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# Tax Reform

The government began by recasting the fiscal system, which had become wholly inappropriate. The diet debated the issue for several years before taking, in 1750, the first substantive step, which was to revise the tax rolls. In endorsing the decision, the queen observed with wry resignation that she never expected much good to come from such an exercise. Nevertheless, the painstakingly-conducted assessment did make it possible to erect a wholly new fiscal system; it also drew the government's attention to the inadequacies of the tax base in certain districts. Completed in 1754, the new fiscal regime came to be known by the name of the working group's chairman (and subsequent court chancellor), Gábor Bethlen.

{2-591.} The former tax system had focused on the several 'nations', legally distinguished groups, and privileged foreigners, as well as on municipalities. In contrast, the Systhema Bethlenianum was based on individual taxpayers, who would be assessed according to their legal status, assets, and, in the case of certain occupations, income. If, as Johann Hintze proposed, the main criterion of absolutism is that the sovereign taxes his subjects without consulting the estates, then 1754 was a banner year for Habsburg absolutism in Transylvania. And even if this is not the sole criterion of absolutism, the new system had great significance, for by extending the tax to landed property, it transgressed the feudal principle of onus non inhaeret fundo.

The poll tax varied according to the taxpayers' status. The highest rate was paid by burghers; at the lower end of the scale came cotters, miners (who remained subject to the tax until 1747), and domestics, who paid the least. Gypsies were exempt. The tax-rate on assessable property was uniform, except in the Királyföld, where it was higher by a third. Merchants and craftsmen paid income tax according to two sets of three rates; one depended on the economic importance of their locality, the other on their level of income. Those in villages constituted an exception, their income tax being equivalent to half of their poll tax.

The Systhema Bethlenianum was a decisive step in the direction of modern taxation, but its very innovations created new problems. Although the income gap between the inhabitants of prosperous towns and those of the poor market towns was considerable, both had to pay the same six-forint poll tax, or taxa civica. The scheme did not specify how much tax should be paid by young people who were supported by their parents but, being over fifteen, were considered adults. The provision, in the 1754 tax decree, exempting Gypsies from poll tax also caused some confusion, for a fair number of Gypsies had settled down as villeins. It was not clear whether the property tax applied to all arable land or just to land {2-592.} under cultivation. Questions remained concerning the rates of tax applied to different breeds of livestock. Finally, calculation of the total targeted tax revenue was not based precisely on the amounts that would be raised by the different types of tax, leaving unresolved the problem of a potential shortfall.

The shortcomings of the Systhema Bethlenianum were supposed to be remedied by the revised tax system that was adopted in 1763 and named Systhema Buccowianum, after Baron Nicolaus Buccow, the chairman of the Gubernium and Transylvania's military commander. People in the poorer market towns were now assessed a libertinus-taxa of four forints in place of the taxa civica. Young adults who were supported by their parents had to pay {2-593.} the taxa impossessionatorum that was otherwise assessed on domestics, amounting to 18 kreuzers for men and 12 kreuzers for women. Gypsies who had settled down were assessed the same poll tax as villeins. To discourage farmers from suspending cultivation in order to avoid property tax, the same rate was applied to land that was left fallow. The tax to be paid after different breeds of livestock was clarified. Finally, the decree provided that if these taxes failed to a generate the expected revenue, surtax would be imposed at a uniform rate in all categories.

After several years' practice, further refinements proved necessary. This latest revision, adopted in 1769, was known as the Systhema Bruckenthalianum, after the then chairman of the Gubernium, Samuel Bruckenthal. The different rates of poll tax were more sharply differentiated. Towns and market towns were still grouped into three classes, but their merchants and craftsmen were spread over six to eight categories, so that the merchants' poll tax ranged from 6 to 27 forints, and that of craftsmen, from 4 to 16 forints. The poll tax payable by freemen, villeins, and cotters also underwent modification: those whose property tax was more than 6 forints were divided into eight categories, and all were subject to an increased rate of poll tax. To eliminate the confusion surrounding the taxa impossessionatorum, the decree gave a precise definition of a curialist (a lesser landed noble who had no villeins). Frontier guards were exempted from the poll tax. The property tax became more differentiated; different rates applied to cultivated land, meadows, and vineyards, and these rates were further differentiated by category (within a range of 1:2.5). The frontier guards' property tax was reduced by a third. This tax regime remained in effect, with minor modifications, until 1848.

The results of these tax reforms met the government's expectations. In 1752–54, global tax revenues had hovered around 720,000 forints; in 1762, they amounted to 1,147,000 forints, and by 1765, they had almost doubled, reaching 1,318,000 forints. The share paid by the different 'nations' changed considerably over this period. Whereas, initially, the Saxons paid a marginally higher amount than the Hungarians, in 1755 the Hungarian counties contributed 337,367, and the Saxon széks 280,197 forints; and this despite the fact that the Systhema Bethlenianum had set the property tax higher in the Királyföld than in the counties. The elimination of that disparity would only widen the gap between the tax contribution of the two 'nations'.

