That evening, Zen sat down at the dining table with Elysia and Mina. They all chatted about what they’d done that day, with Zen first listening to the girls’ stories and then sharing what had happened at the fishing spot he’d gone to with Keel (leaving out the embarrassing failures, of course!).
After he mentioned what he’d learned about the hunters they’d seen, Elysia spoke up. “In short, you dislike everything about Sir Stoga’s administration?”
“Well, yeah.” She wasn’t wrong, though he felt her wording was a little unpleasant.
“What’s wrong with His Excellency Stoga? Indeed, we witnessed the other day how much law and order has degraded in some respects, which is unacceptable, but it seems he has an excellent reputation with the citizens,” Mina pressed Zen, definitely wanting to learn more for the future. It was no problem for knights in other countries to keep their distance from politics, but Mina’s attitude was admirable, befitting a military officer of the empire.
Zen was happy to oblige with a lecture. “If His Excellency Stoga became popular with the citizens through carrying out good politics, then that would be all well and good. But it’s not admirable to put irrelevant policies in place just to win the people’s favor.”
Now, what specifically was wrong in this case?
“First, his tax reductions. I can’t think of any reason he’d do that except to gain popularity.”
“Oh yes, the employees yesterday were very happy about the lower taxes,” said Mina.
“Back then, you looked like you had something to say, father,” Elysia said. “I guess it really wasn’t my imagination.”
Zen nodded. “Of course, all policymakers should strive to reduce taxes.”
Tax reductions could always be relied on to stimulate the market. When the economy was good, you could reduce taxes and still receive more than enough money back in increased tax revenue. On the opposite end, when the economy was doing poorly, you had to reduce taxes to forcibly stimulate the economy, otherwise the country would keep declining.
Feeling enlightened, Mina said, “Either way, it’s worth doing.”
“In spite of that, historically, many statesmen have actually been overzealous about increasing taxes.”
“Why is that?”
“There are many reasons. It might simply be financial illiteracy, or just wanting to live a life of extravagance by bleeding the citizens dry.”
There were a lot of other reasons, like starting a war of aggression to expand their territories only for it to not go as they’d hoped, or if they were being invaded by another territory and had to strengthen their forces to protect themselves. Either way, if their military expenses kept increasing without making money back, they might feel forced to increase taxes to make up for the financial loss. There was nothing more foolish than that.
Even as Zen directed his lecture at Mina, who sat across from him at the table, his words were for the future empress sitting next to him.
“When a policymaker is in power, if they can reduce taxes even twice while keeping the public finances under control, they’ll almost certainly be praised as a wise leader for generations to come. The reverse is also true. No matter the reason and circumstances, if a policymaker increases taxes twice, they will definitely be criticized as a foolish ruler. Their other virtues or achievements won’t even matter.” Anybody reasonably versed in history would agree that this was how things went.
Elysia, after carefully digesting his words, swallowed the bread she was eating and said, “But father, isn’t that necessity valid in the event of an invasion?”
Zen gently shook his head. “The citizens will assume the invasion is still those policymakers’ fault in some way. The ones in charge can’t say they had nothing to do with it.”
While having an extensive military to protect itself was the foundation of a country, if they had strong neighboring countries that were impossible to contend with by force, those smaller countries had to take full advantage of strategy and diplomacy.
It was a typical case of “easier said than done,” but if they couldn’t pull it off, then they had no right to be policymakers in the first place.
“But, Sir Zen...” Mina started. “Given everything you’ve said, is it not appropriate to praise His Excellency Stoga for lowering the taxes?”
“Everything has a limit. It would be putting the cart before the horse if, by recklessly lowering taxes, it causes a tax revenue shortfall and public finances to collapse.”
He gave another supplementary explanation. “Before I came to Cylin, I was in the Tax Bureau in the Financial Affairs Agency. I have a decent grasp of Alona Prefecture’s tax revenue and public finances, and for the past two years, the numbers have been abysmal. Frankly, it’s to the level that they’re receiving subsidies from the national treasury to even just barely make ends meet.” However, the Tax Bureau only dealt with the numbers as they were. It wasn’t their job to look into reasons or find ways to improve them.
That job belonged to the Budget Bureau, a related but separate branch of the Financial Affairs Agency.
Zen continued. “But since His Excellency Stoga hasn’t received any criticism despite how dire Alona’s finances are, then there’s probably a reason. I can’t say what it is, though, since I was never a Budget Bureau clerk.”
“You mean like that money might be being used to develop the prefecture, for example?” asked Elysia.
“Yes. We’ll be getting into annual expenditures now instead of tax yields, but if His Excellency Stoga’s put out a prefectural reform proposal and had the Budget Bureau approve it, then there’s no problem if Alona continues to receive subsidies from the national treasury until the plan is finished, even if they remain in a budget deficit.”