THE PRESENT FINANCIAL SITUATION
I.
ANGLO-IRISH FINANCE TO-DAY.
The finances of Ireland since the Union, when reviewed by the Royal Commission in 1894-1896, exhibited five principal features:
1. A declining population.
2. An estimated true taxable capacity falling as compared with that of Great Britain, and standing in 1893-94 at a maximum of 1 to 19.
3. A revenue stationary for thirty-four years, and showing in 1893-94 a ratio of 1 to 12 with that of Great Britain.
4. A growing local expenditure (though stationary for the last four years).
5. A dwindling net contribution to Imperial services (though stationary for the last four years).
If we review the subsequent seventeen years, we find:
1. A population still declining, though at a slower rate.
2. An estimated true taxable capacity still falling as compared with that of Great Britain, and now standing at a maximum of 1 to 24.[115] That is, Ireland ought strictly to be paying no more than one-twenty-fifth of the United Kingdom revenue.
3. A revenue rising, but very slowly and inelastically as compared with that of Great Britain, and now showing a ratio of 1 to 15; so that the "over-taxation" of Ireland, as reckoned on the Royal Commission's principles, is still at least three millions.[116]
4. A local expenditure growing rapidly and disproportionately to Irish revenue; now just double the expenditure of 1893-94.
5. A net contribution to Imperial services automatically diminishing with the growth of Irish expenditure, disappearing altogether in 1909-10, and now converted into an adverse balance against Ireland of £1,312,500.
In Great Britain during the same seventeen years, population, taxable capacity, revenue, expenditure, and net contribution to Imperial services have all grown steadily, and, what is more important, in healthy proportions to one another.
On the next page will be found the comparative figures for Ireland and Great Britain of revenue, expenditure, and contribution for 1893-94 and 1910-11.
Let me remark at the outset (a) that they and other official figures given in this chapter are taken from the annual Treasury returns alluded to at p. 242, "Revenue and Expenditure (England, Scotland, and Ireland)" and "Imperial Revenue (Collection and Expenditure) (Great Britain and Ireland)." For the current year 1910-11 the official numbers of these Returns are 220 and 221, and the latter of the two is virtually a continuation of the original return, No. 313 of 1894; (b) that the non-collection of a large part of the revenue of 1909-10, owing to the delay in passing the Budget, makes the revenue figures of the last two years, regarded in isolation, misleading; those of the first year being abnormally low, those of the last abnormally high. I therefore give the mean figures of the two years. Expenditure is, of course, unaffected, (c) That the Irish revenue shown as "true" is reduced by heavy deductions from the revenue as actually collected in Ireland. At p. 244 I explained that this adjustment can be regarded only as approximately correct, owing to the admittedly unreliable methods adopted by the Treasury, (d) That the revenue shown includes non-tax as well as tax revenue.
| Ireland. | Great Britain. | |||
| 1893-94. | 1910-11. | 1893-94. | 1910-11. | |
| Population | 4,638,000 | 4,381,951 | 33,469,000 (estimated) | 40,834,790 |
| "Collected" revenue (including non-tax revenue) | £9,650,649 (mean of two years, 1910-11, 1909-10) | £11,704,500 | £88,728,428 | £156,574,250 (mean of two years, 1910-11, 1909-10) |
| "True" revenue (including non-tax revenue) | £7,568,649 (mean of two years, 1910-11, 1909-10) | £10,032,000 | £89,286,978 | £155,137,250 (mean of two years, 1910-11, 1909-10) |
| Local Expenditure | £5,602,555 | £11,344,500 | £30,618,586 | £60,544,000 |
| Contribution to Imperial Services | £1,966,094 | Nil[A] | £58,668,392 | £94,593,250 |
Irish expenditure has been rapidly overtaking Irish revenue during the last three years. In 1907-08 there was a balance available for Imperial services of £1,811,000; in 1908-09, of only £583,000; and in 1910-11, on the basis of a mean of that and the previous year, the deficit shown above of £1,312,500. The principal cause is the Old Age Pensions Vote, which began in 1908.
If all the elements of the problem be considered together, it will be seen that the fiscal partnership is as ill-matched as ever, and has produced results increasingly anomalous. Each of the partners and their united interests suffer. Ireland is still more heavily taxed relatively to Great Britain, yet Ireland's contribution to Imperial services has been converted into a minus quantity. Why? Because Irish expenditure, paid out of the common purse, has doubled, while Irish revenue has increased by less than a third.
