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Vol 05 Chapter 139: Financial Reforms I

「Wow… you had such a dream?」

「Yeah, seriously… I’m sleepy because of it.」

A yawn escaped my mouth.

I wasn’t able to sleep soundly. It’s the worst.

「A fairy with an arrogant personality, huh… got it, I’ll be careful.」

Julia nodded.

Well, I doubt you should take what a fairy says too seriously.

「…」

「What’s the matter, Tetra?」

Tetra seemed to be deep in thought. She had a troubled look on her face.

「Uh… I’m just thinking about the concepts the fairy taught you… How interesting…」

You really love it, huh… Those kinds of topics.

◇

Our country’s annual income amounts to one thousand Talents. Let me explain the breakdown.

• Monopoly on the sale of salt… four hundred Talents
• Monopoly on the sale of paper… one hundred Talents
• Monopoly on the sale of alcoholic beverages (distilled spirits)… one hundred Talents
• Commercial tax… one hundred Talents
• Land tax… three hundred Talents

As you can see, the majority of our income comes from monopolies. It might seem odd, but this is typical for the finances of a small country.

It’s the same in every country. The wealth of the Rosais Family stems from their salt monopoly.

Sadly, from next year on, the land tax will suffer a considerable decrease in revenue. I had to promise to reduce the soldiers’ taxes to stop the strike at the start of the encirclement.

Honestly, I regret it, but at that time, there was no other way.

They didn’t start a rebellion; they just abandoned their duties. Suppressing them with the army would have led to a full-scale civil war. Besides, forcibly taking them to battle would have been detrimental to morale.

Currently, the land tax is 30%. We’ll change this to 10%.

So, it’s simple to assume that the land tax will be reduced to one hundred Talents.

A reduction in revenue by two hundred Talents… Well, we’ll manage somehow.

Most of the income is used to pay for the country’s expenditures, which include:

• Infrastructure maintenance… two hundred Talents
• Personnel costs… four hundred Talents
• Debt repayment… two hundred Talents (yearly over fifty years)
• Border security… one hundred Talents
• Savings… one hundred Talents

Personnel costs were virtually nonexistent before I became king, but they’ve increased significantly since I hired bureaucrats to help manage the country. Hiring people requires money.

By the way, thanks to the bureaucrats, our tax collection capabilities have improved, and our income has increased, so simply dismissing them wouldn’t aid our finances.

You might think that the budget for border security is low, but this is typical during peacetime. If a war occurs, a temporary budget will be allocated. Of course, funds for flood control and the construction of the capital are also taken from temporary budgets, we use the country’s savings for this.

The problem is that our savings are completely depleted due to all the projects and the war.

It could be considered my fault that our savings are depleted. Or rather, it is my fault.

I also borrowed an additional thousand Talents from the Kirisian merchants for the war. The expenditure for debt repayment is going to increase.

We have yet to receive the reparations from the Rozel Kingdom. They probably need time to prepare such a substantial amount. We are scheduled to receive the reparations in five months.

I awarded land to the patricians who desired it as a reward for their services, but the payments for those who desired money will have to wait until after we receive the reparations.

◇

「At the current stage, we are not in serious financial trouble, but considering the future, a major financial reform is necessary.」

「I agree as well. Flood control and the construction of the capital are still incomplete… But what should we do? The decrease in revenue is certain… Should we go back on the promise to low taxes?」

No, that would be bad. A real rebellion could occur.

Right now, my popularity is at its peak. Being at the peak means the fall will be great if it comes.

「First, regarding personnel costs… we will halt any further increase by stopping the expansion of the bureaucratic organization here.」

「Personnel expenses account for forty percent of our annual revenue, after all… But how shall we enforce tax collection?」

Traditionally, tax collection was outsourced to influential local leaders like the village chiefs.

However, there were frequent cases where these local leaders collected taxes at rates higher than the actual tax rate and pocketed the difference, or underreported the tax revenues.

That’s why strengthening the bureaucratic system to help collect the correct taxes has been our policy up until now.

But… It seems that realistically, it’s tough. My ideal is a country like modern Japan, with a developed bureaucratic structure, but I need to distinguish between the ideal and the reality.

「I’m thinking of introducing a tax collector system.」

「Tax collector…? How is that different from before?」

「Simply put, until now, embezzlement of taxes was illegal. We’ll make it legal.」

No matter how much we try to control it, embezzlement will not disappear. So, we might as well recognize it from the start and regulate it on that basis.

「Let’s say… they can keep five percent of the collected taxes as their income.」

Five percent is a substantial amount. It should be a decent income.

「At the same time, we will give the plebeians the right to sue the tax collectors once a year. If a tax collector loses in court, all of their assets will be confiscated.」

The confiscated assets will be passed to the plebeian who filed the lawsuit. And, as is customary in this country…

If there is a confiscation of assets in court, half of those assets will go to the national treasury.

