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These upgrades enable the construction of better military, civic, and economic buildings. Settlements unlock upgrades when you reach the population ceiling.
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Nevertheless, occupation with a view towards increased taxation can be viable, as in the case of settlements sharing the culture of the occupier. You will have to lower taxation to balance public order, and even then it might not be tenable to hold the settlement at all. Occupying a large settlement afflicted with civil unrest won’t allow you to utilize its large population pool for taxation. However, taxation goes hand in hand with public order. The potential income of an occupied settlement will be maximally high.
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