Let me give the final survey of Anglo-Irish finance since the Union, in the tabular form shown by Professor Oldham at the meeting of the British Association in September, 1911:
NET BALANCES PAID BY IRELAND TO GREAT BRITAIN.
| Single Year. | Irish "True" Revenue. | Expenditure in Ireland. | Balance One Year. | Decadal Balance. |
| £ | £ | £ | £ | |
| 1819-20 | 5,256,564 | 1,564,880 | 3,691,684 | 36,916,840 |
| 1829-30 | 5,502,125 | 1,345,549 | 4,156,576 | 41,565,760 |
| 1839-40 | 5,415,889 | 1,789,567 | 3,626,322 | 36,263,220 |
| 1849-50 | 4,861,465 | 2,247,687 | 2,613,778 | 26,137,780 |
| 1859-60 | 7,700,334 | 2,304,334 | 5,396,000 | 53,960,000 |
| 1869-70 | 7,426,332 | 2,938,122 | 4,488,210 | 44,882,100 |
| 1879-80 | 7,280,856 | 4,054,549 | 3,226,307 | 32,263,070 |
| 1889-90 | 7,734,678 | 5,057,708 | 2,676,970 | 26,769,700 |
| 1899-1900 | 8,664,500 | 6,980,000 | 1,684,500 | 16,845,000 |
| Averaged Balances for 90 years | 315,603,470 | |||
| Add, Actual Balances, 1900-09 | 16,214,000 | |||
| Net Payments, in 99 years | 331,817,470 | |||
| Deduct Drawings, deficit of 1909-10 | 2,357,500 | |||
| Net Payments, in 100 years | 329,459,970 | |||
| Add, Actual Balance, 1910-11 | 321,000 | |||
| Net Balances paid by Ireland to Great Britain, 1809-1911 | 329,780,970 | |||
What has become of Sir David Barbour's argument in favour of the existing fiscal system? He admitted that Ireland was overtaxed by two millions and three-quarters. But he showed, it will be remembered, that if not only the revenue, but the expenditure and contribution to Imperial services had all been in proportion to Ireland's real taxable capacity of one-twentieth, she would have been a loser by a million.[117] Ireland, therefore, he argued, had certainly no grievance, while Great Britain received the substantial, though not strictly sufficient, sum of two millions as Ireland's contribution to Imperial expenses.
Let us apply the same reasoning to the present situation. Ireland, by hypothesis, is "overtaxed" by three millions,[118] but if not only the revenue, but the expenditure and contribution to Imperial services of Ireland were all in proportion to her real taxable capacity, which we may estimate now at one-twenty-fifth, we find that she would be a loser by five millions. Her "true" revenue from all sources ought on this supposition to be £6,605,900; it is £10,032,000. Her local expenditure ought to be £2,875,540; it is £11,344,500. Her contribution to Imperial services ought to be £3,730,360; it is a minus quantity of £1,312,500. Sir David Barbour's reasoning, then, leads us to this astounding paradox, that Ireland, while overtaxed by three millions, gains five millions by the arrangement. Moreover, whether we accept Sir David Barbour's reasoning or not, it is a fact that to-day Ireland, which contributed to Imperial services five and a half millions in 1860, and two millions in 1894, now, so far from contributing anything, costs a million and a quarter more than she brings in. This, certainly, was not a result he either anticipated or would have approved of. On the contrary, he anticipated a reduction in Irish civil expenditure, to be saved for Irish purposes, without prejudice to the Imperial contribution. It makes the brain dizzy to compare his anticipation with the reality.
How, on the other hand, stands the argument of Lord Farrer and Mr. Currie? They prophesied a great increase in Irish expenditure and the disappearance of the contribution to Imperial services. That has come true. Lord Welby (and indeed the majority of the Commission) was with them in declining to regard excessive local expenditure as a set-off to excessive and unsuitable taxation, and in condemning root and branch the system of grants, aids, and doles as wasteful in itself and as sapping the self-reliance of Irishmen. There again they were right. They were at one with all their colleagues in holding that under the Union it was impossible to differentiate between the taxation of Ireland and Great Britain, and they prescribed, as the only sound remedy, Home Rule. Once more they were right.
The figures of to-day constitute the reductio ad absurdum of the Union. For over a century in Ireland we have defied the laws of political economy, but they have conquered us at last. Sound finance demands that revenue and expenditure should be co-related. Ireland's economic circumstances are widely different from those of Great Britain, but she has been included, without any regard to her needs and without any reference to Irish expenditure, in a system of taxation designed exclusively for the capacities and needs of Great Britain. Hence Irish revenue is both excessive and inadequate.
