Total Direct Taxation 2,331,000 2,555,500

Total Tax Revenue 10,410,000 8,737,500

NON TAX REVENUE (1910 11).

Postal Service 935,000 935,000 Telegraph Service 185,500 185,500 Telephone Service 35,000 35,000 Crown Lands 24,000 24,500 Miscellaneous 114,500 114,500

Total Non Tax Revenue (1910 11) 1,294,500 1,294,500

Collected "True" or Revenue "Contributed"

at the Revenue at the Present Day. Present Day,

Aggregates 11,704,500 10,032,000

The two aggregate figures at the bottom, 11,704,500 and 10,032,000, approximately represent the Treasury estimate of the "collected" and the "true" revenue of Ireland, respectively, at the present day. They are confirmed by the figures of previous years; for the average revenue of the five years, 1904-09, was as follows: "collected," 11,320,000; "true" or "contributed," 9,612,400, the new taxation of 1909-10 having added 500,000 to the "true" revenue. I must again remind the reader, however, that the figures are open to the criticism that the adjustment between the "collected" tax revenue and the "true" revenue is inaccurate owing to the methods employed by the Treasury. It will be observed that the resulting net deduction from the "collected" tax revenue of to-day, a deduction attributable, on the balance of the various figures, almost exclusively to Excise,[133] and mainly to the Excise duty on spirits, amounts to 1,672,500, and makes all the difference between the solvency and insolvency of Ireland regarded as an independent financial unit. Her expenditure, it will be remembered, was 11,344,500, her "collected"

revenue 11,704,500, leaving a surplus of 360,000, which becomes a deficit of 1,312,500 if we reckon only the "true" or "contributed"

revenue of 10,032,000. On the other hand, the principle, as distinguished from the methods of adjustment, is perfectly sound if we wish to arrive at a correct idea of the financial position of Ireland.

The 1,672,500 virtually represents the duties on goods exported from Ireland, and consumed in Great Britain, or rather the excess of these duties over those levied on goods exported from Great Britain and consumed in Ireland. The consumer pays the tax on dutiable commodities, and a financially independent Ireland could not raise revenue twice over from the same commodity. She would, for example, have to give a drawback from the Excise duty on spirits exported to England, since a Customs duty would be levied on its import into England. On the other hand, she would be ent.i.tled to every penny of revenue derived from the tea and sugar imported into and consumed within her borders, and to the full income tax on property held by Irishmen.

Now, for two reasons, I do not propose to make any exhaustive inquiry into the accuracy of Treasury adjustments for "true" revenue. My first reason is, that full material for calculation cannot be obtained by any private individual, and could not be obtained and worked up even by the Treasury without an enormous expenditure of time and trouble. The most careful inquiry I have seen is embodied in an exceedingly able pamphlet by "an Irishman," ent.i.tled "The Financial Relations of Ireland with the Imperial Exchequer," and I mention below a few of the criticisms made by the writer. His and other investigations seem to prove that Irish revenue is considerably underestimated, perhaps by half a million.[134]

My second reason is that errors of adjustment in either direction cannot affect in any substantial way the kind of financial scheme we are to adopt in the Home Rule Bill.

Let us fix our attention, then, on the second of the two columns in the table on p. 276, showing the aggregate "true" revenue of Ireland at the present day. Disregard the non-tax revenue from the various postal services (which represents payment for services rendered, and is swallowed up by an excess on the expenditure side of 249,000), and examine the heads of tax revenue shown in the upper half of the column.

It will be seen that 70-75 per cent. of Irish "true" revenue is derived from Customs and Excise duties, which, with the exception perhaps of licence duties, may be cla.s.sed as indirect taxation. The deduction for "true" revenue, it will be observed, has considerably modified the proportion, which for "collected" revenue works out at 77.61 per cent., or nearly four-fifths.

