Chapter 1998 - The Shi Young Master Keeping Pace with Times
Lying in bed, Huang Ping stared up at the ceiling with bright, wakeful eyes. Sleep eluded him; his mind churned with investigation details.
Though he hadn't studied tax law for long, he understood the concept of "tax avoidance" well enough.
Legal tax avoidance wasn't a modern invention—it had existed since ancient times. Land Tax, for instance, invited all manner of tricks. The Huang family had once been "powerful gentry" in Lingao, and as a body-servant to Young Master Huang, Huang Ping knew something of the methods involved.
The Shi family's routines were nothing new to him: When the Australians changed the tax collection rules, the Shi family simply "kept pace with the times"—drilling through every loophole in the regulations.
No wonder Old Money keeps getting richer and richer, Huang Ping thought. An ordinary commoner would faint just looking at these articles, let alone researching a path through them.
But then again, ordinary commoners could barely recognize a few characters—forget about deciphering these tongue-twisting clauses!
In truth, the question Zeng Juan had asked earlier today—though somewhat embarrassing—struck at the heart of the Shi family's tax avoidance strategy. This Second Young Master Shi had thoroughly digested the finance and tax provisions: Sanya was Tax Exempt. Property Tax operated under territorial management. By transferring funds from Guangzhou to Sanya, the Property Tax obligation vanished entirely. This maneuver was not merely clever—it was remarkably difficult to execute. Among Guangzhou's local major households, few understood the tax clauses thoroughly; fewer still knew the preferential tax provisions of Sanya, hundreds of miles distant. The Shi family was extraordinarily well-informed!
The Shi family is more formidable than the Liang family, Huang Ping concluded. No wonder Chief Wang had dispatched him here for the inspection. At first, he'd suspected they were making too much of a minor matter. But the Chief's vision proved keener than his own!
The next day, Huang Ping requested assistance from the local tax collection department, mobilizing copyists to duplicate the Tianrui Garden account books.
"All account books—copy the complete set. And all current vouchers must be registered and inventoried one by one."
Night had grown deep. The lamp on the desk still burned. Wang Qiyi rubbed his face and gulped another mouthful of strong tea like an ox, trying to sharpen his thoughts. Staying up late for work was something he loathed with every fiber of his being. But by the time Zeng Juan and Huang Ping's group report arrived, two municipal government meetings still awaited him. There was no choice but to drag the report to nighttime reading.
The situation was now clear. The Shi family had first transferred substantial liquid assets to the Sanya branch—Tianrui Garden—through DeLong. Then, exploiting the Joint Venture and Merchant Introduction conveniences, they relocated their primary production to Sanya, accomplishing entirely legal tax avoidance. This was an unavoidable consequence. Sanya's tax reduction and exemption policies for investment attraction had been Senate policy since Wang Luobin's tenure. Similarly, while mainland merchants like the Shi family remained relatively few, those from Hainan's various counties who had established Sanya branches—or relocated their entire operations there—were countless. The snow-white sugar, the gorgeous silk and porcelain, the Australians' novel gadgets, and the enormous import demand they generated had made European nations increasingly attentive to this new commercial port with its superior location and lower tax rates. Sanya's Free Port positioning had also brought Foreign Merchant Halls to line up along both sides of Cape Avenue, their buildings constantly rising ever higher and grander.
A cool breeze stirred. Wang Qiyi continued gently fanning himself with his palm fan. During this year's Property Tax reassessment, the Shi family had produced DeLong remittance documents, requesting a reduction in the Liquid Capital Amount calculated against their real estate holdings. No one had paid attention at the time. Had Meng Xian not mentioned this case as an example over drinks—commenting that their business model was not merely acceptable but actually quite advantageous—Wang Qiyi would probably never have known about this tactic. Joint venture, factory construction, remittance, transfer. The Shi family had walked this path step by careful step, steady and deliberate.
Everything appeared legal and reasonable. Was he truly harboring groundless suspicions? Senate tax rates weren't particularly high. Would anyone really create such an elaborate structure—even relocating their Old Shop's foundation—just to save a bit on taxes? The approach didn't fit this era's natives and their widespread preference for stability. So where exactly was the problem?
His gaze returned to the account books on his left, which he'd only skimmed earlier. Zeng Juan and Huang Ping had copied the current period's General Ledger in its entirety, along with the Classification Ledgers they deemed crucial. This earnest, methodical approach pleased Wang Qiyi greatly. The books weren't numerous—just two or three volumes. Wang Qiyi felt that, if nothing else, he shouldn't disappoint his subordinates' hard work. He ought to read them through carefully.
