I'm the Dauphin in France

Chapter 465 Taxation and Administration

“Low return on investment?”

Joseph frowned slightly. Does this mean that it is not profitable? In the late 18th century, engaging in industry, and with all kinds of advanced ideas, how could it not make money? !
Mirabeau said helplessly: "That is indeed the case, Your Highness."

With his help, Joseph found the data on the return on investment of various industries in the report. At a glance, he saw that the return rates of most industries were between 6% and 10%.

This figure would definitely be considered impressive in the 21st century, but at the moment, it is shockingly low.

You should know that the current basic deposit interest rate of banks is 6.2%, which was lowered after the fiscal crisis eased slightly last year. It was even above 7% before that.

If you lend the money out, you can easily get 10% interest.

Under such circumstances, who would be willing to invest money in industry?

When Joseph saw that the profit margin of the steel industry was only 7.9%, his face immediately darkened. He looked up at Mirabeau and said, "Our ironmaking industry has already made extensive use of hot blast technology. The profit should definitely be more than 20%. What went wrong?"

He had been busy with the Silesian war in the past few months, and had indeed neglected to pay attention to the development of the country. He had thought that with all kinds of new technologies and standardized production models, those factories should have made a lot of money, but he didn't expect that the profits only barely beat the bank deposits.

Mirabeau rubbed his hands awkwardly and said, "Your Highness, if it is sold near the factory, the profit can indeed reach 20%, but if it is shipped to Paris or Bordeaux for sale, the profit will be less than 7%."

Bailly added: "After the signing of the Rhine-Seine Treaty, we made nearly 10% profit on iron products sold to Germany."

Joseph subconsciously said, "Why is this..."

Before the two could answer, he reacted: "Is it because of the local tariffs of each province?"

"Yes, Your Highness." Mirabeau nodded with a wry smile, "And the tolls from various places have swallowed up a lot of the profits of the goods."

Bailey continued: “There are even some provinces that see goods shipped from other places as an opportunity to make money.

"Like what I saw last month in Toulouse - the tax collector collected sales tax on a truckload of cloth based on the value of the goods, then stopped the truck again at the next intersection and charged them another sales tax based on the size of the vehicle. Yes, adding one word means two different taxes, approved by the Toulouse High Court."

When talking about unreasonable taxation and other things, Mirabeau, as a representative of the capital aristocracy, couldn't help but complain.

Joseph soon frowned as he heard this.

At this moment, French industry began to prosper, so tax farmers and local governments were trying every means to squeeze the last drop of profit from the factories.

For example, in Lyon, the textile industry center of France, the local government actually stipulates that all fabrics leaving the factory must reach a certain length and width before they can be transported and sold, otherwise they will face fines or even public burning.

The tax collection teams of the tax farmers would circle around the factories every day, tax law provisions in hand, trying desperately to deduct whatever taxes they could, making the factories miserable.

In fact, Joseph knew that there was something else that the two of them had not talked about, which was the corruption of officials. At present, there are still a large number of officials in France who were bought with money. In order to recoup their "costs", these people are extremely corrupt. Although the establishment of the Fair Investigation Bureau has played a certain deterrent role on officials, Marat's energy is limited after all. Those officials use some means to make things difficult for factories and secretly ask for benefits. Such things are difficult to investigate.

Joseph couldn't help but rub his temples tiredly. He had previously focused all his energy on promoting technology, management improvements, and increasing the competitiveness of the factory, but neglected the issues of the business environment.

The reason why Britain has become the world's first industrial power today is that in addition to the huge source of raw materials and sales markets brought by the colonies, one of the core factors is that they have the best factory operating environment in Europe.

The UK abolished domestic local tariffs decades ago, and the tax system has undergone several reforms and is considered to be very transparent and reasonable.

As for the integrity of officials, although British officials were also corrupt - which was simply unavoidable in the 18th century - compared with other countries, they were already among the best.

All these have greatly promoted the industrial development of Britain. In comparison, France is still using feudal officials and taxation systems to manage a country that is entering the industrial age.

If left alone, French industry, even with its own advanced technology and ideas, is likely to be crushed by its own tax farmers and officials...

Joseph couldn't help but sigh: "It seems that we have to carry out tax reform as soon as possible."

He added silently in his heart: There is also administrative reform.

Mirabeau and Bailly looked at each other, and then said carefully: "Your Highness, with all due respect, even if some laws regulating taxation are passed, those tax farmers will always find ways to circumvent them..."

"You are right," Joseph nodded and said in a deep voice, "So, our target will be the Tax Farmers Association!"

The General Association of Tax Farmers is the autonomous body of all tax farmers in France.

At present, the tax system in France is roughly like this: at the beginning of each year, representatives of the General Association of Tax Farmers negotiate with the Minister of Finance to work out the tax amount for one or more years, and then sign an agreement based on this.

After that, tax farmers in various places would pay a tax amount directly to the French government according to the amount on the agreement, and then they could collect taxes in a certain area, and all the taxes collected would belong to the tax farmers.

In other words, the French government only issues tax laws but does not participate in the actual tax collection.

The tax farmers were the ones who supported the tax collection teams. Various tricks and extortions were common, and the people were full of complaints and hated the tax farmers. Although the taxes collected were high, the French government could only take a fixed share of the tax, and its finances were stretched to the limit.

Mirabeau's eyes flashed with surprise when he heard this, but he immediately said cautiously: "Your Highness, our financial situation... I'm afraid we can't bear the impact of this."

What he said is also objective fact.

At present, the bulk of France's fiscal revenue comes from tax collection, which is collected from tax farmers at the beginning of each year, sometimes even for two or three years at a time.

If the tax farmer system is changed, the French government will face a situation where the treasury is empty at the beginning of the year.

Although the government can collect taxes later, it will take at least several months. What about fiscal expenditures during this period?
(End of this chapter)