As the reader is aware, this is not a new feature in Irish finance. It formed the basis of the Report of the Financial Relations Commission with regard to the over-taxation of Ireland. Much the greater part of Irish revenue, even since the abolition of protective duties and the subst.i.tution of direct taxation, has always been derived from taxes on articles of common consumption, the simple reason being that Ireland is a country where there is little acc.u.mulated wealth from which to extract direct taxation. In Great Britain, whose circ.u.mstances dictate the finance of the United Kingdom, no less than 54.79 per cent. of the tax revenue is derived from direct taxation, only 45.21 per cent. from Customs and Excise.[135]

The Irish figures show that to retain in the hands of the Imperial Parliament the control of Irish Customs and Excise will be to retain almost paramount control over Irish revenue; to deny Ireland the main lever she needs for co-ordinating her expenditure and her revenue, and for making her taxation suitable to her economic conditions. It will be to preserve the framework of a fiscal system which the highest financial authorities have p.r.o.nounced to be unfair to Ireland, and which incontrovertible facts show to be uneconomical both for Ireland and Great Britain.

Meanwhile that system has at length produced a deficit, with which I shall deal in the next chapter. Its amount, probably exaggerated, must necessarily remain uncertain under the present fiscal Union. One thing alone is certain, that it will grow as long as that Union lasts.

FOOTNOTES:

[115] _I.e._, on the generally accepted basis of (1) a.s.sessment to death duties, (2) a.s.sessment to income-tax. With regard to (1), in the last report of the Inland Revenue Commissioners, the figure for the United Kingdom was 371,808,534; for Ireland, 15,872,302, or 1/234. With regard to (2), the figure for the United Kingdom was 1009.9 millions; for Ireland, 39.7 millions, or 1/254. Deduct a small allowance for the difference between resources and taxable capacity, and the result approximately is one-twenty-fifth.

[116]

Total revenue (including non-tax revenue) of United Kingdom (mean of two years. 1909-10, 1910-11) 165,147,500 One-twenty-fifth 6,605,900 Actual "true" revenue contributed by Ireland (mean of two years, 1909-10, 1910-11) 10,032,000 ----------- "Over-taxation" 3,426,100

If only the tax-revenue be taken, the over-taxation amounts to 3,109,800 (total revenue for United Kingdom, 140,680,000; one-twenty-fifth=5,627,200; actual Irish revenue, 8,737,000). Some members of the Royal Commission made certain allowances for education grants, etc., which it would be useless to parallel now.

[117] See pp. 248-249.

[118] See p. 259, footnote.

[119] Treasury Return, No. 220, 1911.

[120] A list is given at p. 10 of Return 220 (1911), and an admirable exposition of the whole subject from the Irish standpoint will be found in Professor Oldham's seventh published lecture on the "Public Finances of Ireland" (1911).

[121] The "Whisky Money" was so treated under the Finance Act of 1910.

[122] See p. 238.

[123] Between 1896 and 1898 the equivalent grants to Scotland and Ireland were based on the Goschen proportion, 80, 11, 9, the English grant being taken as standard. Scotch grants are now determined by special legislation.

[124] See Chapter XIV.

[125] Only part of the Dublin Metropolitan Police is paid out of State Funds, the rest by the City of Dublin.

[126] The relative figures were: Ireland, 2,408,000; Scotland, 1,064,000; England, 6,325,500. The recent removal of the disqualification for Poor Law Relief adds considerably to these amounts.

[127] In the poorest parts of Ireland they range as low as 9s.

[128] See pp. 174-176. In 1908, England and Wales spent 21,987,004 on elementary education, and raised 10,467,804 for it in rates. Of the rest, 11,104,305 came from Parliamentary grants. Fees and endowment incomes of voluntary schools are not included (Statistical Abstract of United Kingdom, 1910).

The actual Parliamentary Votes, as they appear in the accounts for 1910-11, are: England (Cla.s.s IV.), "Board of Education," 14,166,500; Scotland, "Public Education," 2,250,000; Ireland, "Public Education,"

1,632,000. But the English Votes include sums devoted to technical education, museums, etc., whose counterparts in Ireland come under other departments.

[129] Two years earlier than the date I have chiefly used for the purposes of comparison, but the difference is not material. In point of fact, the expenditure was 300,000 less in the later than in the earlier year.