Mm? Is this cash flow figure excessive?
Just as Wang Qiyi had been preparing to grant the Shi family a "Law-Abiding Citizen" conclusion, the cash flow entries for Tianrui Garden's Hong Kong Warehouse in the final ledger made his eyes gleam. He shot upright in his chair. Hong Kong Warehouse... Sanya Warehouse... Workshop... Raw Materials... Wang Qiyi spread all three account books open and picked up his pen, comparing entries one by one.
So that's how it works!
Before he'd even reached the final figures, Wang Qiyi had essentially grasped this Second Young Master Shi's sleight of hand. The warehouse Tianrui Garden leased on Hong Kong Island was nominally a transit facility for the Sanya factory's mainland operations. In reality, the Shi family used it to run a middleman operation, earning substantial price differentials. Silk products, ceramics, and other goods the Shi family purchased from the mainland were recorded directly into Tianrui Garden's accounts via telegraph—but the actual goods were transported only to the Hong Kong Warehouse, then sold under Tianrui Garden's name. Payments were remitted to Sanya through DeLong. After enjoying local tax reductions or exemptions in Sanya, they used the Tax Payment Certificate to offset duties at Hong Kong Customs via the Great Wave scheduled shipping service. Finally, buyers only needed to collect goods in Hong Kong, or the Shi family would undertake border transport on their behalf. Leveraging their tax-exempt advantages, the Shi family could undercut Hong Kong Warehouse shipping prices considerably—hence their booming business. Looking at the cash flow, sales volume had grown by more than a tenth in just half a year.
"Tsk, tsk—Young Master Shi, oh Young Master Shi, you're still too timid." Wang Qiyi twirled his pen, smacking his lips with something like regret. Why insist on selling under Tianrui Garden's name? If they purchased under the Old Shop's name and sold under the Old Shop's name, then the sales income could be recorded as accounts receivable at the Old Shop, with actual payments directed to the Sanya Tianrui Garden account. The Sanya branch and the Guangzhou shop remained one family—internal goods transfers not involving cash payments wouldn't count as sales. Why not exploit that? Structured this way, they'd pay not a penny of Business Tax—an extra layer of profit beyond the Half-Levy Preference they currently enjoyed in Sanya. Alas... pity, pity. Wang Qiyi shook his head, his musings trailing off with a sense of unfulfilled potential.
Eh? Wait—my perspective seems to have gotten crooked.
He tossed aside his pencil, reining in his thoughts. Wang Qiyi stretched luxuriously, then sank back into his chair.
The Shi family's calculations were clear enough, but punishment was impossible. If one had to identify a problem, it was merely that their Tax Registration Main Business hadn't been fully declared—categorizing this as Out-of-Scope Operation. The maximum fine would be one tael of silver.
"This is what you get for building fiefdoms! This is what you get for staking out territory!" Wang Qiyi muttered with mounting amusement. "'Developing the local economy,' they said. Being a regional official and not knowing where your loyalties should lie. How's it looking now? Fight over it! Scramble for it! Tax exemption not enough? Why not add subsidies too!" The more he thought about it, the more a malicious glee bubbled up. He laughed aloud.
"Chief, what's so amusing? Don't tell me Chief Zhang is coming?" Guard Mi Suisui entered to pour water and, seeing Wang Qiyi laughing and fanning himself alone, cracked a casual joke.
"What does a little brat like you know? Go play somewhere else." Wang Qiyi's temper was quite good, especially with these young lads not much older than his own daughter. "I'm writing a note. Deliver it to Comrade Huang Ping's dormitory first thing tomorrow morning."
After dismissing the guard, Wang Qiyi sipped his tea and considered whether to arrange a meeting with this Second Young Master Shi. This dandy wasn't bad at all. While tax collection was ultimately just "human affairs" with no insurmountable gaps in understanding, the fact that he could so quickly exploit the Senate's era-spanning technological capabilities for tax avoidance—accurately identifying blind spots in inter-jurisdictional tax management—marked him as a genuine talent. Far superior to that Liang family, slicing off their own tail in desperate self-preservation. Such abilities were wasted in the private sector earning money for his own clan. He should be called out to serve the Senate. There had always been voices within the Senate advocating for sending people to Europe to engage in speculative commerce—harvesting a few waves of leeks, as it were. But having Senators personally undertake such matters was inadvisable. Perhaps dispatching people like Shi would work better. Let them bring their own capital; the Senate would provide necessary intelligence. Profits split fifty-fifty with the Senate. And if they lost...
