Chapter 554: Lotteries, Tax Breaks, and Incentives for Everyone
Joseph continued:
"And sellers must also request proof of price when purchasing raw materials from their suppliers.
"Oh, this proof has a name: 'invoice.'
"When a factory or shop issues an invoice, it must be in triplicate—one copy for the buyer, one for the seller, and one for the tax bureau's records.
"This way, tax officials can use the seller's invoices to easily track their sales. Based on these records, combined with purchase invoices, they can accurately determine the value-added tax owed."
Robespierre's mind raced as he grasped the concept. He blurted out:
"Your Highness, what if the seller hides their invoices and keeps no records for the tax bureau?"
Joseph replied calmly:
"Invoices must be issued by the tax bureau, and each one will have a unique serial number. The number of issued invoices and their sequence will be tracked. If a seller issues an invoice to a buyer, there will always be a matching record. If there are gaps in the invoice sequence, it will trigger fines—significantly higher than the unpaid tax."
Robespierre nodded in understanding, then posed another question:
"Your Highness, how do we ensure that shops or factories request invoices when they purchase supplies?"
This time, Foulque interjected, wearing an expression of incredulity:
"Without purchase invoices, the buyer's costs will default to the market's lowest price, forcing them to pay extremely high value-added tax.
"Additionally, they can be penalized for suspected smuggling."
Robespierre's eyes lit up. "As Your Highness said, this system encourages buyers to monitor sellers. Tax officials can simply check the invoice records to prevent tax evasion."
He paused, spotting another potential issue, and turned to Joseph:
"But, Your Highness, what about end consumers—like farmers? They don't need invoices, so they have no incentive to ask for them. Without these requests, sellers won't document these transactions."
"You've identified a critical problem," Joseph said with a nod.
This challenge of consumers not requesting invoices persisted even in the 21st century, leading to substantial tax evasion by businesses. However, modern tax authorities had developed creative solutions to address it.
"We can encourage people to request invoices," Joseph said with a smile.
"For example, all government departments and employees should be required to provide invoices for expense reimbursements. Without invoices, no reimbursements will be processed."
Government spending accounted for a significant portion of expenditures, and requiring officials to request invoices could set an example for society at large.
"Additionally, we can introduce invoice lotteries. Each used invoice number can enter a monthly lottery. The prize amounts don't need to be large—three sous to one franc per prize—but there should be many winners. Offering 100,000 prizes each month would only cost 10,000 to 20,000 francs but would motivate countless people to demand invoices."
In the 21st century, such lotteries had mixed success due to the fast pace of life. People often didn't bother keeping invoices. However, in the 18th century, where time was abundant, even a chance at a small prize would encourage widespread participation.
Joseph continued:
"The tax bureau can also allow ordinary citizens to use invoices to offset personal taxes. Spending more would mean paying less in taxes, which could also stimulate commerce.
"Of course, there should be a cap, such as a maximum deduction of three francs per person per month, to prevent abuse by the wealthy."
Both Robespierre and Foulque nodded repeatedly. For the average French citizen, even a three-sous tax reduction would be incentive enough to insist on invoices.
Joseph added:
"Lastly, and most importantly, we must use public outreach to educate people on the importance of requesting invoices.
"Don't just tell them invoices are crucial for national tax systems. Instead, explain that invoices prevent factory owners and shopkeepers—the wealthy—from evading taxes.
"If the wealthy evade too much tax, the government will have to raise rates to ensure stable finances, forcing ordinary people to pay more."
The two tax officials exchanged glances, marveling at Joseph's deep understanding of human nature.
Ordinary citizens often harbored resentment toward the wealthy. Even if they weren't motivated to act for their own benefit, the idea of making the rich pay more taxes would spur them into action.
These measures were sure to ignite a nationwide movement to request invoices.
Robespierre exclaimed, "Your Highness, your value-added tax plan is brilliant! With this system, tax officials can focus on invoices and eliminate most tax evasion."
Foulque agreed: "This will also reduce the number of tax officials needed, addressing our current staffing shortages!"
Over the next several days, Joseph and the tax bureau leadership refined the implementation plan for VAT and invoice systems. Denis Co, editor-in-chief of The Paris Gazette, was also brought into the discussions.
By month's end, The Paris Gazette ran a sensational headline:
"Shocking! They're quietly stealing from your wallet—Here's how you can stop them!"
Simultaneously, the tax bureau swiftly announced plans to replace the goods tax with VAT. The Paris Royal Printing House worked tirelessly to ensure invoice booklets were ready within a month.
Soon, tax bureau offices across France saw long queues of merchants eager to collect invoice books.
Unanticipatedly, even before VAT launched, the national treasury received a windfall: invoice book fees alone brought in 3.2 million francs within weeks.
Meanwhile, Robespierre's proposal to increase tax official training also proceeded smoothly. Daily training sessions were held, with occasional lectures by public integrity officers at Joseph's insistence.
Western Baltic Sea, Kattegat Strait.
The British Royal Navy's fourth-rate ship of the line, HMS Polyphemus, was sailing briskly with only half its sails unfurled, propelled by the current. At its current speed, it would reach its destination, Riga, in three days.
In the officers' dining room, British Foreign Secretary Lord Grenville eyed his plate and smiled at the Duke of Leeds across from him.
"Tomorrow, you'll no longer have to endure this dreadful food. I envy you."
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