Chapter 554: Lottery, Tax Cuts, Something For Everyone
Joseph continued, "And when sellers purchase raw materials, they must also obtain price verification documents from their suppliers.
"Oh, these verification documents have a name: 'invoices'."
"When factories or shops issue invoices, they must be in duplicate—one for the buyer, and one for their own records.
"This way, tax officials can easily ascertain sales based on the seller's invoice records, and by cross-referencing their purchase invoices—which can also be found on the invoices from their suppliers—determine how much Value-Added Tax is due."
Robespierre's mind raced, and he blurted out:
"Your Highness, what if a seller hides their duplicate sales invoices?"
Joseph calmly replied, "Invoices must be obtained by businesses from the Tax Bureau. Each invoice has a serial number, and both the quantity obtained and their numbers are recorded. If they issue an invoice to a buyer, there must be a corresponding duplicate on file. Otherwise, there will be missing numbers in their invoice book, in which case the Tax Bureau can fine them—a penalty that will certainly be much higher than the Value-Added Tax itself."
Robespierre nodded, enlightened, and immediately asked again:
"Your Highness, how do we ensure that shops or factories always demand an invoice when purchasing goods from a seller?"
"Without a purchase invoice, the cost price will be calculated at the market's lowest rate, and the shop will have to pay an extremely high Value-Added Tax.
"They could even be penalized for suspected smuggling."
Robespierre's eyes lit up. "As Your Highness said, this taxation method allows buyers to supervise sellers, and tax officials only need to inspect invoice books to prevent tax evasion."
As he spoke, he suddenly noticed a 'blind spot' and turned to Joseph.
"Your Highness, what about the final purchasers of goods, such as farmers? They have no need for invoices at all.
"Therefore, they have no incentive to ask for an invoice, and if they don't request one when buying something, there will be no record in the shop's invoice book..."
"You've identified a very important issue," Joseph acknowledged.
In fact, ordinary people not asking for invoices was a persistent headache for tax departments even in the 21st century. Many businesses evaded a lot of taxes because of this.
However, it was precisely because of this that later tax departments devised many countermeasures.
"We can use various methods to encourage people to ask for invoices," Joseph said with a slight smile. "For example, all government departments and employees must submit invoices for expense reimbursements. Without an invoice, no reimbursement will be made."
Government spending was no small sum, and government personnel taking the lead in demanding invoices would also serve as a guiding force for French society.
"Secondly, we can introduce an invoice lottery. Every used invoice number will be entered into a drawing, with the Tax Bureau announcing the winners each month. The prize money doesn't need to be very high—three sous to one franc would suffice—but the key is to have a large number of winners. If we announce 100,000 winners each month, the total prize money would only be 10,000 to 20,000 francs, which would entice many people to demand invoices."
The effect of invoice lotteries wasn't particularly significant in the 21st century, mainly because people's pace of life was too fast, and they were too lazy to waste time or save invoices.
But in the 18th century, people had plenty of time. For a few sous in prize money, there would certainly be plenty of people willing to 'haggle' with sellers. And keeping receipts was one of the fundamental duties of a housewife in that era.
Joseph continued, "The Tax Bureau could even implement a policy allowing ordinary citizens to use invoices to deduct from their personal taxes. The more they buy, the less tax they pay, which would also stimulate commerce.
"Of course, there must be an upper limit, such as a maximum deduction of three francs per person per month, to prevent the wealthy from using this to evade taxes."
Robespierre and Fulco both nodded repeatedly upon hearing this. Forget three francs; even if they could save three sous in tax, ordinary French citizens would furiously demand invoices when buying things.
But the Crown Prince showed no signs of stopping. "Finally, and most importantly, there's public opinion and propaganda.
"We need to make ordinary people understand the crucial importance of asking for invoices.
"Not by saying that invoices guarantee national tax revenue, but by directly telling them that demanding invoices prevents wealthy factory owners and shopkeepers from evading taxes. If the rich evade too many taxes, the government will have no choice but to raise tax rates to ensure national financial stability. In that scenario, ordinary people would have to pay more taxes."
The two senior Tax Bureau officials shared the same thought: 'The Crown Prince truly understands human nature!'
Ordinary citizens, to varying degrees, harbored some animosity towards the wealthy. Even if they wouldn't do something to save themselves a small amount of tax, they would certainly be very active if it meant making the rich pay more taxes.
With such a series of measures, France would soon see a surge in demand for invoices.
Robespierre exclaimed, "Your Highness's Value-Added Tax plan is simply perfect! From now on, tax officials will only need to monitor invoices to prevent most instances of tax evasion."
Fulco nodded in agreement, "And we can expect the number of tax officials required to decrease. The Tax Bureau is currently short-staffed, so this will solve a huge problem!"
Over the next few days, Joseph and the senior officials of the Tax Bureau discussed in detail the plan for implementing the Value-Added Tax and invoice system. Later, Denico, the General Manager of the Paris Business Journal, also joined the discussions.
Towards the end of the month, as the Paris Business Journal ran the front-page headline "Shocking! They Are Quietly Devouring Your Purse—What Can You Do?", the Tax Bureau announced its plan to convert commodity taxes to Value-Added Tax with extreme efficiency.
The Royal Mint of Paris also provided full cooperation, ensuring all invoice printing would be completed within a month.
Subsequently, long queues formed outside Tax Bureau offices across France, marking the beginning of a rush to collect invoice books.
What Joseph hadn't expected was that the national treasury received a substantial influx of funds even before the Value-Added Tax was officially launched. In just under half a month, the fees collected by Tax Bureaus nationwide for invoice books alone amounted to 3.2 million francs.
At the same time, Robespierre's earlier proposal to increase training for tax officials wasn't delayed. All Tax Bureaus conducted one and a half hours of training daily. Furthermore, at Joseph's request, personnel from the Notary Investigation Bureau were invited to the Tax Bureau periodically to give lectures.
...
Western Baltic Sea.
Kattegat Strait.
Although the British Royal Navy's fourth-rate battleship, HMS Polyphemus, had only half its sails raised, it was still moving exceptionally fast, propelled by the ocean currents.
At its current speed, it would reach its destination, the port of Riga, in three days.
In the senior officers' mess, Lord Grenville, the British Foreign Secretary, looked at the plate before him and smiled at the Duke of Leeds across the table.
"You won't have to suffer through this dreadful food tomorrow. I truly envy you."
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