It's not a stealth cash wealth tax. It's literal debt forgiveness. You can even call it a collectivized form of continuous insolvency. E.g. instead of every 20th debt contract being forgiven entirely 5% of every debt contract is forgiven.

The benefit is that if the creditors (mostly upper classes) refuse to forgive the debt then you don't need an angry mob with pitchforks to cancel the contract (revolution).