Bill the Pill
The rules say the the Saxony political marker is moved "1 to the right for each victory point Prussia loses (due to a defeat in battle or a lack of supply). It applies whether or not any victory markers are actually moved. It applies only if Austria wants it to apply."
Does this still apply is the Saxon army took the lose that caused Prussia to lose the victory point? We have played that is does.
We played the same, but I can't remember if it was due to finding a certain rule or just an educated guess to keep the game moving (my game is not available now).
So a very good question--hoping the designer will weigh in soon.