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wealth of the two countries, as to the capacity of Ireland to bear the British scale of taxation, or even as to the amount of revenue derived from and expended in the countries respectively, with the consequent contributions made to common Imperial services. A Committee sat in 1864-65, which compiled some interesting information and heard some important witnesses, but ignored the main questions at issue and produced what Sir Edward Hamilton described later as an “ impotent Report. Sir Joseph MacKenna, an able Irish banker, again and again, between 1867 and 1876, pleaded for an inquiry into Anglo-Irish finance, alleging gross injustice in the incidence of Irish taxation, and obtained nothing more than a rough return showing that between 1841 and 1871 the gross tax revenue per head of the population had risen in Ireland from 9s. 6.7d. to £1 6s. 2. 2d. and had fallen in Great Britain from £2 9s. 9.5d. to £2 4s. 1.6d. For the first time also it was shown that the national beverages of England and Ireland, beer and whisky, respectively, were taxed in a ratio unfair to Ireland. In 1886 Mr. Gladstone, in preparing his first Home Rule Bill, had to re-open the question of the relative resources of Ireland and Great Britain for the first time since the Union, because he proposed a fixed annual contribution, unchangeable for thirty years, from Ireland towards the Imperial services. He fixed the contribution at one-fifteenth or approximately half that of two-seventeenths fixed by Pitt in 1800, and the new figure was certainly not too low. In 1888 the question was again incidentally raised by Mr. Goschen, who apportioned certain equivalent grants towards local taxation in England, Scotland, and Ireland, in the proportion of 80, 11, 9, apparently on the principle that those were the proportions in which each country respectively contributed to Imperial expenditure. Mr. Gladstone, in preparing the Home Rule Bill of 1893, made investigations which threw additional light on the true amount of revenue derived from Ireland, with allowance made for revenue from dutiable goods taxed in Ireland but consumed in Great Britain, and vice versa, but his financial scheme, as revised in the course of the Session and passed by the House of Commons, evaded the crucial issue by making Ireland's contribution to Imperial services a quota, one-third, of her true annual revenue. This quota,
moreover, was indirectly reduced by temporary subsidies in aid of Irish charges (e.g., for Police) and was estimated, with these deductions, not to exceed at the outset one-fortieth.
THE FINANCIAL RELATIONS COMMISSION OF 1894-1896. It was now apparent that, with or without Home Rule, the whole subject needed serious investigation, and in 1894, after the defeat of Mr. Gladstone's Bill, a Royal Commission under the Presidency of Mr. Hugh Childers was appointed to consider the " Financial Relations between Great Britain and Ireland." Their Report deserves careful study, because it contains within it all the essential materials for forming a judgment upon the financial problem of to-day. All that it lacks are the complementary figures of the subsequent seventeen years, and these figures, which I shall presently add, do not affect the conflict of principles, though they throw into more vivid relief than ever the outcome of conflicting principles.
In composition it was a very strong Commission ; it consulted the highest financial authorities in the Kingdom ; it made for two years an exhaustive examination, historical and practical, of the questions submitted to it, and although the members disagreed on some important points, the conclusions upon which they were unanimous cannot be impugned. The terms of reference were :
“1. Upon what principles of comparison, and by the application of what specific standards, the relative capacity of Great Britain and Ireland to bear taxation may be most equitably determined.
“ 2. What, so far as can be ascertained, is the true proportion, under the principles and specific standards so determined, between the taxable capacity of Great Britain and Ireland.
“3. The history of the financial relations between Great Britain and Ireland at and after the Legislative Union, the charge for Irish purposes on the Imperial Exchequer during that period, and the amount of Irish taxation remaining available for contribution to Imperial expenditure ; also
the Imperial expenditure to which it is considered equitable that Ireland should contribute."
It will be observed that Questions 1 and 2 deal with abstract points, No. 3 (except the last clause) with concrete facts.*
In their short unanimous Report the Commissioners began by stating that “Great Britain and Ireland must, for the purposes of this inquiry, be considered as separate entities."
To Question 1 they made no unanimous answer. This was immaterial, because, as a result of numerous tests (assessment to estate duties and income-tax, consumption of commodities, population, etc.) all arrived unanimously at an answer to the next question.
Answer to Question 2 (and incidentally, as will be seen, to part of Question 3): “That whilst the tax revenue of Ireland is about one-eleventh of that of Great Britain, the relative taxable capacity of Ireland is very much smaller, and is not estimated by any of us as exceeding one-twentieth."
The wording of the answer needs to be explained by reference to the text of the Report.
