Chapter 3 Financial Reforms: Tax Reforms

The Lemurian Empire had a centralized organizational structure. The bureaucracy from Emperor Hadrianus' reign was still more or less intact, so there was plenty of surviving administrative data.

Hercule spent three months examining fifty years' worth of administrative records and documents, then he went through a hundred years' worth of data with a five-year interval and produced a statistical graph. He compared the fluctuations on the graph with periods of famine, wars, declaration of new laws and Ecumenical Councils. Finally, he came to the conclusion.

"Just as I thought, the tax collection efficiency declined while war spending went up."

Hercule called for all bureaucrats of the Lemurian Empire.

The bureaucrats had expressions full of anxiety, wondering why the new emperor had summoned them.

In contrast, Hercule inquired a bureaucrat with a calm face.

"Kroll."

"Y-Yes!!"

The novice bureaucrat belonging to the human race felt his heart jumping out of his chest. Unsurprisingly.

The Lemurian Emperor, said to be God's proxy on Earth, had directly called out to him. The fact that he memorized Kroll's name also made him incredibly nervous.

Why would the emperor ever bother learning the name of a rookie bureaucrat like me!! Kroll's mind was in disarray.

"Describe our empire's tax system."

"Y-Yes!"

The imperial tax system consisted of six main kinds of taxes:

Land tax

Head tax

Commercial tax

Import tax

War tax

Slave emancipation tax

In addition, the state held the monopoly on salt.

"I see. Thank you, Kroll."

Then Hercule declared as he took a sip of his coffee.

"Head tax, commercial tax, import tax, slave emancipation tax and the monopoly on salt are to be abolished or revised."

Eh? The bureaucrats' expressions froze. What Hercule said was so abrupt that they couldn't follow at all. But one by one, they began to understand the meaning behind his words.

He wants to make radical changes to the tax system!!

Changes are scary. Changes can make things grow even worse. Right now they could still manage, they would rather not make changes.

Many of them started having these kinds of thoughts and felt alarmed of reforms. Yet Hercule didn't have even a shred of anxiety.

Why, you ask?

For the sake of that "anything", the risk of driving the country to the ground was a trivial matter!!

That was a joke, of course. (Maybe 10% of that was serious…)

Hercule had confidence in himself. He firmly believed that anything he did was absolutely correct.

"Y-Your Majesty! That would be…"

"Hold your horses, I'm going to explain right away. You can protest after hearing what I have to say."

Then Hercule took out a sheet of administrative data.

"Kroll, take a look at this and tell me what you think."

"U-Um…"

The novice bureaucrat whom Hercule was oddly pleased with conveyed his thoughts.

"T-There are only women… I think."

"Exactly! Moreover, there are way too many handicapped people!!"

The Lemurian Empire's head tax was higher for men than women. And for people with physical disabilities… limb loss or visual or hearing impairments for example, their tax burden would be even lower.

In the beginning, even peasants did their tax reports seriously. But at some point, the peasants noticed something.

Nobody would notice even if they lied.

Visual and hearing impairments were self-declared. Officials had no way to confirm but to rely on the person's own words. Also, with a report like "My family had two men and four women (actually four men and two women!)" it was far too time-consuming to enter their house to verify the report's content, or to check if someone was cross-dressing.

The empire had a population of over 10 million people. In the first place, the reported population might actually be inaccurate. Some people could have counted wrong on purpose, many peasants could have under-reported and no one would be none the wiser.

With each person evading tax, it gradually developed into a huge problem…

What do you think would happen when dust builds up?

Of course, it was connected to the decline in tax revenue for the Empire.

"Can you guys take pride in yourselves if this information turns out to be true?"

The bureaucrats could say nothing in return. It was clear that the civil registers were full of errors.

"A tax system that cannot collect taxes may as well not exist. I want this tax abolished."

After taking a sip of coffee, Hercule turned his eyes towards Kroll once again. Kroll stiffened.

"I'm sorry for asking over and over, but how is the commercial tax collected?"

