Traveling back to 1977

Chapter 654 Tax Incentives
Although Lujiawan had taken the initiative, Secretary Yang and his team acted swiftly.

Every day during the day, he and Captain Zhang would go to find Secretary Qian and the other two, and the five of them would negotiate behind closed doors.

Such frequent exchanges led to the fact that everyone in Nanhu Commune knew that something big was going to happen in Lujiawan. However, under the lure of the "first uprising," those in the know kept it a secret, and for several days, no outsiders were able to find out any specific information.

In a small place like Nanhu Commune, such a secret was extremely rare, and it quickly became the talk of the entire commune, with all sorts of opinions being expressed.

In the evening, several leaders from the brigade headquarters came to have dinner with Chen Fan and explained the details of the day's negotiations to him, after which Chen Fan would make the final decision.

After all the lotus roots in the entire brigade had been dug up and sold to the supply and marketing cooperative, Lujiawan finally reached an agreement with Nanhu Commune.

During the negotiation process, Chen Fan also learned about many issues that he had not paid attention to before.

For example, taxes.

Anquan used to be a cadre at the Nanhu Tax Office. If the college entrance examination hadn't been reinstated, he would probably be succeeding the recently retired director and becoming one of the most miserable people in Nanhu Commune.

Yes, that's right. The lives of grassroots tax officials these days, especially those in communes, can only be described as miserable.

No wonder when Anquan was still in Lujiawan, he rarely mentioned his work at the tax office; when he did, it was a story of bitter tears.

Current fiscal revenue can be broadly divided into two main parts.

One portion is the profits turned over by state-owned enterprises. Under normal circumstances, production plans and product destinations are predetermined, and as long as they operate normally, state-owned enterprises are almost never likely to incur losses.

Each year's operating income is also turned over to the central government according to a certain percentage, which is the main source of revenue for governments at all levels from top to bottom.

The other part, however, is the tax that is known to later generations.

State-owned enterprises have already handed over their profits, so they naturally won't pay large amounts of taxes; at most, they'll only pay a small amount of regular tax.

Grassroots collective enterprises, now called "community and brigade units," which are profit-making units run by communes and production teams, have become the main targets of taxation.

The main taxes levied included: the unified industrial and commercial tax (equivalent to the current consumption tax, value-added tax, and business tax), corporate income tax, slaughter tax, agricultural tax (grain delivery), animal husbandry tax (levied based on animal husbandry income in the collective economy), livestock transaction tax, and vehicle and vessel tax.

Leaving aside other taxes unrelated to enterprises, there are only two types of taxes that township and brigade enterprises face: the unified industrial and commercial tax and corporate income tax.

In particular, corporate income tax is subject to a tiered tax rate, with the lowest collection rate being 10% and the highest collection rate being quite high. If a company's income is considerable, the excess portion will be subject to a collection rate of 55%!

Who can bear this? !

As a result, the difficulty of tax collection became a real problem faced by almost all commune tax collectors.

This is just one aspect.

In this era, paying taxes was not like in later times, where a company would send an accountant to the tax bureau to file taxes. Instead, it was done through a "door-to-door collection with invoices" method.

This is the real reason why tax officials are so miserable.

Think about communication back then?

They basically rely on shouting.

Think about the traffic back then?
Most of the time, we rely on walking.

When tax officials go to the countryside to collect taxes, it's best to call the production team first. When the production team leader receives the call, he'll know that they're coming to collect taxes.
Needless to say, nine out of ten will run away.

When the tax officer rushed over, he found no one there!

The boss isn't here, are you surprised or not?!

come back next time?

I'd rather die than walk for hours!

Especially in mountainous areas, a trip can take up a whole day, or even two days. So what can be done?

This is not counting.

Even more outrageous is that not every commune had a tax office!

Take Gufeng County as an example. The entire county has more than a dozen communes, but there are only two tax offices: one in Chengguan Town, which is the county seat of Gufeng County, and the other in Nanhu Commune.

The tax office of Nanhu Commune was responsible for all tax collection work in nearly ten communes in the western part of Gufeng County!
Take the slaughter tax for example. You can only collect two cents for slaughtering a pig. The current rule is "tax first, then slaughter". Even if it is a remote commune dozens of kilometers away, if someone wants to slaughter a pig, the tax collector has to run there for those two cents.

Back then, Anquan worked hard for several years and solved the problem fairly well before he was valued by the old director and given a position as a village-based cadre, a status roughly equivalent to that of the junior director.

