Zombie Apocalypse: Creation-Chapter 697: Taxations and Inflation

Chapter 697: Taxations and Inflation
After staying in Houqin’s office for a bit, Xiaoyun quickly called one of the head staff to take over the position for the day.
He headed back into his car, driving to the adminstrative building before parking his car right in the front.
"Good afternoon, Boss!"
"Good afternoon."
As Xiaoyun walked past the front desk and entered the elevator alone, he quickly pressed the top floor and waited as it began traveling upward.
Once out of the elevator, he sees Jianlin working right outside Yuqi’s office, with several other workers seemingly to be chatter about something.
"Good afternoon, Boss!"
"Good afternoon."
He didn’t waste any time as he entered straight into Yuqi’s office, only to find Liuqian and Muxie both sitting right across from her.
"Oh, hey, Governor." Liuqian immediately waved, his face changing from a grumpy mood to a warm smile.
"Hey Liuqian."
"Finally, look who decided to show up after the entire morning had gone by," Yuqi murmured as she gave him a sour look.
"I had something to do in the army... Anyway, what brought the two experts here to your office today?"
"Governor, Mrs.Yuqi herself had given a press conference just a few hours ago," Liuqian replied first.
"Really?"
Xiaoyun looked a little surprised as Yuqi had always avoided camera attention, at least not intentionally going to the press.
"Babe, you know our current financial situation, right?" Yuqi softly asked as she started moving her chair a little closer.
"Yeah. Of course. We’re currently spending a lot of money to stimulate the economy. What about it?"
"I announced a government plan to the press about professionalizing and standardizing the tax code across all financial transactions."
"Sounds good to me... Is there something off about it?"
As Xiaoyun turned his attention over to Liuqian and Muxie, it became blatantly clear that this was the reason why they were here today.
"Governor, this is not the best time to announce sweeping changes. We need these companies to fully mature first before we can put the tax burden on them."
Liuqian’s argument made sense in Xiaoyun’s head, as the whole market had been allowed to be tax-exempt for rapid growth.
Their whole original plan was to floor the new business with so much capital that they could feel safe expanding first rather than taking profit.
"Yuqi, why tax now?"
"We’re already starting to feel liquidity pressure from last month’s . We already borrowed more than we make from the central banks.
Even if they have extremely low interest payments, we should rein in our spending at a certain point rather than letting it balloon."
"Is the situation that bad? I thought we had assets that we could exchange and trade in for liquidity directly." Xiaoyun questioned.
"That’s assuming we have a market that can buy our goods. Many of the manufacturing businesses are already saturated with machines they had brought from us.
We have no one else to sell our inventory to other than the central bank. And Liuqian had explicitly stated that those items’ evaluation is way too high."
Looking over to Liuqian, he nodded his head, giving Xiaoyun the signal that what Yuqi had said was really true.
"How much money do we have left before we need to earn more money?"
"We have five months’ worth of funding. After that, there wouldn’t be any money to borrow unless we started going deep into citizens’ deposit money."
Liuqian’s answer made Xiaoyun fall into silence. The thought of withdrawing citizens’ own bank accounts sounded like a disaster waiting to happen.
Especially considering that almost 99% of the citizens’ money was deposited in the central bank.
Having the central bank loan 20% of its deposit to the government was already high enough based on the balance sheets.
Going any further was only fueling an unhealthy level of spending. One that would be an opium level of addiction.
"I don’t see any problem with starting to tax cooperations... Liuqian, what other argument do you have against it?"
"Governor, the only option isn’t only borrowing money from the central bank. Mrs.Yuqi has the treasury, and it can print more money at any time."
"Printing money?"
Xiaoyun’s face immediately got a little concerned as he already knew the effect of what happened when he last printed money to transition the currency.
It almost created a hyperinflation cycle, only under control after they stopped printing and started bringing out more food to stabilize the currency.
"Xiaoyun, you know the effect of inflation. We already have enough money circulating for citizens to make free market transactions."
Seeing Xiaoyun starting to lean towards Yuqi’s favor, Liuqian immediately fired back with his own set of facts.
"Governor, that is absolutely wrong. It’s further from the truth. The market is severely money-starved because we don’t print more."
"How so?"
"Here’s our own survey we had conducted across different regions. We sent people out to survey with both citizens and business owners alike."
As Liuqian looked over to Yuqi, she hesitated for a second before handing a folder to Xiaoyun’s hand.
Inside, it was a research paper. Reading just the abstract, it was stating how citizens far away from the city were bartering goods for goods.
Even for services, they were being conducted with goods rather than actual money. Half of the people in the survey specifically stated the lack of money.
In other words, they just couldn’t trade their goods for money. No government or outsider bought their goods in exchange for money.
An entire town or district could have only a thousand NRC when it needs an estimate of fifty thousand to function properly.
The economic output lost from the bartering was severe, to the point that people were selling their goods or services at a loss to get the things they needed to survive.
At the conclusion of the paper, the solution was stated to print more money and to increase outflow outside of the two duo capitals of Luoping and Guangzhou.
"Yuqi, you read this paper, right?" Xiaoyun questioned as he closed the folder before putting it down on the desk.
"I did. But printing money won’t solve the issue. It’s only going to concentrate money towards the manufacturing sector rather than to the rural areas."
"How would you know that?"
"Because two-thirds of our subsidy is to manufacturing and construction. If we print more money, it will just land straight into their hands."
Xiaoyun didn’t even need to turn towards Liuqian for an answer as Muxie chose to speak up this time.
"Miss Deputy Governor. You say the money will go into the manufacturing sector. But do you not see that the raw resources come from those exact rural areas?
It’s not like those manufacturing businesses only locate in the city. Hell, many of these businesses are located in those smaller towns.
If this can’t rejuvenate those towns, I don’t see how taxes would help those smaller, rural communities."
"How many of those struggling towns have raw resources to export? How many of them have nothing other than people?
You say manufacturing is located in those smaller towns, you tell me, how is electricity going there when our grid is still mostly functioning only in the city?
And how many of those towns are just government-run collective farms that have nothing going for them other than us giving them a place to live?"
Yuqi’s counter-argument made both Liuqian and Muxie fall into silence. It was almost as if the two of them knew it was the main critical flaw in their study.
"There is no need for money to flow into those villages in the first place. They are temporary settlements to help them feed themselves.
When we produce more food with more fuel and mechanized machines, it will only be a matter of time before those temporary settlements are abandoned."
Watching the two of them continue to sit there in silence, it was clear to Xiaoyun that someone had already won the debate long before he entered the room.
"Well, Liuqian, Muxie, do you two have anything else to argue back with?"
"We don’t have anything else to say back..."
Liuqian murmured as his face returned to the initial grumpy mood when Xiaoyun first entered the room.
"Very well. Yuqi, you are going to... implement Liuqian’s plan first."
"What?"
Xiaoyun’s sudden answer confused all three of them, especially Yuqi, as she couldn’t believe what had come out of her husband’s mouth.
"Relax, Yuqi. I’m not saying your idea of taxing is abandoned. Rather, I want you to begin testing how rates of taxes would affect the market first.
And I know what inflation can do to our economy, but that doesn’t mean we should just shy away from it as a possible solution.
Just because something is dangerous to work with doesn’t mean we should never use it. We can start printing small and see its effect first.
If Liuqian’s point is valid, then we can just continue the small flow to let more liquidty into the market. It can always be put on hold at any time.
At the end of the day, we can do both of them. While we test your ideas in the back, we can put the research paper to the test and see if its solution works or not."