"Well… A merchant's tax rate is calculated from his revenue and the type of commodities…"

"How do you find out his sales revenue?"

"…From his self-assessment, Your Majesty."

So basically, merchants were free to fudge the numbers.

"It's true that a tax levied on trade will generate significant income. I do intend to keep a business tax policy, but the way we've gone about it requires too much work. I'm going to revise it."

If he had government officials do a surprise inspection, he could probably crack down on tax evasion to some extent. But that would take far too much work, time and manpower.

Maybe income tax evasion could be minimized if he had a giant bureaucracy on par of Japan, but that was impossible for the Lemurian bureaucracy.

"Next is the import tax, this one only obstructs the flow of goods while returning a minuscule income. It also creates an opportunity for crooked officials to line their pockets. Abolished."

After quickly eliminating the import tax, Hercule took a sip of coffee and moved on.

"Next is the slave emancipation tax… I shouldn't need to say anything about this one. It's actually curious how this outdated tax still exists. Unlike the old times when we had to tax the release of slaves to gain support for the government, nowadays slaves are basically never freed anymore. Abolished. Though I do agree that we need a tax on slaves."

Then Hercule finished the coffee in one gulp.

"The last is the monopoly on salt. This policy was implemented during my father's reign to secure a new source of income. The state sells salt at a monopoly price of 30 times the regular price. Salt is a necessity, so the people will have to buy it no matter the cost! Goodness gracious, isn't this just genius…? Seriously, would anyone actually buy the monopolized salt? Rather than the salt monopolized by the state, would people not prefer to buy the much cheaper, higher quality illegal salt circulating in the imperial capital's black market?"

The bureaucrats averted their eyes simultaneously. They actually were also purchasing illegal salt themselves. Lemurian bureaucrats earned meager wages, they weren't so well off that they could buy the state-produced salt.

Then Hercule asked the bureaucrats a question.

"Gentlemen. Can any of you confidently say there has been a mistake in my conjecture so far? Rest assured, I swear to God that I shall not punish you."

The hall was perfectly silent. Not a single person could make an objection to Hercule.

But then, a single hand raised. It was Kroll.

"Will all due respect… Regarding the abolition of import tax, will customs be dissolved as well? I'm afraid abolishing customs would be harmful to national security…"

"Of course not. Rest assured, I have no intention of abolishing customs."

Hercule grinned. Looking at Hercule's smile, the bureaucrats' nervousness dissipated somewhat. They began to raise their hands sporadically.

"With all due respect…"

"I-I have a question…"

"I'm a little uncertain about something…"

Hercule scrupulously answered the bureaucrats' questions, one by one. After about an hour, all the bureaucrats had consented to Hercule's assertions.

"Gentlemen. Accordingly, I have devised a new tax plan. Do not hesitate to object. Let us save our empire by implementing a brand new tax system."

Then Hercule handed out parchments containing his new tax plan as he said in conclusion.

"Right, it seems your salaries are a little too low. If the financial reforms are a success, I will give you all an appropriate raise before all else… Let's all do our best."

Seeing Hercule's wide grin, the bureaucrats' eyes gleamed with excitement.

Afterward, Hercule and the bureaucrats exchanged heated discussions for three days and nights. Finally the finished tax plan was ready to be announced throughout the Empire…

Two years later.

The empire's national income had risen to one and a half what it was.

The use of taxation to pay for palace personnel had been reviewed, and expenses had been compressed. Among the treasures that were part of the imperial property, things with no historical value were pawned off.

Thus the imperial treasury was no longer in dire straits.

Bureaucrat Kroll's Diary

"His Majesty Hercule the Great is a terrifying person. He has no fear of destroying traditions. The objections of my seniors were all shot down. It's unbelievable that he is merely twelve years old. I would not doubt it even if he claimed to have forty years of bureaucratic experience.

In addition, Hercule the Great's tax plan is very ground-breaking, not to mention extremely effective.

He also said that he would increase my meager salary.

The reason I became a bureaucrat must have been to serve this man. This is surely God's will, it must be fate.

I, no, all of us in the bureaucracy are in agreement."