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.