"Excessive"? "Inadequate"? What do these terms really mean? Let us once and for all clear our minds of all obscurity and look the facts in the face. No one knows what Irish revenue and expenditure ought to be, or would be, if Irishmen had controlled their own destinies. It is useless to parade immense sums as the cash equivalent of over-taxation; it is idle to array against them rival figures of over-expenditure. Normal Irish revenue and normal Irish expenditure are matters of speculation. For all we know, Ireland, had she been permitted normal political development, would be raising a larger revenue, and feeling it less; while it is absolutely certain that she would be paying her own way and contributing to Imperial services more, in proportion to her resources, than she did before the Union. The political and therefore the economic development of Ireland have been deliberately and forcibly arrested. I do not say malignantly, because there was no malignant intention. But the action, if mistaken, was deliberately and consistently sustained. Much of Irish industrial talent was lost irrevocably before the old industrial restrictions were removed. There remained the land, an immense source of potential wealth, if properly developed under a rational system of agrarian tenure. For the best part of a century after the Union, the agrarian tenure, dating from the first genuine colonization of Ireland, when the land was confiscated wholesale and the peasantry enslaved, was maintained by force of arms. Thirty years ago (if we date from the Land Act of 1881) we began to change this tenure into another equally defective, though far more favourable to the tenant. A little later, but only eight years ago, on a thorough and systematic scale, we began the parallel policy of Land Purchase. Even now, having transferred half the land to peasant ownership, and placed the other half under judicial rents, many of our statesmen are unwilling to give Ireland the control of its own affairs. On the contrary, step by step with the economic enfranchisement of the farmers, has gone the policy of destroying their personal and political independence, and forcing them to look outside their own country for financial aid, by spending money upon Ireland which Irishmen have no direct responsibility for raising. What a travesty of statesmanship! First, having assisted the farmer to buy his own land, to clap him on the back with "Now, my fine fellow, you are a free man." In the same breath to tell him that he is not fit to have a direct voice in the management of his own country's affairs, and to try and reconcile him to this insult by sapping that very independence of character which the acquirement of a freehold has begun to instil in him.
I described in Chapter IX. how a number of patriotic Irishmen, working both at industrial and agricultural development, have striven to counteract this fatal tendency, and to persuade their countrymen to rely on themselves alone. But I venture to repeat what I said then, that without the bracing discipline of Home Rule, and, above all, of the financial Home Rule, these efforts are doomed to comparative failure.
It is absolutely necessary to produce an equilibrium between revenue and expenditure in Ireland, as in every other country in the world. Whatever the temporary strain upon Ireland, whatever the sacrifices involved, the thing must be done, and done now or never. Great Britain's interest is something, but it is trivial beside that of Ireland. The situation is growing worse, not better, and Irishmen should unite to insist that the whole system should stop.
II.
IRISH EXPENDITURE.
Let us look a little more closely at Irish expenditure, as disclosed in the Treasury returns.
For purposes of comparison, I set out first the main heads of Civil Expenditure for England, Scotland, and Ireland in the year 1910-11:[119]
| Population. | England, 36,075,269. | Scotland, 4,759,521. | Ireland, 4,381,951. | |
| £ | £ | £ | ||
| Civil Government Charges, 1910-11: | ||||
| (a) On Consolidated Fund: | ||||
| (1) Civil List, Salaries, Pensions, and Miscellaneous Charges | 340,500 | 148,000 | 138,500 | |
| (2) Development and Road Improvement Funds | — | — | — | |
| (3) Payments to Local TaxationAccounts, etc. | 7,199,500 | 1,204,500 | 1,477,500 | |
| (b) Voted | 26,121,500 | 4,180,500 | 8,026,000 | |
| Total Civil Government Charges | 33,661,500 | 5,533,000 | 9,642,000 | |
| Customs and Excise and Inland Revenue | 3,157,000 | 464,000 | 298,000 | |
| Post Office Services | 15,798,500 | 1,930,000 | 1,404,500 | |
| Total Expenditure | 52,617,000 | 7,927,000 | 11,344,500 | |
| £ s. d. | £ s. d. | £ s. d. | ||
| Per head of population | 1 9 2 | 1 13 3½ | 2 11 9 | |
The totals, if we consider relative populations, appear startling.
Look at the third, or Irish, column, and set aside the two last items, "Customs, Excise, and Inland Revenue," and "Post-Office Services," which represent the cost of collecting Irish Revenue and maintaining the Irish postal, telegraph, and telephone services. We may note in passing, however, that the Post-Office receipts in Ireland in 1910-11, according to the Treasury estimate, were less than the outgoings by £249,000 (receipts, £1,155,500; outgoings, £1,404,500).
The Civil Government Charges are the most important heads of expense, and these are divided into two main classes: (a) charged on Consolidated Fund; (b) Voted.
Class (a) consists of (1) Salaries, Pensions, etc.; (2) Development and Road Improvement Funds; (3) Payments to Local Taxation Accounts.
