Let us, in the first place, clear the ground from some doubtful arguments which, used as premises, will probably lead the unwary to false conclusions. A plea is often put forward that England is a rich country and Ireland a poor country, and it is argued that identical taxation therefore wrongs Ireland. But England is not a rich country, in the broad sense. It is a country in which there is vast accumulation of wealth, but in which, also, there is a great mass of poverty—poverty probably exceeding the poverty of Ireland, and, therefore, identical taxation if it wrongs the poor of Ireland, wrongs still more the poor of England. Critics arguing from this false premise contend that the extension of the Income-tax to Ireland was a wrong, that is to say, the wealthy man living in Ireland, where living is relatively cheap, ought not to contribute to the national expenditure on the same principle as the wealthy man living in England, where living is relatively dear; or, to put the argument in another form, it is sound finance to take Income-tax from a man in England, struggling on a few hundreds a year. It is unsound finance to take Income-tax from, say, the profits earned in Ireland by the Guinness firm. Nationalists, misled by the plea of Ireland's poverty, have relied on this argument, and Conservatives also have used it chiefly to discredit Mr. Gladstone, who extended the Income-tax to [pg 114] Ireland; but the argument is false in itself, and cannot be made the basis of sound financial legislation. As a matter of fact, taxes on articles of general consumption, on the necessaries of life, fall heavily on the poor, and the argument of over-taxation applies in great degree to the poor in the great towns of England, and to the poor in Ireland. If, then, the poor of Ireland are to be relieved, the poor of England must be relieved also, and identical taxation would still be the result. The statesman must find a truer gauge by which to measure the relative capacity of the two countries to bear taxation.
Again, during the long discussion on financial relations, much time has been wasted in criticising that provision of the Act of Union, which fixed the respective contributions of Great Britain and Ireland to the common purposes of the Empire at the proportion of fifteen and two. That proportion, in fact, was not exacted, and it may be put aside as theoretical.
A summary of recent financial history in Ireland will enable the reader to understand the circumstances in which Parliament takes up the problem of Home Rule. Towards the close of the eighteenth century the condition of Ireland was bad. England, selfish to the last degree in her commercial policy, treated Ireland as little better than a conquered country, and ruined her commercially and industrially by restrictions on her trade. Protestants and Catholics joined in patriotic resistance, and wrung at last freedom of trade in 1779, and an independent Parliament in 1782. Thenceforward for a time the financial administration of Ireland was regulated in accord with Irish interest. The country prospered financially under the new order. Large sums were spent in promoting agriculture and manufactures, and in grants for public works, and the [pg 115] country's finance was restored to order. During the years of peace, 1782 to 1793, Ireland contributed on the average £584,000 to military—that is to the common expenses of the Empire. The military expenditure of Great Britain in the peace years, 1786 to 1792, averaged £5,142,000. Ireland was then a most important factor in the State, for the population was to that of England in the proportion of nearly one to two.
Pitt desired to establish reciprocity between the two countries and at the same time to obtain from Ireland a contribution on a fixed principle for the Navy, wise proposals worthy of the Minister; but the two Parliaments could not agree. That of England bowed to the pernicious claims of ascendancy and to the supposed interests of the commercial classes. Pitt was defeated. The French Revolution and a war lasting nearly twenty-two years followed, and in the midst of the war broke out the Rebellion of 1798. If the charge of the Irish debt at the outbreak of the war and the average civil expenditure of Ireland between 1793 and the Union is deducted from the average income of Ireland, the surplus constituted Ireland's real contribution to the common expenditure and it averaged about £900,000 a year. The year 1800 marks a great change of policy. Pitt put an end to the independent Parliament of Ireland and passed the Act of Union, bad in itself, and worse by the means which made it law. It sought to make the two countries one for all purposes of revenue, and that object was kept steadily in view.
From 1800 to 1817 the United Parliament imposed taxes on both England and Ireland, but the Irish Treasury collected the Irish Revenue, defrayed the local expenditure of Ireland as sanctioned by the United Parliament and remitted the surplus in aid of the war expenditure. The greater part of the [pg 116] burthen fell upon Great Britain, but Ireland's share drained greatly her resources. Her revenue which had produced £1,837,000 in 1793, reached £7,305,000 in 1817, an increase of 300 per cent., while her contributions during the years of war to the common expenditure calculated on the principle adopted in the preceding paragraph amounted to about £3,000,000. During the same period Great Britain contributed to the war out of revenue about £43,000,000 on the annual average.