(@) In saying “ tax revenue " the Commissioners meant to exclude non-tax revenuee.g., Post Office receipts, etc.—but the Commissioners in their various separate Reports generally employed the figures of total revenue. Taking these as our basis, the Irish revenue then raised would have been nearly one-twelfth instead of one-eleventh of the British revenue. In other words, of the total revenue of the United Kingdom, Ireland paid nearly one-thirteenth. (6) As to the true Irish taxable capacity of “one-twentieth,
one-twentieth,” some confusion arises owing to the use of the phrase by different Commissioners in different senses. Mr. Childers and Sir David Barbour appear to have meant one-twentieth of the United Kingdom's taxable
* The text of the unanimous conclusions was as follows :
1. That Great Britain and Ireland must, for the purpose of this inquiry, be considered as separate entities.
2. That the Act of Union imposed upon Ireland a burden which, as events showed, she was unable to bear.
3. That the increase of taxation laid upon Ireland between 1853 and 1860 was not justified by the then existing circumstances.
4. That identity of rates of taxation does not necessarily involve equality of burden.
5. That, whilst the actual tax revenue of Ireland is about one-eleventh of that of Great Britain, the relative taxable capacity of Ireland is very much smaller, and is not estimated by any of us as exceeding one-twentieth.
capacity, the others one-twentieth of Great Britain's. In order to be on the conservative side, I shall adopt the former estimate. The discrepancy is not material to the conclusions of the Commissioners, as, for reasons which I need not go into, they agreed that the minimum amount of over-taxation was two millions and three-quarters.
This was the main outstanding conclusion of the Royal Commission. Translated into figures, it showed the following facts : In 1893-94 the total revenue of the United Kingdom from all sources was £96,855,627. Of this sum the revenue contributed by Great Britain from all sources was £89,286,978 ; by Ireland, £7,568,649—that is, between one-eleventh and onetwelfth of the British revenue.
If Ireland in 1893-94 had paid in proportion to her true taxable capacity of one-twentieth, the maximum arrived at by any member of the Commission, the revenue derived from her would have been £4,842,781.
In other words, there was held to be an excess payment from Ireland of £2,725,868.
It was not suggested by any member of the Commission that Ireland, since the Union, had grown richer at a more rapid rate than England, and was therefore more capable of bearing taxation. On the contrary, it was admitted that she had grown, relatively, much poorer. On the most moderate estimate, therefore, the over-taxation of Ireland since the Union, computed strictly on the principle laid down, could be represented as amounting in 1894 to something like two hundred and fifty millions, or, if we date from the fiscal union of 1817, two hundred millions.
The answer given by the Commissioners to Question 3, so far as it goes, is explanatory of the previous answer.
“That the Act of Union imposed upon Ireland a burden which, as events showed, she was unable to bear.
“That the increase of taxation laid upon Ireland between 1853 and 1860 was not justified by the then existing circumstances.'
And they added the opinion “ that identity of rates of taxation does not necessarily involve equality of burden.”
Their answers, so far as they were complete, to the other inquiries contained in Question No. 3 about the tax revenue
of Ireland and the net contribution of Ireland in the past to Imperial services, are to be found in figures included in the body of the Report, and these figures formed, of course, the basis of their unanimous conclusion as to the over-taxation of Ireland.
These figures, to which I have often alluded in this volume, necessitate a short digression, because they and subsequent Returns of the same sort form the only official data upon which to estimate the present financial position of Ireland.
They were extracted partly from annual Returns originally issued by the Treasury for the Home Rule Bill of 1893, and entitled “Financial Relations (England, Scotland, and Ireland),” and partly from a new document known as the “Pease" Return, No. 313 of 1894. These Returns, taken together, represented the first serious attempt by the Treasury to construct an account covering a period from 1819-20 to 1890-91, and showing (a) the exact revenue derived from Ireland and Great Britain respectively ; (b) the local expenditure in Ireland and Great Britain respectively, as distinguished from Imperial expenditure incurred for the benefit of the whole United Kingdom ; (c) the net contribution of Ireland and Great Britain respectively to this latter expenditure for Imperial services only.
Since 1894 two regular annual Returns have been compiled, the one showing the revenue, local expenditure, and net Imperial contribution of Scotland, Ireland, and England (including Wales), the other giving an historical summary of similar figures for Great Britain and Ireland only, from 1819-20 to the current date.
Two insoluble problems have had to be grappled with by the Treasury in preparing these Returns : first, to differentiate Imperial expenditure from local expenditure ; second, to arrive at the "true" net revenue of the partners as distinguished from the revenue collected within their respective limits. Both these problems arise whenever an attempt is made to look behind a system of unitary finance into the burdens and contributions of different portions of a united realm, and the latter, though not the former, of the two may arise in just as acute a form if the realm consists of federated States with a common system of Customs and Excise.