Zhang Wenliang shamelessly exposed An Quan's past: "I still remember the first time Old An came to Lujiawan to collect taxes. At that time, each team was going to receive a share of the profits, and no one wanted to pay attention to him. After all, if they paid tens of yuan more in taxes, the members would receive one yuan or a few cents less."

Back then, it wasn't like it is now. Let alone a few cents, even a hundred or two hundred dollars wouldn't be so painful. So, when the tax collectors came, they didn't give them a friendly look.

Privately, we even said he was like an ancient tax collector. We'd already paid our grain tax, yet he still came to collect taxes—slaughter taxes, livestock transaction taxes, it just didn't make sense.

Secretary Yang, holding his wine glass, chuckled and said, "Xiao An is a good person. No matter how others look down on him, he doesn't get angry."

Chen Fan was very curious, "So how did he break the deadlock?"

Xiao Liewen had almost finished eating, picked up his pipe, lit it, and chuckled as he chewed on the mouthpiece, "What else can we do to break this deadlock? Just grind it out."

Exhaling a puff of smoke, he continued, "Doing grassroots work is nothing more than getting 'three benefits'."

As he spoke, he counted on his fingers, "Talking, running, starving."

Chen Fan rolled his eyes slightly and said thoughtfully, "I can guess what you're saying. Since the common people can't understand taxation, we have to patiently explain it to them. We have to be careful how we explain it so that they don't get annoyed and can understand and accept it. You can't do it without a good tongue."

Xiao Liewen nodded, looked at him and smiled, "Then tell me about your running ability."

Chen Fan chuckled and said, "They don't have cars or motorcycles, at most they ride a bicycle, but they have to travel to so many communes, it's not easy."

He paused for a moment, then said with a smile, "You seem quite hungry. Can't you eat on the road?" Zhang Wenliang immediately replied, "You've never done this kind of work before, not even the most physically demanding tasks. Once you've done it, you'll know that whether you're traveling or doing heavy physical labor, you won't be able to eat when you're too tired."

Before he could finish speaking, Chen Fan nodded in realization, "I don't have the time or the appetite, so even if I'm hungry, I just endure it."

Secretary Yang added from the side, "Besides this reason, there are generally regulations for cadres going to the countryside, prohibiting them from taking even a needle or thread from the people. Moreover, tax officials are not well-liked, and some production teams will not provide them with meals in order to get them to leave. If they don't bring enough dry rations, they will have to go hungry."

Xiao Liewen puffed on his pipe and laughed, "The first time Xiao An collected taxes, he encountered almost every problem. The second year, he learned his lesson and came to discuss it with Xiao Yang from your Team 6 before the tax collection even started."

He had worked in the countryside here and was familiar with Xiao Yang's family. He helped them with tasks such as delivering grain to the commune and handing over pig quotas to the food station. As a cadre in the commune, he knew people in various departments, which saved him a lot of trouble.

Later, through Xiao Yang, they connected with other teams and worked for about ten days to help each team handle the delivery of grain and livestock.

To be honest, we ordinary people are quite down-to-earth. We're all made of flesh and blood. If you're good to me, I'll definitely not make things difficult for you.

From then on, we prepared all the taxes in advance. For example, the slaughter tax…”

He suddenly turned to look at Chen Fan and chuckled, "Have you paid the slaughter tax?"

Chen Fan blinked, shook his head, and said, "Never."

It's strange, he's already slaughtered several pigs at home, but no one has come to collect taxes from him.
Furthermore, there are cooked food factories that slaughter so many chickens, ducks, and geese every day, what about the taxes?

Xiao Liewen said with a smile, "No one is asking you to pay taxes because after purchasing the pigs at the beginning of the year, we reduced the number of pigs for the mission. The remaining ones were raised until the end of the year. As long as they survived, we went to Xiao An to pay taxes and get the tax payment certificate before slaughtering them. Of course, we can slaughter them as we please."

Chen Fan opened his mouth slightly. Such a thing actually happened?

It seems that even after two years here, I don't know everything.

Ye Shubao finished the last bite of rice, put down his chopsticks, wiped his mouth, and joined in. "Xiao An's greatest strength is his flexibility. Some people in the past just couldn't wrap their heads around things and insisted on doing things exactly as they were told, which could drive you crazy."

Take this slaughter tax for example. The rule is to pay the tax first and then kill the animals. So, does that mean I'll be punished if I kill the animals first and then pay the tax?
Xiao An didn't care, nor did he make things difficult for him. He spoke politely, saying, "We've already slaughtered a pig, how could we be short two cents?"