In other parts of Return No. 220 will be found the details of expenditure in these various classes:
(1) The Salaries and Pensions need not detain us long. The principal item is judicial salaries, £102,000, as compared with £282,000 for England, which has more than eight times the population of Ireland. Another item, £20,000 for the Lord-Lieutenant, is double the sum allotted to any Colonial Governor, even of the Dominion of Canada, which has nearly twice the population of Ireland. But the extravagance lies, not in the cash amount, but in the fact that the Irish Lord-Lieutenancy is, under present conditions, an anomalous institution. No Irishman would grudge a penny of the sum if the Lord-Lieutenant, like a Colonial Governor, presided over a responsibly governed Ireland.
(2) Road Improvement and Development Funds. This category is blank for the year 1910-11. There will be payments for the current year which will swell the Irish expenditure.
(3) Payments to Local Taxation Accounts, £1,477,500. This raises an intricate subject, into which I cannot enter in great detail. It is well known that the whole system of relieving local taxation out of Imperial taxation needs thorough revision. Meanwhile Ireland, like other parts of Great Britain, has been allotted at various times a multitude of different grants under various Acts, but principally under the Local Government (Ireland) Act, 1898, and the Finance Acts of recent years.
Local Government on the British pattern was, as I have already described, extended to Ireland only in 1898. The money now raised in Ireland by Local Taxation is about £4,800,000, exclusive of the Grants in Aid which we are now considering, and which appear, rightly, on the national balance-sheet because they come from the common purse.[120] They are based on different principles, and originated in many different ways. Some are fixed annual sums, determined either by some arbitrary standard or (as in the case of the Licence Duty grants and the Customs and Excise grants[121]) on the Irish proceeds of certain duties in a year taken as standard. The Estate Duty grants still vary with the total product of duties in the United Kingdom, and are still allocated on the proportion settled by Mr. Goschen in 1888—namely, 9 parts to Ireland, 11 to Scotland, and 80 to England.[122] If the proportion were to be revised now, and, on Mr. Goschen's method, made to correspond to the respective estimated contributions to Imperial Services, Ireland, instead of getting £418,000, would get nothing at all. The largest item in the list—namely, the "Agricultural Grant," a fixed annual sum of £728,000, dating from the Local Government Act of 1898—was designed partly to reconcile Irish landlords to the passage of that Act. Nearly half of it represented the remission of the landlord's half-share of the poor-rate on agricultural land, as estimated in the standard year 1896-97. The English precedent for this was the Agricultural Rates Act of 1896, which relieved the English owner of agricultural land in a similar way. Irish conditions were so different, however, that it was felt necessary in this case to balance the landlord's boon with an equivalent boon to the tenant; so that half the tenant's share of the county cess was also remitted. The result was a disproportionately large grant as compared with those received by England and Scotland.[123] We must remark, as one of the minor intricacies of Irish finance, that all these grants do not actually go in relief of Local Taxation. Some of them are diverted to public Departments, such as the Board of Intermediate Education, the Congested Districts Board, and the Department of Agriculture.
All these grants will cease, as such, after Home Rule, while their amount must be reckoned as part of the cost of Irish Government. The Irish Parliament will have to revise the whole system of relief to Local Taxation and establish it on some simple and rational basis. Meanwhile, it is important to remember that the Irish grants form the major part of the Guarantee Fund set up by the Land Purchase Acts, and, until the last amending Land Act of 1909, were chargeable—the Estate Duties Grant, hi the first instance, the Agricultural Grant in the second instance—with the increasingly heavy losses incurred in floating Land Stock below par. In 1908-09 the sums so withdrawn amounted to £90,000. That liability was removed by Mr. Birrell's Act, and they now remain chargeable only with any arrears in the annuities paid by the purchasing tenants. This is a negligible liability, and should properly be placed upon the Irish Government as a whole, which, if it pleased, could recover the money from localities.[124]
We now reach the category (b) "Voted," and find in the Irish column the truly enormous sum of £8,026,000—nearly double that of Scotland (£4,180,500), which has a population slightly greater, and more than a third of that of England (£26,121,500), which has a population eight times as great.
When we search the various tables of detailed expenditure, three prominent items arrest our attention:
| Constabulary and Dublin Metropolitan Police[125] | £1,464,500 |
| Old Age Pensions | £2,408,000 |
| Public (i.e., Primary) Education | £1,632,000 |
| £5,504,500 |
Those three items may be said to epitomize the history of Ireland under the Union—coercion, pauperization, deficient education. The first two are, of course, intimately connected. The existing cost of police, surviving needlessly at the monstrous figure shown, represents the past cost of enforcing laws economically hurtful to Ireland. The economic hurt is reflected in the cost of Old Age Pensions paid to a disproportionately large number of old people, below the official standard of wealth, in a country drained by emigration for seventy years past of its strongest sons and daughters. Police in Ireland costs twice as much as in England and Scotland, where (with the exception of the London Metropolitan Police) it is a local, not a national charge, while Irish Old Age Pensions cost in 1910-11 more than twice as much as Scottish Pensions, and amounted to two-fifths of English Pensions.[126] With full allowance for excess payments owing to the lack of all birth records prior to a certain date, the Irish figure is relatively enormous. It is £100,000 greater than the whole cost of Irish Government in 1860, and, with the addition made in the estimates of the present year, it is just a million more than what, according to Sir David Barbour's reasoning, would have been the whole cost of Irish Government in 1893-94, had Irish expenditure, like Irish revenue, been in proportion to the taxable capacity of Ireland.