He reined in his thoughts before they galloped too far. This matter warranted prominent treatment in his internal report. It would serve as a pointed reminder to those Senator-County-Mayors and Senator-City-Mayors who howled as if their lives were at stake whenever they heard the words "Comprehensive Arrangement." Let them understand what "Whole Nation, One Chessboard" truly meant. Did they think they could bypass the Finance and Tax Bureau and go it alone? They could wait to have their faces slapped by seventeenth-century natives.
"Chief, Bureau Chief Ai sent someone asking whether you've reviewed that Special Expense application?" A messenger appeared at the door.
"What Special Expense?" Wang Qiyi had been drafting carefully in his mind. The interruption instantly soured his mood.
"The 'Naturalized Cadre Family Life Promotion Memorandum' from Senator Du..."
"Oh, that one." Wang Qiyi's spirit revived. Since they'd hung the "Finance and Tax Bureau" sign, their job encompassed not just collecting money but also spending it. As the system gradually matured, Guangzhou City's extra-budgetary expenditures now all required clear budget documentation and approval before payment.
This so-called "Naturalized Cadre Family Life Promotion Memorandum" had been issued by a Senator named Du Yibin, currently serving as County Director in Enping County. By all accounts, Enping County's situation wasn't exactly peaceful—yet this Senator had inexplicably submitted such a memorandum to Liu Xiang.
The content wasn't particularly complicated. In essence: finding wives for naturalized citizens.
Gender imbalance under Senate rule had persisted for some time. Even after Engine Action's large-scale population influx, the problems of marriageable females being scarce and bride prices remaining absurdly high remained unsolved. Forget ordinary commoners—many male naturalized citizens lacked wives, reduced to the status of "leftover men."
Too many leftover men constituted a social instability factor. This was especially true for Fubo Army soldiers. Though the military had instituted an officer and senior NCO marriage program modeled on something like the "258 Regiment" requirements, the reality was too many monks and too little porridge. Many still couldn't solve their spouse problems. As for ordinary soldiers—they had essentially no hope.
Officers and soldiers who'd served for years, who'd repeatedly risked their lives, couldn't even marry a wife? They could only rely on the monthly-issued Joy Coupons to address their sexual needs. No family life. No heirs. The impact on morale was substantial.
Now that the Senate occupied Guangdong and had added millions to its population resources, failing to address this problem any longer would be indefensible. Liu Xiang had no sooner entered Guangzhou than the Civil Affairs Bureau and the General Staff Political Department jointly issued "Guiding Opinions" regarding soldier and cadre marriage.
Guiding Opinions were one thing—implementation remained problematic. Liu Xiang had just entered the city. A hundred urgent matters demanded attention. Major cases piled upon important cases. Where did he have time to find wives for his subordinates? The matter had gotten shelved.
Unexpectedly, this Enping County Director had proactively submitted documentation addressing an issue that wasn't even his direct responsibility.
Since ancient times, securing a wife required money. No matter how eras changed, this core element of marriage remained constant. In seventeenth-century China, the transactional nature of marriage was expressed even more nakedly than in later eras—it was essentially a buying and selling relationship.
Though Senate rule had added millions to the population, when examined overall, females didn't appear to outnumber males. Society-wide, marriageable women remained far fewer than marriageable men. The "body price" for marrying a woman naturally couldn't be low. Moreover, marrying and establishing a household was equivalent to a new enterprise opening: a house was needed, basic household goods had to be prepared... none of these could be accomplished without money.
How Senators Liu and Du would locate suitable females was beyond his purview and his interest. But the expenses were real. This funding obviously couldn't come from City Finance—Liu Xiang couldn't produce such sums either. So ultimately, this ball got kicked to the Finance and Tax Bureau. Finally, Wudaokou made the decision: seeking Senate approval to expense it from the "General Office Special Fund."
The General Office Special Fund, as its name implied, was controlled by the General Office—a budget line item used for Senators' various private activities and lifestyle service expenses. The funding source was income from the Senator Foundation.
Using this money to handle the major matter of naturalized cadre marriages would not only preserve normal fiscal expenditure but also function as winning hearts and minds. It additionally served to appease a faction of Senators advocating "Army Private Ownership"—though the funding wouldn't come under personal names, it would at least come under Senate auspices.
Wang Qiyi naturally had no objection. But the specifics of disbursement still fell to the Finance and Tax Bureau to manage.
"Tell Bureau Chief Ai: I've read the specific budget sheet. It's far too rough—it needs to be rejected and redone." Wang Qiyi said. Most Senators had no idea how to prepare a budget. Submitted budget items were uniformly sloppy and negligent. In Director Wang's view, this was entirely unacceptable.
"Rules may be troublesome, but they still need to be built step by step."