Chen Fan looked around at everyone, pondered for two seconds, and then asked, "What about the cooked food factory?"

Upon hearing this, Secretary Yang immediately laughed and said, "Of course it counts as a side business. When we were discussing this issue the day before yesterday, Secretary Qian made it clear that we had already separated the agricultural production in Lujiawan from all the side businesses in terms of procedures."

Then each side business is relatively independent. The livestock farming has nothing to do with the cooked food factory, and it only supplies the food factory. Even the transportation and retail stores are kept separate, with clear accounts, allowing for tax evasion…

Chen Fan was pleased with his foresight, after all, it was he who had made the suggestion.

Then I heard "tax evasion"? I almost choked on my cigarette.

Fortunately, Captain Zhang immediately spoke up, "What do you mean by tax evasion? It's tax avoidance."

He then explained to Chen Fan, "Secretary Qian said that according to regulations, all our side businesses have to pay taxes, and there are two kinds: one is a unified industrial and commercial tax, and the other is income tax."

The higher your income tax, the higher the percentage it will be.

If the tax were levied based on a single company's revenue, it would amount to a huge sum. However, by distributing the revenue across various companies and then calculating the tax, the difference can be tens or even hundreds of thousands of dollars less.

Throughout this year, Lujiawan not only enjoyed favorable weather and a bumper harvest in agriculture, but its side businesses also thrived. In addition to the foundation laid by Chen Fan, Zhang Wenliang led his team to double the number of cooked food shops and expanded to include several major clients, covering the entire Yunhu area, especially all passenger terminals along the Yangtze River within the Yunhu area.

Therefore, in that year, Lujiawan's total revenue from side businesses exceeded 20 million yuan, of which 70% came from wharf shops, demonstrating the immense earning power of the tourism industry.

Ok?
Ahem, of course, this is just gross income. After deducting costs and profits for commune members, teams, and other production teams, the brigade headquarters can only get about 20% to 30%, which is about 5 to 6 million.

In short, Chen Fan understood what Captain Zhang meant: "If it's a tiered tax rate, then we can indeed pay a lot less tax."

Finally, he asked the most crucial question, "We agreed to move all our side businesses there, didn't they offer any recognition?"

"It's been expressed."

Secretary Yang grinned from ear to ear, “Secretary Qian said that as long as we are willing to move, we will not be charged income tax this year.”

Captain Zhang said, "The unified industrial and commercial tax doesn't cost much, so we can just pay it. The income tax is the big expense. I had Li Hui calculate that not collecting it could save more than two million yuan."

Chen Fan couldn't help but gasp. His total income was only five or six million, but his income tax was over two million. This tiered tax rate was really harsh.

Continuing the previous topic, Secretary Yang said, "In addition to exempting this year's income tax, we will exempt it for another two years after moving there, and the tax will be halved for the following three years. When you add it all up, it will be incredible."

Seeing their smiling faces, Chen Fan smiled and remained silent.

Next year, local enterprises will spring up like mushrooms after rain. Even without the preferential policies provided by Secretary Qian and his team, tax reductions or even tax exemptions will be the general trend in the next few years.

However, for now, this is enough to show the commune's sincerity. As for what to do when the tide turns?
Of course, we should follow the trend and continue with the reductions and exemptions.

In general, the first half of the 1980s was dominated by collective enterprises, and it was not until the mid-1980s that private companies began to emerge and flourish.

As for the specific policies, they change every year, or even several times.

Anyway, Chen Fan doesn't plan to get involved in this area too early; he'll just stay put for a few years first.

Seeing the smile on Chen Fan's face, Captain Zhang knew that he was quite satisfied with the policy, so he continued, "In addition to this, the commune also agreed to apply to the county commerce bureau through formal channels to raise raw materials and production equipment for us, so that the food factory and the garment factory have another avenue to go."

These are the most important points; as for other aspects, they are not important.

It's nothing more than providing supporting facilities for the industrial zone, jointly building a building for a guesthouse and restaurant, and moving the supply and marketing cooperative's store and clinic there.

In this respect, it's similar to the artsy new villages in the provincial capital.

After all, according to the plan, once this industrial park is completed, there may be hundreds or even thousands of workers working there. This is the largest enterprise cluster in Nanhu Commune, and even in Gufeng County, apart from Chengguan Town.

In addition, for the honor of being the "first uprising", Secretary Qian and his team naturally gave him whatever they could to make the team look good.

(End of this chapter)