The New Irish Constitution Part 9

The grant to Ireland of the _collected_ not the _true_ duties of Customs and Excise was open to grave objection. It presented her with the duties levied in Ireland on articles consumed in Great Britain, but if at any time the habits of the people, such as decrease in drinking, reduced this practical gift-estimated at 1,400,000, or if changes in law or practice transferred the payment of these duties from Ireland to Great Britain, the financial equilibrium of the scheme would be destroyed. This was a real danger as under the bonding system the British trader could, if he pleased, pay these duties in Great Britain.

The decision that Ireland was not to be represented at Westminster led to a clumsy device for giving Ireland a voice in the Imperial Parliament when Irish interests were involved. This would be the resource if a war contribution had to be obtained.

The scheme of 1886 can only, therefore, be regarded as a draft to be tested and modified in discussion and to form the basis of a revised and amended scheme.

THE BILL OF 1893

Mr. Gladstone introduced the second Home Rule Bill in February, 1893. In the discussion he pointed out how incredibly wasteful the method of governing Ireland was; the Irish Civil Government grants, which had averaged from 1833 to 1837 762,000, had risen between 1888 and 1892 to 4,042,000, and the cost of local government in Ireland was twice as much per head as the like cost in England.

Under the scheme of 1886 Irish representatives were not to sit in the Imperial Parliament, but the Government found that under existing financial arrangements there must be financial connection, unless Parliament was prepared to face a different system of trade laws between the two countries, and provision must be made for that connection. Mr.

Gladstone, therefore, reversed the decision of the Government in 1886. He proposed to retain Irish representatives at Westminster, reduced in number to 80. They were not to vote on purely British questions, but in his opinion it would be difficult to make that distinction as far as the ma.s.s of business was concerned. The Irish representatives would not vote on any tax which was not to be levied in Ireland or on any grant of money for other than Imperial purposes as scheduled in the Bill. By this means Ireland would have a voice, if emergency, such as war, rendered fresh taxation necessary.

In the interval between 1886 and 1893 knowledge had been gained to some extent as to what const.i.tuted the "true" revenue of Ireland, and the Inland Revenue thought it possible to levy in Great Britain the Excise duties collected in Ireland on articles consumed in Great Britain and _vice versa_. These Excise duties represented the greater part of the sum of 1,400,000, previously described as the difference between duties, so to speak, belonging to Ireland and duties collected in Ireland, a difference estimated in 1893 at 1,800,000. If Ireland retained that difference, as contemplated by the scheme of 1886, it was equivalent to a grant from Great Britain to Ireland. On the other hand the Customs were not able to make the separation thought possible by the Excise.

With these facts before him Mr. Gladstone made an entire change in the financial scheme. As in 1886, he held that Ireland must make a proper contribution to Imperial expenditure, but he abandoned the principle, adopted in 1886, of obtaining that contribution by a quota of one-fifteenth of Imperial expenditure, that is a contribution of 2 by Ireland to 28 by Great Britain. He retained instead the whole of the Customs revenue collected in Ireland as the Irish contribution. He proposed that Great Britain should pay any excess of the charge of constabulary over 1,000,000, out of the contribution, the balance representing Ireland's share of Imperial expenditure. He justified the change on the ground that as the management of trade was reserved to the Imperial Government, the management of the Customs so closely connected with trade should be Imperial also. The Customs were expected to produce a net revenue of 2,370,000. He estimated it as equivalent to about 4 per cent. of Imperial expenditure whereas the actual contribution was about 12 per cent. The contribution would, of course, vary as the net Customs revenue rose or fell. On the other hand the Irish Government were to take all the rest of the "true" revenue of Ireland and to defray out of it all local Irish expenditure, including a fixed sum of 1,000,000 towards the cost of the constabulary and Dublin police, which were temporarily to remain Imperial services. Customs and Excise duties were to be regulated and collected by the Imperial authority which was also to fix postal rates; but all other taxes were to be imposed by the Irish Legislature.

