammunition consumption for the New 2nd Division alone costs nearly a thousand silver dollars." Don't look at the monthly ammunition consumption per soldier as merely 100 to 150 rounds; when multiplied by several thousand men, it became staggering. And that didn't even account for the requirements of food, uniforms, equipment, and military pay. Without his harvest in Jiangcheng and Europe this time, Wang Yue would never have dared to assemble the New 2nd Division.