We have seen how the taxation of Ireland at the time of the Union was three millions. Five years later the figure had risen to four millions, and it went on increasing at this rate until in 1815 it amounted to no less than six and a half millions, having more than doubled in amount in a space of fifteen years, while during the same time the National Debt had risen from four and a half to ten and a half millions.
To understand the significance of these figures it must be realised that the Napoleonic war was in progress, and that the supply, on the part of Ireland, of provisions at enhanced war prices was the only means by which she was able to cope with her increasing liabilities. The conclusion of the war and the consequent fall in prices accelerated a crisis in Irish finance. Even in the years of plenty not more than one-half of what the Act of Union proposed could be squeezed out of the country, and the balance, which was added to her debt, raised the ratio which it bore to that of Great Britain from the proportion of 1 to 15-1/2 in 1800 to that of 2 to 17 in 1817. One would have thought that such an increase of debt would have
[23]made Ireland less fitted to bear equal taxation with Great Britain, but the statesmen of the day thought otherwise, and in 1817 the Exchequers were amalgamated. Even then the fiscal systems of the two countries were not in all respects assimilated, though in regard to some taxes an equalisation was effected, as, for example, in the case of tobacco, the duty on the unmanufactured variety of which was raised from 1s. to 3s. per lb., while that on cigars and manufactured tobacco was raised from 1s. to 16s. per lb. The manner in which the change affected social conditions in Ireland at this time may best be illustrated by the fact that the taxes on commodities, which necessarily hit the poorest classes hardest, rose from 4s. a head per annum in 1790 to 11s. a head per annum in 1820. After the Consolidating Act of 1817 the annual taxation fell to about five millions, abatements and exemptions being made every year. The tobacco tax and the Stamp Duty of 1842, which realised about £120,000 a year, were, it is true, equalised in the two countries, but for many years the system of special treatment was pursued. To Sir Robert Peel credit is due for having refused in 1842 to extend to Ireland the Income Tax, which he re-imposed in England, and for reducing the duty on Irish whiskey to its original figure by the remission of an additional 1s. per gallon which he had imposed.
Soon after this the country supped full of horrors in the famine of 1846-1847. In the decade from 1845 to 1855 more than a quarter of Ireland's population was lost. No sooner did she begin to recover from the effects of this visitation than the Repeal of the Corn Laws dealt her an almost equally disastrous blow. The absence of an industrial side which she might develop, as did England, the almost complete dependence on agriculture, joined to the enfeebled condition in which the lean years had left her, made the adoption at this moment of the principle of Free Trade—in her case—deplorable. Nor was this all.
[24]It was at this moment that the opportunity was taken by Mr. Gladstone, at that time Chancellor of the Exchequer, to reverse the discriminative policy upon which Peel had so strongly insisted.
The Income Tax was applied to Ireland in 1853 at the rate of seven pence in the pound. Ten years later it had risen to seventeen pence. At the same time an additional duty of eight pence a gallon on Irish whiskey was exacted, which in two years was multiplied fourfold, while in 1858 Disraeli assimilated for the first time the whiskey duty in the two islands by raising it in Ireland to 8s. a gallon. The result of this new departure in taxation may be summarised by saying that the Irish revenue was raised from just under five millions in 1850 to nearly eight millions in 1860, and that, too, at a time when, of all others, her distress demanded special treatment and care.
Although the process of assimilation was carried far in 1853 and the subsequent years, fiscal unity has never been completely effected. To this day Ireland secures exemption from the Land Tax, the Inhabited House Duty, the Railway Passenger Duty, and the tax on horses, carriages, patent medicines, and armorial bearings. It will be said, no doubt, that Ireland ought to show due gratitude for these exemptions, but though they raise collectively a sum of £4,000,000 by their incidence in England, Scotland, and Wales, it is calculated that if applied to Ireland they would bring in not more than £150,000 a year, a sum so small that one may ask whether it would bear the cost of collecting.
By way of set-off to the imposition of income tax, which it should be noted was at the time said to be "temporary," Mr. Gladstone wiped out a capital debt of four millions, but it must be pointed out that, in the fifty years which have ensued, a sum of between twenty millions and thirty millions has been collected in Ireland as income tax. Objection cannot—beyond a certain point—be taken to the incidence of this tax,
[25]seeing that it does not fall upon the poorest classes, and that no country benefits more than does Ireland from the substitution of direct for indirect taxation. But what does call for censure is that its application was not made an occasion for the remission of other taxes.
In 1864 the Conservative Government recognised the serious problem of the unequal incidence of taxation in the two islands, and appointed a committee to consider their financial relations. Sir Stafford Northcote, the chairman of this committee, declared that, notwithstanding the fact that they were both subject to the same taxation, "Ireland was the most heavily taxed and England the most lightly taxed country in Europe." Twenty-five years later Mr. Goschen, the Conservative Chancellor of the Exchequer, consented to the appointment of another Committee on the same subject, but no report was ever issued. In 1895 a Royal Commission was appointed, comprising representatives of all political parties, and presided over by a man of commanding ability in the person of Mr. Childers, a former Liberal Chancellor of the Exchequer. The terms of reference were "to inquire into the financial relations between Great Britain and Ireland and their relative taxable capacity." The following extract will serve to show the conclusions of the Commissioners:—