Chapter 74: War Tax
To have a sufficient military force, besides expanding the army, are there any other choices? Expanding the army naturally requires money.
Since its establishment, the financial situation of the Hungarian Republic has been teetering on the brink of bankruptcy.
The newly formed government has no idea how to manage finances. The tax revenues they managed to collect were quickly spent without any proper planning.
In this matter, Kossuth bears direct responsibility. It can be said that the newly formed Hungarian Republic has surpassed Austria in terms of corruption.
TThis issue can be compared to the situation after the Xinhai Revolution in the Republic of China, where in the absence of a stable new order following the collapse of the old order, officials in positions of power became even more unrestrained.
"Mr. Kossuth, the government has already imposed two war taxes this year!" reminded Count Thallóczy.
Hungary's taxation has always been dependent on hidden dealings. During the period when the decaying aristocracy controlled the government, there were often various chaotic taxes, making life difficult for the people.
Originally, it was expected that after independence, everyone would be able to live a better life. However, the reality turned out to be the opposite. Without the "exploitation by the Austrians," their lives became even more difficult.
The new republican government has granted greater autonomy to local authorities, and in their eyes, any government elected is presumed to be righteous and upright.
However, reality often differs from ideals. Hungary has followed the example of the United States, where not only the central government has the right to levy taxes but also local governments have the same authority.
In simple terms, the number of tax-collecting bodies has increased without any effective oversight. Officials take advantage of this situation to amass wealth, and even certain local governments have devised numerous confusing and burdensome tax categories.
Of course, these convoluted taxes are not applicable to the nobility, nor do the capitalists have to bear their burden. It is the common people who end up paying the price for these taxes.
However, the war tax is an exception where even the nobility and capitalists are required to contribute. It's not just about the obligation to pay, but the issue lies in the excessive frequency of these tax collections, which makes it difficult for everyone to accept.
How long has the Hungarian Republic been established? Even if we include the pre-establishment preparations, it's barely been three months, right?
Within such a short period, two war taxes have already been imposed, and now they are proposing a third one. The enemy hasn't even arrived yet, and people are already burdened with excessive taxation.
Unlike capitalists who can find ways to evade taxes, the main industry of the nobles is land, which cannot be easily hidden. It's not easy for them to evade taxes.
"Yes, Your Lordship, the Count!"
"But the situation is beyond our control. According to the intelligence we have gathered, Austria can deploy up to 400,000 troops to wage war against us, while our National Guard is less than 300,000.
Moreover, their forces are well-trained regular soldiers, while our army consists mainly of recently laid-off workers or farmers who have set aside their tools. We rely solely on our passion and determination.
The disparity between the two sides is immense. Without an equal number of troops, we simply have no chance of winning this war!" Kossuth argued fervently.
Well, the situation of the Hungarian National Guard is actually worse than he described because the ordinary soldiers don't possess that passionate determination he mentioned.
Even the number of soldiers doesn't exceed 300,000. The National Guard is nothing more than an improvised organization with lax control over its subordinates. After deductions at each level, there simply isn't enough money to sustain such a large force.
However, it doesn't matter. When there are policies, there are always countermeasures. In this regard, capitalists are the most experienced. Influenced by what they've seen and heard, the military officers from bourgeois backgrounds quickly came up with a deceptive strategy.
Apart from recruiting a few people to maintain appearances, the rest can just be names on paper. If there's an inspection from above, they can temporarily pull in some people to make up the numbers. After all, everyone at every level has received benefits, and no one dares to expose this fragile facade.
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Among all the military forces in Hungary, the only ones with actual combat capabilities are the student militias. They are the true revolutionaries, fighting for national independence. The rest, including Kossuth, are no longer pure revolutionaries.
"Mr. Kossuth, I believe it is necessary for the government to disclose its financial expenditures. The republican government has only recently been established, and you have already spent the equivalent of a year's normal expenses for the Hungarian government!
If the government's spending continues to be this high, perhaps we don't need to wait for the Austrians to act. You will have already destroyed the new government yourselves!" warned Duke Leopold sternly.
This is an embarrassing issue, and Kossuth's face turned grim. Everyone knows that the new government has significant financial expenses, and in the past, he used war as an excuse.
But if the war hasn't even started yet, and the expenses are already this high, what will they do if it really breaks out?
International loans? Dream on. No financial institution dares to lend them money. It would mean borrowing without repayment, and Austria is also a major power that wouldn't recognize treaties signed by these insurgents.
Apart from that, the only option left is to increase taxes. But that's not a good solution either. It can't solve internal problems, and no matter how much money is poured in, it won't fill this bottomless pit.
"Yes, the government can disclose its financial expenditure for public oversight. However, we are currently facing financial difficulties and need a sum of money to overcome the crisis.
This time, the government won't take this money for free. We will issue bonds and allow everyone to subscribe to them. The annual interest rate will be set at 7%, and the initial issuance will be 200 million shields (equivalent to 11.69 grams of silver).
If the bonds do not sell out, then we will have to impose another round of war taxes."
Kossuth chose to compromise. He still needed the support of these people at this moment. Without the cooperation of the nobility, imposing taxes would be futile. Therefore, making appropriate concessions was a feasible approach.
The Kossuth government lacked governing experience, and some people suggested that the government should issue its own currency. After tasting the benefits of currency issuance, the cash-strapped republican government resorted to printing money in an attempt to alleviate the financial crisis.
However, reality harshly taught Kossuth a lesson. Without sufficient reserves in hand, relying solely on the government's credibility to issue currency turned it into worthless paper.
After the failed currency issuance, the Hungarian Republic was plunged into a financial crisis, paving the way for a path of increasing taxes.
MWFSun will be the new schedule for the novel. I might be able to translate more in the future, stay tuned!
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