Chapter 267

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With the arrival of the second wave of immigrants, the town’s population had grown to almost reaching 1000 people. And with the arrival of Charlotte-san, who served as both tax collector and nun, we decided to start implementing a tax system. The tax collected would be deposited into Baron Wolfszahn’s account.

As long as the tax system still adhered to Lancaster Kingdom’s laws the ruling lord was free to implement their own tax collection methods, categories and rates. Hence why, I decided to make full use of my knowledge regarding modern tax laws to create a tax system for this new town.

First, I wanted to introduce the ‘withholding tax system’. Withholding tax system was considered to be Japan’s strongest tax system. In order to prevent ordinary workers from feeling burdened by the heavy tax, this system would immediately take the tax straight from the workers’ salaries.

Since the population of this town was still small, thoroughly registering each citizen’s ID would be possible. I wanted to link each citizen’s ID and their corresponding family registry with their savings account in the Commercial Guild. In this way, we could reduce the administrative cost as well. 

Registering each family’s register and opening a savings account for them would cost 20.000 gold. It was not a small amount but I consider this as an essential expense considering the benefit we would gain in the future.

For example, we would be able to distribute relief funds easily in case of emergency or distribute basic monetary aid for the poor. There would not be a single person living in poverty or starving to death in my town. I would never allow a slum to be created. This was my top priority so any expenses that could help me achieve this goal were considered as necessary expenses. Of course, if things were going peacefully, we could also utilize this system to collect taxes automatically straight from the salaries. This system was the most cost-effective.

Next, progressive tax. People with high income would be taxed more and those with lower incomes would be taxed less. Of course, we wouldn’t tax people who were barely earning anything. I wanted to create a tax bracket based on income levels and adjusted the tax rates accordingly. Doing detailed calculations might make things too complicated so I decided to make the tax rates based on annual income in a simple number. 50%,40%,30% and so on. Mind you, people with annual income of 3 gold coins or less would be exempted from taxes.

If the system became too complex, the administration cost would increase as well. Using a simpler system not only would reduce the cost but could also reduce the income inequality as well.

Since the town wasn’t even 1 year old yet, we wouldn’t be able to know the people’s annual income yet. Hence why for the first year, I set the tax rate based on their first month income multiplied by 12.

In this world, they categorized the seasons based on the most prominent quality of each season. Flowers, birds, wind and month. Each season had 3 months, with flowers representing March to May, birds June to August, wind September to November and moon December to February.

Therefore, since the last of Moon 1 could be considered as the last day of the year, I decided to use Moon 1 to mark the end of tax calculation period with the first day of Moon 2 as the start of tax calculation period. From there on, we could implement a tax return process, including refund adjustment (in case we collected too much tax. I would be asking the citizens to fill out their expenses and if we ended up collecting too much tax from them, we would refund the excess.)

The tax rate for entrepreneurs and business owners would be decided based on their first monthly report. We would multiplied those numbers by 12 and addressed the necessary tax refunds at the end of Moon 1.

And so, starting from this month, we were able to collect tax from the citizens. The tax would be deposited into Baron Wolfszahn’s savings account.

As for the basic monetary aid that I had briefly mentioned before…. Every citizen, including babies, children and adults alike, would receive 1 silver coin every month. The money would be deposited straight into their accounts.

With this, there should be no people starving and we could greatly reduce theft and pickpocketing. After all, most people resorted to crime out of desperation. If we could eliminate the economic factor, we should be able to expect a low crime rate in the town as well.

People might be thinking… Do we need to give 1 silver coin to the rich as well? About that, we could recover the excess through tax later so it wouldn’t be a problem. In fact, I believed it would be better to distribute too much rather than too little. Categorizing which citizens deserved the monetary aid one by one would put too much burden on administrative cost so this method would be the most cost-effective for now.

I had other ideas as well but considering the implementation and administrative costs, I decided to go with this system for now and we could change the system through trial and error later on.

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T/N: I don’t even understand the tax system IRL so I’m sorry if this chapter doesn’t make sense.