Passed on 15 Aut'gin, LY 902, by the lower court system. The law reformed the method by which villages built up their public funds, which had been done chiefly through the minting of coins, ever since 117 (see Currency of the Land). Under the new law, everyone who held a job would have to keep track of their income throughout the year, and on Tax Day (see Holidays of the Land), they would be required to pay a percentage of their income for the past year. The law declared that the original tax rate would be 3%, but also said that that rate might be raised or lowered from time to time, depending on changing needs. The rate might also be changed by individual villages rather than universally in every village. The law also stated that at such time as a world government might be established, it would have the right to collect its own taxes, in addition to those collected by villages. The first local taxes were collected in 903, and the first federal taxes in 904, following the founding of the Second Order. The original federal tax rate was 5%. Taxes are to be paid at the bank.
There were frequent complaints that it can be difficult to save enough money from week to week, throughout the year, to have a full year's taxes available on Tax Day. This was one of the chief concerns of the Treasury Department, which was established in 905. On 20 Aut'gin of that year, Congress drafted a proposed law which would amend the tax law, and the amendment was ratified by the High Court on 23 Aut'gin. The amendment stated that all employers would keep records of how much they paid their employees, and deduct the appropriate amount each pay period, depositing it in the banks, which would then see that these monies were paid into both the local village's public fund and the federal fund. However, it took some time for the new regulation to go into effect, as each employer had to not only learn of the amendment's existence, but also incorporate it into their regular accounting practices. For some employers, particularly the ones who employed full-time accountants or accounting firms, the transition was relatively swift. For smaller businesses or individual employers, the transaction took longer. And so, for the fiscal year between Tax Day 905 and Tax Day 906, people enjoyed varying amounts of time in which no taxes were paid or owed, ranging from about two weeks to two months.