During one of my games, the UP set a 5% income tax on empires that went to war while this 'law' was in effect. During a war, when I checked my empire screen, it had me labled as a 5bc expenditure for the tax, while my income was several thousand BC.

This kept on throughout the entire game, just a flat 5bc deduction for the tax.
EDIT - This was using the 1.11 patch.