I touched upon the Irish aspect of the policy of Old Age Pensions at p. 181. Whatever the pecuniary charge, I suggest that it is absolutely necessary for Ireland in the future to control both payment and policy, and she might find it in her best interest, with due notice and due regard to present interests, to halve the scale of pensions. It is not a question of the general policy of Old Age Pensions, but of the applicability of a certain scale to Ireland, where agricultural wages (for example) average only 11s. 3d. as compared with 18s. 4d. for England, and 19s. 7d. for Scotland.[127] Of all ways of remedying a backward economic condition, that of excessive pensions is the worst.
The cost of Irish Primary Education—£1,632,000, as I pointed out in Chapter IX.—is at once too high and too low; too high in the sense that much of it is wasted owing to the lack of popular control, too low in the sense that it is a scandal to spend nearly as much on police as on the education of children, and £800,000 more on Old Age Pensions than on the education of children. If part or even the whole of the additional expense eventually necessary is raised by rates, so much the better. Accurate comparison is difficult with the English and Scottish expenditure on elementary education, because the greater part of the cost in those countries is borne by private endowments and local rates, whereas in Ireland no local rate is raised for elementary education, there are no endowments, and private subscriptions are very small.[128] It is certain, however, that far greater sums, in proportion to population, are spent in England and Scotland than in Ireland. This is little to be wondered at if we consider the painful history of education in Ireland; but we cannot recall the past, and, as I urged in Chapter IX., one of the first duties of a free Ireland will be to improve the education of the children.
The Irish vote for Universities and Colleges, £166,000, has been swelled by the recent establishment of the National University. No item in the whole list represents money better spent.
With regard to other Irish services, I shall make use, with Professor Oldham's consent, of some interesting tables compiled by him, showing the principal variations in Irish expenditure since the year 1891-92.[129]
They include certain expenses which I have already alluded to, and others which I shall have to remark upon further, besides giving a general view of the growth in the cost of Irish government. Neither of lists A or B is exhaustive:
A. INCREASES OF EXPENDITURE.
| 1910-11. | 1891-92. | |
| £ | £ | |
| 1. Old Age Pensions | 2,408,000 | — |
| 2. Primary Education | 1,632,000 | 843,755 |
| 3. Universities and Colleges | 166,000 | 26,000 |
| 4. Payments to Local Taxation Account | 1,477,500 | 399,260 |
| 5. Ireland Development Grant | 191,500 | — |
| 6. Post Office | 1,404,500 | 749,046 |
| 7. Cost of collecting Irish Revenue | 298,000 | 223,362 |
| 8. Surveys of the United Kingdom | 81,000 | 47,603 |
| 9. Land Commission | 414,500 | 91,826 |
| 10. Department of Agriculture | 415,000 | 44,630 |
| 11. Other items (five[130]) | 240,500 | 172,918 |
| 8,728,500 | 2,598,400 |
Nos. 1 to 4 I have already dealt with, but it is interesting to note the contrasting figures of 1893-94.
No. 5. The Ireland Development Grant of £191,500 is interesting as an example of the haphazard methods of Anglo-Irish finance. It is an annual sum voted for various development purposes, and was originally established (at the figure of £185,000) in 1903 as an equivalent for the capitation grants for school attendance in England, given under the Education Act of 1902 in lieu of school fees. In allotting the Irish equivalent, Mr. Goschen's proportion of 80, 11, 9 was for the first time condemned by all parties. What the proportion ought to be was a matter of dispute, but it was fixed in this case on the basis of population. Since the English grant has now risen to £2,500,000, the Irish proportion therefore is now, strictly speaking, inadequate.
Nos. 6, 7, and 8 are examples of charges debited by the Treasury against Ireland which are open to criticism as long as the Union lasts, and which meet with much complaint in Ireland. Obviously, however, the first two at any rate are charges which an Ireland financially independent would have to bear.
No. 9. The Land Commission vote of £414,500 is of course the direct result of an abnormally bad system, necessitating abnormal and costly remedial administration. Ireland herself is not morally responsible for a penny of it, but if she is wise she will shoulder the cost as a corollary of responsible government. Small administrative economies may be made, and the cost will disappear altogether with the completion of Land Purchase, say in fifteen years, but in the immediate future no reduction can be counted on with certainty. The figure given includes the cost of the Land Commission proper, which deals with Judicial Rents and manages finance, as well as the cost of the Estates Commissioners who conduct the machinery of Land Purchase. It also includes losses on the flotation of Land Stock at a discount, and the interest and sinking-fund on the Stock raised to pay the bonus to landlords.
