It is useless and unjust to argue, in answer to this great Report, that Ireland ought not to have been regarded as a financial unit at all. Any country that is an island, and possesses a social organisation of its own, with a definite relationship between rich and poor, must necessarily be a financial unit. But even if that were not so, it is too late to argue the question with any honour. For we must never forget that the whole financial legislation of the United Kingdom in regard to Ireland is based upon the Act of Union, which was practically a solemn treaty between the two countries, passed—we will not say how—by both the British and the Irish Parliaments. It is the essence of that treaty that Ireland entered into it upon certain financial terms, and among those terms was the condition that she should be treated as a separate financial unit.
This Report, therefore, immensely strengthens the claim of Ireland to more generous financial terms in 1912 than in 1886 or in 1893.
We want to set up in Ireland a high and strong sense of financial responsibility. The control therefore, as well as the expenditure, must be placed as far as possible in Irish hands, and for that purpose the management, as well as the collection, of Irish taxes ought to be left as far as possible with the Irish Exchequer that must be set up.
The tendency is started by the principle of the Bill of 1912, and the policy of the next decade will be to place in Irish hands as rapidly as possible both the collection and the administration of the finance for all the great Irish services, including those at present "reserved" as well as those at present "transferred."
This brings us finally to the vexed problem of Customs and Excise. It is notorious that the greater part of the Irish revenue—the revenue of a poor country, derived for the most part through indirect taxation—is drawn from Customs and Excise.[78]
It is not, perhaps, surprising, therefore, that the Bill of 1912 should go some way towards meeting the demand that has sprung up in various quarters, both in Ireland and in England, for the control of customs and excise by the Irish Parliament. The proposal of the Government is that we should extend to Ireland, with some variations, what is at present the financial arrangement in regard to customs and excise between the British Treasury and the Isle of Man. The first fact to be remembered quite clearly is that the Irish Parliament is absolutely debarred from creating any new duty. It will not be able to draw up any new set of tariffs. In other words, it will have to adapt its revenue to the general financial policy of the central government, whether that be a free trade policy or a tariff reform policy. But Ireland is to be allowed to vary her customs within certain limits. She may, for instance, reduce her customs to the lowest point, on the only condition that she loses thereby equivalent revenue. But on the main custom duties which fall on such articles as tea, sugar, cocoa, tobacco, and so forth, she cannot raise her customs beyond 10 per cent. The only exceptions will be beer and spirits, on which Ireland may raise her customs or her excise to any point that she desires. It will be necessary, of course, to have rebates or countervailing duties in regard to articles transferred from Great Britain to Ireland, or vice versa, and to that very slight extent alone will these proposals affect the trade relations between Ireland and England.
I may add that the same power of reduction or addition will extend both to income tax and death duties up to the limit of 10 per cent. for increase—a provision which will safeguard the industries of the North from being sacrificed to the needs of the South.[79]
Such are the proposals of the 1912 Home Rule Bill. They appear to present an ingenious compromise between the complete delegation of customs and excise and the complete centralisation. There are very serious objections to the complete separation of these duties. One is that separation of customs has been accepted everywhere as vitally inconsistent with the Federal idea. No State of the American Union has separate customs. Even Bavaria, a State of the German Empire which possesses, as we have seen, a separate army, post office, and national railways, has no separate customs. Such a plan could, therefore, hardly fit in with Federalism, as at present realised in any part of the world. The second objection would be the very grave offence given to the free trade sentiment of Great Britain, and the very grave injury to trade between Britain and Ireland, if we were to hand over to Ireland the right of placing taxes on English goods. Under such circumstances it would certainly be impossible to persuade the British public to grant a bonus to Ireland in order to give her the power of taxing British goods. That would clearly be too great a strain upon the Christian sentiment even of John Bull.
Parnell, it is well known, felt a strong temptation to make a demand for separate customs. But he always put it aside as impolitic, probably on this very ground; and the rise of the Tariff Reform movement since his death has certainly not weakened those considerations, because it has led to a corresponding rise of free trade feeling among a large part of the British public on this side of the Channel.
It is quite clear that the Government's compromise on customs and excise, ingenious as it is, will be subject to very close and shrewd criticism. But the first duty of Home Rulers, both in Great Britain and Ireland, is to avoid the carefully-baited trap of a quarrel on points of detail. That is the obvious game of the enemies of Home Rule. The proper policy of every true Home Ruler is to preserve through all the vicissitudes of those financial discussions a sane and steady perspective, well knowing that, after all, finance is not really the true heart of this problem.