The Bill provides, in the first instance, for the period during which the yield of Irish taxes is less than the cost of Irish administration, and contemplates certain modifications after a financial equilibrium has been attained.

During that period the revenue of the Irish Exchequer will consist of a sum transferred annually from the Imperial Exchequer, and termed in the Bill the Transferred Sum, together with the receipts of the Irish Post Office.

The Transferred Sum will be fixed at the outset at such amount as will cover, with the addition of the Post Office revenue, the present expenditure on Irish Government, with the exception of the cost of the Reserved Services. Included in the Transferred Sum will also be a specified sum as surplus. The amount of this surplus will be 500,000 annually for a period of three years, then diminishing by 50,000 a year for six years till it reaches 200,000, at which sum it will remain.

Subject to this variation in the amount of the surplus and to certain minor variations specified in the Bill, and subject also to any changes consequent upon the exercise by the Irish Parliament of the powers of increasing or reducing taxation which are defined below, the amount of the Transferred Sum, fixed in the first year after the pa.s.sing of the Act, will remain the same until an equilibrium is reached between the total revenue derived from Ireland and the total expenditure on Irish purposes.

_Revenue of the Imperial Exchequer from Ireland._

The Bill provides that until such equilibrium is established the whole of the proceeds of all Irish taxes shall be collected by the Treasury of the United Kingdom, and be paid into the Imperial Exchequer. (This provision does not apply to Post Office revenue.)

The revenue so collected should be sufficient to cover the Transferred Sum and to provide a balance sufficient to defray a part of the cost of the Reserved Services. As the revenue from Ireland increases in the future, the receipts of the Imperial Exchequer will increase proportionately, and the yearly deficit which will fall at the outset upon the Imperial Exchequer will gradually be lessened and ultimately disappear.

_Joint Exchequer Board._

The Bill establishes a Joint Exchequer Board of Great Britain and Ireland, consisting of two members appointed by the Imperial Treasury and two by the Irish Treasury, with a Chairman appointed by His Majesty the King.

The duty of the Board will be to determine certain questions of fact arising from time to time under the financial provisions of the Bill.

The figures given in this Paper are estimates only, and do not purport to be final. The Bill, therefore, does not rest upon these figures, but enables fuller returns to be obtained after the pa.s.sing of the Act, and it provides that the amounts of Irish Revenue and Expenditure for the purposes of the Act shall be, not the figures given in this Paper, but such sums as may be determined after the pa.s.sing of the Act, upon the basis of these fuller returns and of the more accurate figures of Revenue and Expenditure which will then be available, by the Joint Exchequer Board.

_Revenue and Expenditure Accounts._

If, however, the estimates given above are a.s.sumed, for purposes of ill.u.s.tration, to be the figures finally determined, the Irish Government's Budget in the first year would balance as follows:--

------------------------------+------------------------------ _Revenue._ | _Expenditure._ | Transferred Sum 6,127,000 | All purposes not Post Office 1,354,000 | separately | specified - 5,462,000 Fee Stamps 81,000 | Post Office - 1,600,000 | ---------- | 7,062,000 | Surplus - 500,000*

---------- | ---------- Total - 7,562,000 | Total - 7,562,000 ------------------------------+------------------------------- * Subject to subsequent reduction as stated above.

The Imperial Government's receipts and expenditure on Irish account would balance as follows:--

------------------------------+-------------------------------- _Revenue._ | _Expenditure._ | Irish Revenue | Transferred Sum 6,127,000 (excluding Post | Old Age Pensions 2,664,000 Office and fee | National Insurance stamps) 9,404,000 | and Labour Deficit 2,015,000 | Exchanges 191,500 | Land Purchase-- | (1.) Land | Commission 592,000 | (2.) Other | Charges 169,000 | Constabulary 1,377,500 | Collection of | Revenue 298,000 ---------- | ---------- 11,419,000 | Total 11,419,000 ------------------------------+--------------------------------

_Powers of Varying Taxation._

The Bill confers on the Irish Parliament the following financial powers:--

1. It may add to the rates of Excise Duties, Customs Duties on beer and spirits, Stamp Duties (with certain exceptions), Land Taxes, or Miscellaneous Taxes, imposed by the Imperial Parliament.

2. It may add to an extent not exceeding 10 per cent, to the Income Tax, Death Duties, or Customs Duties other than the duties on beer and spirits, imposed by the Imperial Parliament.

3. It may levy any new taxes, other than new Customs Duties.

4. It may reduce any tax levied in Ireland, with the exception of certain Stamp Duties.

The Imperial Treasury will collect the revenue arising from any increases in taxation enacted by the Irish Parliament in the exercise of these powers; and an addition will be made to the Transferred Sum of such amount as the Joint Exchequer Board may determine to be the produce of the additional taxation. Similarly, if taxation, is reduced by the Irish Parliament, a deduction will be made from the Transferred Sum corresponding to the loss of revenue due to the repeal of a tax or to collection at the lower rates.

