Taxation is where your peasants contribute to the welfare of the state. As the ruler of your province you may set an adequate taxation level, which your peasants must meet. If this level is too high it can cause unrest, so finding a balance between profit and social harmony is the secret to a profitable campaign.

Taxes may be set at different levels, ranging from no-tax collection 0, to 4.5 gold. The higher the rate, the greater the chance of civil unrest. A wise ruler will make sure that his population has plenty of entertainment and luxuries before imposing a high tax. This will maintain a high level of morale and avoid a revolt. Setting a high tax level will also make your city less attractive to newcomers and may even force peasants to leave. Try for 'NORMAL' level tax or lower to attract peasants to your city.

A revolt is serious business and is to be avoided at all cost. During a revolt a province comes to a stand still and civil strife can lead to high crime, fires and destruction. In the event that your population goes out of control, you may have no choice but to declare martial law and send the troops out into the city.

If Martial Law is declared, your province will resume normal operations, but your army will not be able to plan attacks and will only be able to defend at half their potential. During Martial Law, taxation falls automatically to 1 gold and cannot be adjusted. You may stop Martial Law at any time, but be sure to have a good morale built up, or your population may take to arms once more.

Taxation and prosperous economic decisions will fill your treasure vaults with gold soon enough. As your income exceeds your expenses, profit will rise and you will begin to hoard gold. If you hoard too much gold, you will create a state of inflation. Inflation is relative within your province, so it has no effect, but if this gets to enemy ears, your economy may be subject to re-evaluation. Your rivals can call for economic measures to be taken against you by infiltrating spies and deflating your economy. The higher your inflation percentage, the higher the re-evaluation and monetary loss you will suffer. Deflation attacks can cause economic disasters in your province, with losses of up to 30% of the original capital, so beware.