No. 10. The vote of £415,000 for the Department of Agriculture, whose origin and functions I described in Chapter IX., does not accurately show the actual cost of the Department, because it excludes the greater part of an Endowment Income of £166,000 a year, derived partly from the Irish Church Fund, partly from the Irish Local Taxation Account, and partly from the interest on a capital endowment of £200,000, as well as other small miscellaneous grants. But it includes a sum of about £44,000 for some museums, colleges, gardens, etc., whose English counterparts are subsidized under different votes, as well as the sum of £144,000 for the Congested Districts Board.[131] Nor does this latter sum represent the full cost of the Congested Districts Board, which has also an Endowment Income from the Irish Church Fund of £41,250, a subsidy from the Ireland Development Grant, and a fluctuating income from various sources—rents, etc.
Part of the expense of the Department itself must be regarded as abnormal, in view of the extraordinarily backward economic condition of the country when it was founded. Nor, valuable as the Department's work is, can it be safely assumed that the cost is not extravagant. As long as any Department relies on an Imperial vote there can be no certainty that the expenditure will be economical. The whole cost of the Congested Districts Board is abnormal. Its very existence is evidence of the failure of external government in Ireland, and, as I urged in Chapter IX., the whole question of the treatment of the congested districts needs thorough investigation at the hands of a responsible Irish Government.
B. REDUCTIONS IN EXPENDITURE.
| 1910-11. | 1891-92. | |
| £ | £ | |
| 1. Relief of Distress | 5,000 | 183,675 |
| 2. Pauper Lunatics Grant | — | 111,655 |
| 3. Teachers' Pensions Grant | — | 90,000 |
| 4. Railways (Ireland) Grant | 61,000 | 341,934 |
| 5. Local Government Board | 92,500 | 132,748 |
| 6. Chief Secretary's Offices | 27,500 | 39,681 |
| 7. Registrar-General's Office | 13,000 | 29,926 |
| 8. Justice and Police | 2,090,500 | 2,129,849 |
| 2,289,500 | 3,059,468 |
Most of these reductions are deceptive. No. 1 is the saving of an abnormal grant, Nos. 2 and 5 signify mere transfers to Grants in Aid of Local Taxation, No. 7 a transfer of duties to the Department of Agriculture.
The table shows a total reduction of £769,968, while Table A shows a total increase of £6,130,000. Together they account for an increase since 1891-92 of £5,360,032.
Here is a similar table, confined to Justice and Police:
C. EXPENDITURE ON JUSTICE AND POLICE.
| 1910-11. | 1891-92. | |
| £ | £ | |
| 1. Judicial Salaries | 102,000 | 110,244 |
| 2. Dublin Metropolitan Police | 93,500 | 91,998 |
| 3. Royal Irish Constabulary | 1,371,000 | 1,362,348 |
| 4. Judicial Pensions, etc. | 15,000 | 18,656 |
| 5. Law Charges | 65,500 | 71,977 |
| 6. Superior Courts Offices | 110,500 | 116,851 |
| 7. County Courts Offices | 109,000 | 112,895 |
| 8. Prisons, etc. | 112,000 | 134,429 |
| 9. Reformatories, etc. | 112,000 | 110,451 |
| 2,090,500 | 2,129,849 |
To Nos. 1, 2, and 3 I have already referred. The whole charge of two millions, though it shows a slight decrease in twenty years, is grossly out of proportion to the resources of Ireland. Under heads 6 and 7 are included a number of posts which are notoriously little more than sinecures.
To sum up once more, the cost of the Irish Government as paid out of the common purse in the last completed financial year was £11,344,500, or £2 11s. 9d. per head of the population, as compared with a cost per head of £1 9s. 2d. in England, and in Scotland of £1 13s. 3½d. But this is not the minimum figure with which we have to reckon in considering the Home Rule scheme; some items show a marked increase in the Estimates of the current year: (1) The increase in Old Age Pensions, not certain yet, will be at least £250,000. (2) The Land Commission is £544,000, as compared with £414,500. (3) Universities and Colleges, £186,256, as compared with £166,000. (4) Department of Agriculture, £426,609, as compared with £415,000. (5) Registrar-General's Office, £29,020, as compared with £13,000. (6) Valuation and Boundary Survey, £44,581, as compared with £30,000. (7) Public Works and Buildings in Ireland, £273,370, as compared with £215,000. Even with allowance for over-estimates, especially in the last of these items,[132] we must anticipate an increase of nearly half a million under the above heads, to which we must add £150,000 recently allocated by the Road Board to Ireland for the year 1911-12, and £34,750 already allocated by the Development Commissioners. If Ireland comes prematurely into the National Insurance scheme, and assumes eventual financial responsibility for her share of the cost, that will be an additional source of expense; but it is to be hoped that her leaders, in common prudence, will henceforth endeavour to stem the rising flood of Irish expenditure, and so facilitate the retrenchments imperatively necessary under Home Rule. As it is, the total outgoings of the current year (1911-12), swelled by the increases shown above, will probably amount to £12,000,000, while this total will in its turn be added to by the office costs of the Irish Legislature and the salaries of Ministers.