The Irish Exchequer will therefore gain or lose by any increase or decrease in taxation enacted by the Irish Parliament, and the net revenue of the Imperial Exchequer will remain unaffected by such changes.

If Excise or Customs Duties are imposed at different rates in Great Britain and Ireland respectively, provision is made for the adjustment of the taxes paid in respect of articles pa.s.sing from one country to the other.

As administrative difficulties might arise in certain cases if the 10 per cent. limitation mentioned above were in terms to prohibit additions to the taxes in question to an extent of more than 10 per cent. of the rates of tax, the Bill effects the object in view by enacting that only such proceeds of the tax as do not exceed 10 per cent. of the yield of the Imperial tax shall be transferred to the Irish Exchequer.

The Bill makes no specific reference to the powers of the Imperial Parliament to levy taxation in Ireland. The provision in clause 1 that the supreme power and authority of the Parliament of the United Kingdom shall remain unaffected retains the existing powers of the Imperial Parliament in this regard.

_Transfer of the Reserved Services to the Irish Government._

After six years, the control of the Royal Irish Constabulary will pa.s.s to the Irish Executive. The Irish Parliament is empowered to a.s.sume at any time, with twelve months' notice, legislative and executive control with respect to Old Age Pensions, to National Health Insurance, or to Unemployment Insurance, together with Labour Exchanges. When any such transfer of Reserved Services is effected, the financial burden will be a.s.sumed by the Irish Exchequer, and an addition will be made to the Transferred Sum corresponding to the financial relief given to the Imperial Exchequer.

_Loans and Capital Liabilities._

Loans made for the purposes of land purchase and loans made before the pa.s.sing of the Act for other Irish purposes will be among the Reserved Services, and the payment of interest and sinking fund charges will be made by the Imperial Exchequer.

New loans may be raised by the Irish Parliament on the security of the Irish revenue. Provision is also made for enabling the joint Exchequer Board, if so authorised by the Irish Parliament, to issue the loans and to meet the interest and sinking fund charges by means of deductions from the Transferred Sum.

The Bill provides for the apportionment between the two Exchequers of liability for existing loans raised for Irish services.

_Readjustment when Financial Equilibrium is reached._

When the total revenue received from Ireland by the Imperial Treasury has been sufficient, during three consecutive years, to meet the total charges for Irish purposes, the Exchequer Board shall report the fact with a view to a revision of the financial arrangements. Since it is impossible now to foresee what services may remain at that time as Reserved Services, what loans may have been contracted during the intervening years, and what changes may have been made in the rates of taxation, the Bill does not attempt to enact the modifications which may then be desirable.

It contemplates, however, as part of the present financial settlement, that Parliament will then consider, on the one hand, the fixing of such contribution by Ireland to the common expenses of the United Kingdom as may be equitable, and, on the other hand, the transfer to the Irish Legislature and Government of the control and collection of such taxes as may be deemed advisable.

The remaining clauses--from 27 to 47--are concerned with readjustments as to judges, civil servants, police and other matters, and do not vary substantially from the corresponding clauses in the Bill of 1893 (published in Appendix D). The first meeting of the Irish Parliament is fixed for the first Tuesday in September, 1913.

There are only two other clauses which require special notice, as adding fresh provisions to those laid down in the Bill of 1893.

The first is the 26th clause, which gives to the Irish special powers of representation at Westminster in the case of a revision of the financial arrangements:--

"For the purpose of revising the financial provisions of this Act in pursuance of this section, there shall be summoned to the Commons House of Parliament of the United Kingdom such number of members of the Irish House of Commons as will make the representation of Ireland in the Commons House of Parliament of the United Kingdom equivalent to the representation of Great Britain on the basis of population; and the members of the Irish House of Commons so summoned shall be deemed to be members of the Commons House of Parliament of the United Kingdom for the purpose of any such revision."

The second--Clause 42--provides that Irish laws shall be interpreted always in legal subordination to Acts of the Imperial Parliament:--

"(2) Where any Act of the Irish Parliament deals with any matter with respect to which the Irish Parliament have power to make laws which is dealt with by any Act of the Parliament of the United Kingdom pa.s.sed after the pa.s.sing of this Act and extending to Ireland, the Act of the Irish Parliament shall be read subject to the Act of the Parliament of the United Kingdom, and so far as it is repugnant to that Act, but no further, shall be void."

APPENDIX B

THE SHRINKAGE OF IRELAND