In 1817 the Irish Treasury was abolished, the exchequers of the two countries were united, the British and Irish Revenues were paid alike into the one exchequer. The Irish local expenditure was defrayed from that exchequer under the check of the English Treasury, and the United Parliament imposed and repealed Irish taxes. From 1817 for many years Ireland fared badly. Her representatives in Parliament served her ill. Tories, Whigs, and independent members failed alike in making England understand Irish needs, and the British Parliament neglected Irish interests. The years between 1817 and 1842 mark the first period of Irish financial history dating from the war. It was a period of stagnation. Both countries required time to recover from the calamity incident to war; but the recovery would have been more rapid, even under heavy taxation, had not progress been retarded by the unwise legislation of protection, which fettered enterprise and restricted commerce. This evil, however, injured Great Britain more than Ireland. In 1824 the separate Customs Departments of the two countries were abolished. The trade between Great Britain and Ireland was treated as coasting, and from that time no official record has been kept of goods exported from and imported into both countries.
In 1817 the taxes levied in England were similar to, [pg 117] but not identical with, those levied in Great Britain. Ireland was exempt from many taxes levied here, and in some cases, such as spirits, she paid a lower rate of duty. A period of profound peace enabled the government to remit taxation; but those remissions were chiefly made in deference to British interests, and in making them Irish interests were little considered. The truth of this statement is illustrated by the Revenue Returns. The estimated “true”[100] Revenue of Great Britain fell from £51,500,000 in 1820 to £46,250,000 in 1840, although population, and with it consumption, had increased. The “true” Revenue of Ireland in the same period rose from £5,250,000 to £5,500,000. But it must be added that many of the taxes remitted were taxes not levied in Ireland. In respect to them Great Britain had to a certain extent a claim to prior consideration.
The second period of financial history extended from 1842 to 1869, a period of rapid recovery and of great prosperity in Great Britain, but not so in Ireland. Famine fell upon her in 1846, and thinned her population, followed by emigration, which showed how poverty pressed upon the poor, while the Fenian movement of 1866 showed how widespread was the spirit of unrest. A highly cultivated Liberal statesman was Lord-Lieutenant during several years of the period. An interesting diary which he kept leaves the impression that the leading statesmen of the day were not reading the signs of the times, or gauging the gravity of a growing movement. This was hardly the period to choose for increasing the taxation of Ireland, nevertheless in 1853 Mr. Gladstone extended the [pg 118] Income-tax to Ireland, counterbalancing it in part by the remission of loans granted to Ireland during the famine—a very insufficient compensation. But the Income-tax did not touch the poor, and as I have pointed out there was no reason why the wealthy and comparatively well-to-do classes in Ireland should not contribute to the public expenditure like their brethren in Great Britain. This plea, however, does not extend to the spirit duties which during 1853 Mr. Gladstone and Mr. Disraeli raised to the level of the spirit duties in Great Britain. That tax undoubtedly was paid in great measure by the poorer classes.
In one direction there was improvement. In 1842 Sir Robert Peel acceded to power, and inaugurated at once the policy of liberating trade which has conferred such benefits on Great Britain, and in a minor degree on Ireland. The era of prosperity which followed the adoption of the Free Trade policy increased greatly the consuming power of the people, and enabled Mr. Gladstone to largely reduce duties on the principal articles of food consumed by the poorer classes. For example, he and his successors reduced the tea duties from 2s. 2d. to 6d. and abolished the sugar duties. This was undoubtedly the true method of remedying the evil which underlies the plea that identical taxation wronged Ireland. I have shown that that evil was caused not by identical taxation, but by heavy taxes on food, which oppressed alike the poor of Ireland, and the more numerous poor of Great Britain. The policy adopted met the local grievance, by modifying if not removing the general grievance, and this remedy of the general grievance was only rendered possible by the growing prosperity of Great Britain. The poor of Ireland had therefore their full share of the benefit caused by the prosperity of Great Britain. The historian [pg 119] must give full weight to this consideration when he criticises the increase of the Irish spirit duty. There can be little doubt as to the verdict of history, if the choice lies between cheap whisky and dear food on the one side, and cheap food and dear whisky on the other. Between 1860 and 1900 the Customs and Excise duties which were reduced exceeded the like duties increased by some £22,000,000 a year, and Ireland had her share in the reduction.
In 1864 a Committee of the House of Commons inquired into the taxation of Ireland, but it led to no useful result. In other directions the monotony of neglect continued. The Government and Parliament paid little or no attention to Irish needs. Ireland was the Cinderella of the three kingdoms, and fared accordingly.