The scheme framed cannot assume immediate economies, and a responsible Ireland alone can decide the nature and extent of the drastic economies which must be made in the future. Beyond the brief remarks and hints made in the course of this chapter, I myself venture only to lay down the broad proposition that, to the last farthing, Irish revenue must govern and limit Irish expenditure. For any hardship entailed in achieving that aim Ireland will find superabundant compensation in the moral independence which is the foundation of national welfare. She will be sorely tempted to sell part of her freedom for a price. At whatever cost, she will be wise to resist.
If Irish revenue is to be the measure of Irish expenditure, it follows that it must be wholly, or at any rate predominately, under Irish control. Let us look a little more closely, therefore, into its amount and composition.
III.
IRISH REVENUE.
As I have already pointed out, in order to arrive at the present revenue of Ireland, our best course is to take the mean tax revenue of the two years 1909-10 and 1910-11, and to add to it the non-tax revenue of 1910-11, which was, of course, unaffected by the delay in passing the Budget of 1909. For clearness, however, I first set out separately the Irish figures of these two years, distinguishing between tax revenue and non-tax revenue, and giving the "collected" revenue and the "true" revenue in different columns:
| 1909-10. | 1910-11. | |||
| Revenue as Collected. | "True." | Revenue as Collected. | "True" | |
| TAX REVENUE. | £ | £ | £ | £ |
| Customs | 2,742,000 | 2,755,000 | 3,103,000 | 2,977,000 |
| Excise | 4,487,000 | 2,898,000 | 5,826,000 | 3,734,000 |
| Estate, etc., Duties | 684,000 | 684,000 | 1,144,000 | 1,144,000 |
| Stamps | 293,000 | 315,000 | 326,000 | 351,000 |
| Income Tax | 388,000 | 451,000 | 1,825,000 | 2,164,000 |
| Land Value Duties | — | — | 1,000 | 1,000 |
| Total Irish Revenue from Taxes | 8,594,000 | 7,103,000 | 12,225,000 | 10,371,000 |
| NON-TAX REVENUE. | ||||
| Postal Service | 900,000 | 900,000 | 935,000 | 935,000 |
| Telegraph Service | 180,000 | 180,000 | 185,500 | 185,500 |
| Telephone Service | 30,000 | 30,000 | 35,000 | 35,000 |
| Crown Lands | 26,000 | 26,000 | 24,500 | 24,500 |
| Miscellaneous | 116,000 | 116,000 | 114,500 | 114,500 |
| Total Irish Non-Tax Revenue | 1,252,000 | 1,252,000 | 1,294,500 | 1,294,500 |
| Aggregate Irish Revenue | 9,846,000 | 8,355,000 | 13,519,500 | 11,665,500 |
| Percentage of the Aggregate Revenue of the United Kingdom | 7.52 | 6.38 | 6.57 | 5.67 |
On p. 276 are the details of the mean tax revenue, "collected" and "true," of the two years 1909-10, 1910-11, with the non-tax revenue of the latest year, 1910-11, added to them.
PRESENT IRISH REVENUE (MEAN OF THE LAST TWO YEARS).