This will make it harder for tax collectors to commit fraud, and the plebeians will keep a close eye on the tax collectors’ misconduct.

The country will receive taxes whether the tax collectors commit fraud or not.

「With the introduction of the tax collector system, we can reallocate the freed-up personnel to collecting commercial taxes.」

Commercial taxes are self-declared. Naturally, it’s impossible to follow each merchant around and verify their profits. We are not that idle.

However… Merchants are paying their taxes properly.

This is because anyone who wishes to conduct business within the city must obtain permission from the country, and in return, they pay taxes.

This allows for a considerable amount of tax recovery. However, taxes are not being collected from itinerant traders who move from village to village or from markets held on roadsides.

While it may be unavoidable for itinerant traders, it’s a waste not to collect taxes from markets. From now on, we will also collect taxes from these markets.

And we will raise the sales tax. It has been 3% until now, but we will change this to 5%.

Considering the economic growth of our country, this rate is appropriate.

Next, we need to develop various industries… The problem is that I’ve already granted the patricians exclusive rights to manufacture paper and distilled spirits.

We need new industries. I must think of something.

And there is something else I want to do…

「I want to strengthen the country’s monopoly on salt.」

「Salt?」

The main industry of King Rosais’ Country is rock salt. The king controls seventy percent of it, the Rosais Family twenty percent, and other patricians the last ten percent.

In addition, we have secured another rock salt mine as part of the territory seized from King Belvedire’s Country. It is safe to assume that sixty to seventy percent of the rock salt traded by the Kirisian merchants comes from our country.

To control most of the rock salt market in the Adernian peninsula, I want to start by controlling all the rock salt within our country.

「I want to nationalize all the rock salt within the country… I’ll compensate with land and money the patricians and the Rosais Family members affected by the measure.」

「… I see.」

In fact, Raymond holds seventy percent of the rock salt owned by the Rosais Family. This was granted to him by the previous king when Raymond worked as his right-hand man.

…It might be somewhat underhanded to bring this up after the former king’s death.

「I don’t mind. I don’t need any land as payment either. …How will you deal with the patricians?」

「I will persuade them.」

The major patrician families in this country are the Rosais, Aris, and Dibel Families. I am the patriarch of the Aris Family, and the Dibel Family is afraid of me.

Persuasion should be easy. However…

「Don’t you want any more land?」

「My king doesn’t want to reduce the directly controlled lands, right? …No, rather, doesn’t my king want to consolidate all the country’s lands under royal authority?」

…He noticed.

「If I were in your position, Your Majesty, I would try to do the same. You are already recognized as king by both the Aris and Dibel Families. The citizens’ trust in you is complete as well. Your Majesty no longer needs the support from the Rosais Family. Thus, it would be natural to consider stripping power from the troublesome Rosais Family to strengthen the royal authority, especially now that the previous king has passed away.」

As expected of him… He’s realized it. Could other patricians have noticed as well?

「Rest assured. I am the only one who knows this. Perhaps… Bartolo-dono might have guessed, but he will not interfere.」

「Is that so… Will you cooperate?」

Raymond nodded in response to my question.

「The times cannot be changed. The power of the plebeians is increasing, and that of the patricians is decreasing. And my king’s power grows stronger every day. Even I am not foolish enough to believe that the Rosais Family alone will remain secure in this situation. I have one request—make Julia-sama’s child the next king. If the gods don’t allow it, then please take a son-in-law from the Rosais Family. If you promise this, I will gladly cooperate in strengthening the royal authority.」

「Understood. Rest assured, I also believe that appointing Julia’s child as the next crown prince is the best for the stability of the country.」

My only concern is whether this will put too much pressure on Julia. Well, both Julia and I are nineteen years old. We can still have children for another twenty years.

I think it will be fine… but I need to support her properly.

「Then the solution is easy. We will return all the tax collection and military rights over the lands owned by the Rosais Family to Your Majesty.」

「That helps a lot… but are you sure it’s okay?」

「Under certain conditions.」

• One, to guarantee their status.
• Two, to provide an annual stipend.
• Three, to recognize the private property rights of the lands owned by the Rosais Family (though they will be taxable).
• Four, to assume the debts of the Rosais Family.
• Five, to allow political participation in the government of the country.

「With these conditions, I believe things will proceed smoothly.」

「Debts… do they have that many debts?」

Raymond nodded.

「Most patricians borrow money to raise soldiers or luxuries. As they have tax rights, the quantity they can borrow is significant which is problematic—it allows borrowing up to a high limit… If you, Your Majesty, agree to assume these, many patricians would be pleased to give them up.」

…But that means assuming their debts as well.

Three months later, negotiations with the Rosais Family concluded, and all lands owned by the Rosais Family were surrendered to me.

However, as replacements in the form of magistrates or autonomous organizations were not yet ready, the Rosais Family remained in control as the administrators of these lands.