The changes adopted in that year were explained in my budget speech, and will be found in my volume of Financial Statements, pp. 53, 60, and 69. They affected the Spirit Duties and the Income-Tax.
1. The Spirit Duties.—We laid 8d. per gallon upon Irish spirits, imposed at the same time 1s. per gallon in Scotland, and laid it down that the equalisation of the duty in the three countries would require a reduction of the duty of 8s. chargeable in England. Sir Robert Peel had imposed 1s. per gallon on Irish spirits in 1842, but was defeated by the smuggler, and repealed the duty in consequence of the failure. In 1842 the duty was levied by a separate revenue police. I abolished this separate police, and handed the duty to the constabulary force, which raised it, and without difficulty.
2. The Income-Tax was also in that year extended to Ireland. I pointed out that Sir Robert Peel, in imposing the burden on Great Britain, proposed to give a compensation for it by progressive reductions of duty on consumable commodities, and that Ireland had for twelve years enjoyed her full share of the compensation without undergoing any part of the burden; but I also laid it down as a fundamental principle that the peace income-tax was to be temporary, and I computed that it might cease in 1860. This computation was defeated, first by the Crimean war, second by a change of ideas as to expenditure and establishments which I did everything in my power to check, but which began to creep in with, and after, that war. We were enabled to hold it in check during the government of 1859-66. It has since that time, and especially in these last years, broken all bounds. But although the computation of 1853 was defeated, the principle that the income-tax should be temporary was never forgotten, at least by me, and in the year 1874 I redeemed my pledge by proposing, as mentioned, to repeal it—a course which would have saved the country a sum which it is difficult to reckon, but very large. This fact which was in the public mind in 1853 when the income-tax was temporary, is the key to the whole position. From this point of view we must combine it with the remission of the consolidated annuities. I have not now the means of making the calculation exactly, but it will be found that a descending income-tax on Ireland for seven years at 7d., then 6d., then 5d., is largely, though not completely, balanced by that remission. It will thus be seen that the finance of 1853 is not responsible either for a permanent peace income-tax upon Ireland, or for the present equalisation of the spirit duties. At the same time, I do not mean to condemn those measures. I condemn utterly the extravagance of the civil expenditure in Ireland, which, if Ireland has been unjustly taxed, cannot for a moment be pleaded as a compensation. I reserve my judgment whether political equality can be made compatible with privilege in point of taxation. I admit, for my own part, that in 1853 I never went back to the union whence the difficulty springs, but only to the union of the exchequers in or about 1817. It is impossible to resist the authority which has now affirmed that we owe a pecuniary, as well as a political debt to Ireland.
FINANCIAL PROPOSAL OF 1853
Mr. Gladstone to Sir Stafford Northcote
Aug. 6, 1862.—I have three main observations to make upon the conversion scheme, two of which are confessions, and one a maxim for an opposition to remember.
1. In the then doubtful state of foreign politics, had I been capable of fully appreciating it at the time, I ought not to have made the proposal.
2. Such a proposal when made by a government ought either to be resisted outright, or allowed to pass, I do not say without protest, but without delay. For that can do nothing but mischief to a proposal depending on public impression. The same course should be taken as is taken in the case of loans.