[130] (1) Rates on Government Buildings; (2) Superannuation; (3) Government Printing; (4) Board of Works; (5) Home Office.

[131] Department of Agriculture, Endowment Fund:

{ (1) Local Taxation Account 78,000 Income from --{ (2) Irish Church Fund 70,000 (3) Interest on Capital sum of 200,000.

Also (in 1909-10): From Ireland Development Fund 7,000 Under an Act of 1902 5,000

[132] The amount _voted_ for Public Works in 1910-11 was 259,848 [see "Civil Service Estimates" for 1911-12 (No. 63--1911)]; the amount _spent_, according to Return No. 220, 215,000.

[133] Under the heads of Excise, the princ.i.p.al deduction is in Spirits (1,793,000 in 1910-11) and Beer (309,000 in 1910-11).

The items of Irish tax revenue in which the Treasury make _no_ adjustment are: Excise Licenses (356,000 in 1910-11); Club Duty (2,000 in 1910-11); "other items" (10,000 in 1910-11); Cards and Patent Medicines (10,000 in 1910-11); "Estate, etc., Duties" (1,144,000 in 1910-11); Income Tax (Schedules A and B) (694,000 in 1910-11--abnormally large figure owing to non-collection in previous year); Land Value Duties (1,000 in 1910-11).

All the heads of Customs revenue are subject to adjustment, though the total result is only a small deduction from Ireland (126,000 in 1910-11). In all but two the adjustment is in favour of Ireland. The two exceptions are "Foreign Spirits," where a deduction of 25,000 is made in 1910-11, and Tobacco, where a deduction of 620,000 is made in 1910-11.

[134] _Income Tax_, Schedules C and D (dividends from Government Stocks, public companies, foreign dividends, etc.). The Treasury estimate (as stated in a side-note to the Return) is based on statistics of _Estate Duty_ for the five years ending 1908. But what light can Estate Duty throw on (for example) the dividends collected at the source from British or foreign securities held by Irish banks? Schedule C deals with "Government Stocks, etc.," Schedule D with "Public Companies, Foreign Dividends, etc.," but in the adjustment for "true" revenue no distinction is made between them. Now the Banking Statistics (Ireland) of 1910 show that dividends were payable at the Bank of Ireland on 38,732,000 of Government securities, and that, in addition, a debt bearing interest was due to the Bank from the Government of 21/2 millions.

Income Tax on these items alone would be 65,000, less rebates; but the whole of Schedule C, which includes Foreign and Colonial Government Stocks, is given in 1909-10 as only 30,000.

No attempt is made to credit Ireland with a share of the profits made by English and Scottish companies through business done in Ireland.

The only reliable items in Income Tax are those of A and B (Land, Houses, and Occupation of Land), where in 1908-09 Ireland contributed about 6 per cent. of the total; under other heads, according to the Treasury, only 3.5 per cent. The writer estimates the true contribution as several hundred thousand pounds more.

_Post Office_.--The Treasury give no clue as to how they calculate the profit and loss on Postal Services. Figures of letters, telegrams, parcels, etc., delivered in Ireland are known from the Postmaster-General's report, but the report does not distinguish Irish from English postal orders, of which 1211/2 millions were issued in the United Kingdom in 1909-10. There is good reason to believe that a part of the postal profit now wholly credited to England should in reality be credited to Ireland.

_Stamps_.--Far too little allowance is made by the Treasury for stamps on transfers executed through English and Scottish exchanges for shares bought or sold by Irishmen, and for bonds, deeds, insurances, issues of capital, etc.

_Tea and Sugar_.--The Treasury base their calculation "on quant.i.ties inter-changed between Great Britain and Ireland in 1903-04," and I learn from the Inland Revenue Department that by this means the consumption per head of the population was arrived at, and that the present official figures are based on the a.s.sumption that the relation of consumption per head in Ireland to consumption per head in the United Kingdom as a whole has not altered since 1903-04. The unreliability of this a.s.sumption is manifest. It is probable that the heavy additional duty on spirits has raised the consumption of tea in Ireland more than in Great Britain, and the figures of Imports compiled by the Department of Agriculture seem to confirm this view.