| Details of Revenue. | Mean Collected Tax Revenue of the Years 1909-10, 1910-11. | Mean "True" or "Contributed" Tax Revenue of the Years 1909-10, 1910-11. | |
| TAX REVENUE. | £ | £ | |
| Indirect Taxation | Customs | 2,922,500 | 2,866,000 |
| Excise (incl. licences £284,500) | 5,156,500 | 3,316,000 | |
| Total Indirect Taxation | 8,079,000 | 6,182,000 | |
| Estate Duties | 914,000 | 914,000 | |
| Direct Taxation | Stamps | 309,500 | 333,000 |
| Income Tax | 1,106,500 | 1,307,500 | |
| Land Value Duties | 1,000 | 1,000 | |
| Total Direct Taxation | 2,331,000 | 2,555,500 | |
| Total Tax Revenue | 10,410,000 | 8,737,500 | |
| NON TAX REVENUE (1910-11). | |||
| Postal Service | 935,000 | 935,000 | |
| Telegraph Service | 185,500 | 185,500 | |
| Telephone Service | 35,000 | 35,000 | |
| Crown Lands | 24,000 | 24,500 | |
| Miscellaneous | 114,500 | 114,500 | |
| Total Non Tax Revenue (1910-11) | 1,294,500 | 1,294,500 | |
| Collected Revenue at the Present Day. | "True" or "Contributed" Revenue at the Present Day. | ||
| Aggregates | 11,704,500 | 10,032,000 | |
The two aggregate figures at the bottom, £11,704,500 and £10,032,000, approximately represent the Treasury estimate of the "collected" and the "true" revenue of Ireland, respectively, at the present day. They are confirmed by the figures of previous years; for the average revenue of the five years, 1904-09, was as follows: "collected," £11,320,000; "true" or "contributed," £9,612,400, the new taxation of 1909-10 having added £500,000 to the "true" revenue. I must again remind the reader, however, that the figures are open to the criticism that the adjustment between the "collected" tax revenue and the "true" revenue is inaccurate owing to the methods employed by the Treasury. It will be observed that the resulting net deduction from the "collected" tax revenue of to-day, a deduction attributable, on the balance of the various figures, almost exclusively to Excise,[133] and mainly to the Excise duty on spirits, amounts to £1,672,500, and makes all the difference between the solvency and insolvency of Ireland regarded as an independent financial unit. Her expenditure, it will be remembered, was £11,344,500, her "collected" revenue £11,704,500, leaving a surplus of £360,000, which becomes a deficit of £1,312,500 if we reckon only the "true" or "contributed" revenue of £10,032,000. On the other hand, the principle, as distinguished from the methods of adjustment, is perfectly sound if we wish to arrive at a correct idea of the financial position of Ireland. The £1,672,500 virtually represents the duties on goods exported from Ireland, and consumed in Great Britain, or rather the excess of these duties over those levied on goods exported from Great Britain and consumed in Ireland. The consumer pays the tax on dutiable commodities, and a financially independent Ireland could not raise revenue twice over from the same commodity. She would, for example, have to give a drawback from the Excise duty on spirits exported to England, since a Customs duty would be levied on its import into England. On the other hand, she would be entitled to every penny of revenue derived from the tea and sugar imported into and consumed within her borders, and to the full income tax on property held by Irishmen.
Now, for two reasons, I do not propose to make any exhaustive inquiry into the accuracy of Treasury adjustments for "true" revenue. My first reason is, that full material for calculation cannot be obtained by any private individual, and could not be obtained and worked up even by the Treasury without an enormous expenditure of time and trouble. The most careful inquiry I have seen is embodied in an exceedingly able pamphlet by "an Irishman," entitled "The Financial Relations of Ireland with the Imperial Exchequer," and I mention below a few of the criticisms made by the writer. His and other investigations seem to prove that Irish revenue is considerably underestimated, perhaps by half a million.[134] My second reason is that errors of adjustment in either direction cannot affect in any substantial way the kind of financial scheme we are to adopt in the Home Rule Bill.
Let us fix our attention, then, on the second of the two columns in the table on p. 276, showing the aggregate "true" revenue of Ireland at the present day. Disregard the non-tax revenue from the various postal services (which represents payment for services rendered, and is swallowed up by an excess on the expenditure side of £249,000), and examine the heads of tax revenue shown in the upper half of the column. It will be seen that 70-75 per cent. of Irish "true" revenue is derived from Customs and Excise duties, which, with the exception perhaps of licence duties, may be classed as indirect taxation. The deduction for "true" revenue, it will be observed, has considerably modified the proportion, which for "collected" revenue works out at 77.61 per cent., or nearly four-fifths.
As the reader is aware, this is not a new feature in Irish finance. It formed the basis of the Report of the Financial Relations Commission with regard to the over-taxation of Ireland. Much the greater part of Irish revenue, even since the abolition of protective duties and the substitution of direct taxation, has always been derived from taxes on articles of common consumption, the simple reason being that Ireland is a country where there is little accumulated wealth from which to extract direct taxation. In Great Britain, whose circumstances dictate the finance of the United Kingdom, no less than 54.79 per cent. of the tax revenue is derived from direct taxation, only 45.21 per cent. from Customs and Excise.[135]
The Irish figures show that to retain in the hands of the Imperial Parliament the control of Irish Customs and Excise will be to retain almost paramount control over Irish revenue; to deny Ireland the main lever she needs for co-ordinating her expenditure and her revenue, and for making her taxation suitable to her economic conditions. It will be to preserve the framework of a fiscal system which the highest financial authorities have pronounced to be unfair to Ireland, and which incontrovertible facts show to be uneconomical both for Ireland and Great Britain.
Meanwhile that system has at length produced a deficit, with which I shall deal in the next chapter. Its amount, probably exaggerated, must necessarily remain uncertain under the present fiscal Union. One thing alone is certain, that it will grow as long as that Union lasts.