The compilation of the rolls in 1750 revealed the strengths and weaknesses of the tax base. When the assessors examined the public debt of municipalities and other localities, it came to light that the Királyföld had assumed a crushing debt burden. The root cause of the indebtedness was the heavy burden of taxes. Part of it could be traced back to the war of liberation, but it continued to grow in the 1740s. In 1750, the Saxon municipalities' indebtedness (not including a judgment of 9,634 forints 53 kreuzers against Újegyházszék) amounted to 765,781 forints 46 2/5 kreuzers, more than the country's total tax revenues at the time. Public revenues in the municipalities amounted to 33,812 forints 30 kreuzers, insufficient even to pay the legally sanctioned interest (the actual rates were far higher), let alone to pay off the debt by instalments. The most heavily {2-594.} indebted district was Brassó, which owed 129,066 forints 21 kreuzers; the Beszterce district came second, with 111,931 forints 37 1/2 kreuzers, and of that, Beszterce owed 101,944 forints 1 kreuzer, which put it at the top of the list of indebted towns. Meanwhile, the public debt of villages in Hungarian and Székely administrative districts was generally under 100 forints, and more rarely a few hundred forints. The total public debt of villages in the Marosszék amounted to 3,885 forints 19 kreuzers, or roughly the same as that of an average village in the Barcaság. Among Hungarian and Székely towns, only Kolozsvár had a significant debt (55,675 forints); the others collectively owed about the same amount as the Saxon town of Prázsmár.

The Saxon széks and municipalities had incurred loans from a wide range of social strata. The creditors included local magistrates and other officials, Saxon patricians, and, in smaller number, Hungarian as well as Saxon landowners. Loans were also made by the institutions and clergy of all Churches in Transylvania. These included not only Saxon Lutheran ministers, parishes, and schools, but also Catholic monastic orders (partly in the form of credits transferred to them by foundations), schools, and other institutions or persons; Calvinist ministers, congregations, and schools (notably the college at Nagyenyed); and even some Unitarian clergymen and Romanian priests of uncertain affiliation. There were also some military officers among the creditors.

The pattern of creditors varied by locality. At times, a group of patricians linked by family ties might hold a Saxon szék in its financial grip. Remarkably, there were few urban merchants among the creditors. Their absence may be explained partly by the virtual impossibility of recovering a loan in the 1750s, and partly by the fact that interest was paid not in cash, but in various agricultural services and products (wine, wheat, corn, fattened pigs), by the transfer of some of the village's common land, or by the mortgage on an inn or mill.

{2-595.} This situation compelled the central government to take decisive measures. It dispatched to Transylvania a special commissioner charged with the task of freeing the Saxon 'nation' from its debts and ascertaining how many posts had to be retained in the public service, at what level of remuneration. The man chosen for this mission was Zacharias Wanckhel von Seeberg, a Saxon convert and councillor in the Transylvanian court chancellery. In Saxon historiography, which is generally objective and reliable, Seeberg is invariably depicted as the devil incarnate. Yet the need was urgent, and the commissioner discharged his task with some success: within the space of a few years, he substantially reduced the Saxons' debt. For instance, between 1750 and 1759, the debt of the Brassó district was trimmed by a quarter, to 97,247 forints 47 3/4 kreuzers.

However, Seeberg's activity had inevitably impinged on the administrative autonomy of the Saxon 'nation'. Worse still, his efforts to reduce the debt as well as the number of public officials threatened the very livelihood of the Saxon patrician class. The latter was incensed by his committee's initiatives, and notably by the proposal that in cases where the debtors had paid a rate of interest higher than sanctioned by law, the difference should be retroactively counted as repayment of capital. (Calculations showed that many creditors could be obligated to make reimbursements.) The Saxon 'nation' regarded it as a victory when, in 1758, Seeberg's task was transferred to a 'Saxon Economic Directorate' (Directio Oeconomica Saxonica) chaired by the Saxon count. Samuel Bruckenthal was a staunch and enlightened defender of the Saxon patricians' interests, and there was even greater rejoicing when, a few years later, he managed to obtain that the directorate be disbanded.

Wishing to exploit Transylvania's economic potential to the fullest, the central government had conducted a tax reform and forcefully stabilized the Királyföld's finances, but it needed to do more. In late 1757, most of the Treasury estates were put up for sale. As noted, the principal buyer was Chancellor Gábor Bethlen; {2-596.} he later passed on the Ebesfalva domain to Erzsébetváros, and the Fogaras domains to the Saxon Universitas. In the same period, the Treasury conducted a thorough review of its accounts. One result was that it retrieved from noble, small proprietors fragments of crown estates that the latter had obtained as security against loans. Another was a lawsuit against the Saxon 'nation' over the census sancti Martini. The St. Martin's Day tax had been levied since the Andreanum, but, at the end of the 17th century, it amounted to a mere 6,000 Hungarian forints a year — a negligible sum compared to the enormous taxes exacted at the time of the war of liberation. Leopold I exempted the Saxons from this tax until 1705, when it went into abeyance. In 1758, when the empire was suffering from financial difficulties, the Treasury revived the St. Martin's Day tax, and it demanded from the Saxon 'nation', which was barely emerging from its crushing debt, a retroactive payment of no less than 385,000 forints. The suit was not settled before the end of the period under consideration, but there loomed the threat of a judgment favourable to the Treasury. Meanwhile, in 1757, the state raised a loan in the amount of 279,200 forints.