The interests of existing judges, and existing civil servants, and of her constabulary, which remained under the control of the Viceroy, were secured. The constabulary would be gradually replaced by a force under the control of the Irish authority. Two Exchequer Judges would be appointed to guard observance of the Act, and appeals lay to the Privy Council which would try on the motion of the Viceroy, or of the Secretary of State, any question as to invalidity of an Irish Act. These arrangements might after fifteen years be subject to revision in pursuance of an address to Her Majesty from the House of Commons or the Irish Legislative a.s.sembly.

The receipts and expenditure of the Irish Government under this scheme would have stood as follows:

RECEIPTS.

(1) Excise true revenue exclusive of licences 3,220,000 (2) Local taxes: Stamps, Income-tax, Excise licenses 1,495,000 (3) Postal revenue 740,000 (4) Other non-tax revenue 205,000 Total 5,660,000

EXPENDITURE.

(1) Civil Government charges, except Constabulary 3,210,000 (2) Collection of Inland revenue 160,000 (3) Postal service 790,000 (4) Contribution to Irish Constabulary 1,000,000 Total 5,160,000 Surplus 500,000

The Bill pa.s.sed the House of Commons, but the financial clauses were greatly recast in Committee. The changes originated in the fact that the Inland revenue had overestimated the "true" revenue of Excise by a very considerable sum, and the error would have reduced to an insignificant sum the free starting balance for the Irish Government provided in the original scheme. Mr. Gladstone decided in consequence not to keep the Customs revenue as Ireland's contribution to Imperial expenditure, but to let that revenue fall into the common stock of Irish revenue and to take out of that common stock one third of the "true" Irish revenue. This third was to cover Ireland's contribution to Imperial expenditure together with one third of the cost of the Irish constabulary and Dublin police. Ireland was to meet all her local charges out of the remaining Irish revenue. The Imperial Government was to retain for six years the imposition and collection of all taxes; the Irish Government having only supplementary powers of taxation. At the end of six years the Irish contribution was to be revised, and Ireland would be empowered to impose taxes other than Customs and Excise, and she would collect taxes, the Customs alone being retained by the Imperial authorities. The "true" revenue derived from the Customs and Excise was to be ascertained by a Joint Committee of the Treasury and the Irish Government. The financial result of these changes is shown in the following figures:

(1) Customs: Revenue collected in Ireland 2,136,000 _Add_ estimated allowance for duties paid in Great Britain on articles consumed in Ireland 266,000 Total estimated Irish revenue 2,402,000; Amount Payable to Irish Exchequer Two-Thirds 1,601,000 (2) Excise: (_a_) Spirits. Revenue collected in Ireland 4,112,000 _Deduct_ duties ascertained to be paid in Ireland on spirits consumed in Great Britain 1,872,000 Total 2,240,000 (_b_) Beer. Revenue collected in Ireland 811,000 _Deduct_ estimated allowance for duties paid in Ireland on beer consumed in Great Britain 187,000 Total 624,000 (_c_) Licence duties collected in Ireland 194,000 Total estimated 3,058,000; payable to Exchequer 2,039,000 (3) Stamp duties collected in Ireland 707,000 estimated, 471,000 payable (4) Income-tax collected in Ireland 552,000 estimated, 368,000 payable (5) Crown Lands amount estimated to be due to 65,000 estimated, 43,000 payable Total 6,784,000 estimated, 4,522,000 payable (6) Miscellaneous Irish Revenue 138,000 estimated, 138,000 payable Totals 6,922,000 estimated, 4,660,000 payable

Irish Expenditure, 1892-3.

(1) Civil Government charges (exclusive of Constabulary and salary of Lord-Lieutenant, but inclusive of local charges met out of local taxation account) 3,123,000 (2) Constabulary charges (1,459,000) two-thirds of 973,000 (3) Estimated deficit on postal account 52,000 Total 4,148,000 Surplus 512,000 Total 4,660,000

The schemes of 1893 again ill.u.s.trate the difficulties inherent in a severance of the two Exchequers. The revise left more points open for difference between the two Governments, and it had the serious defect of revision after the short interval of six years.

The original scheme was far preferable. The retention of the Customs as the Imperial contribution reduced opportunity for conflicts of opinion to a minimum, and the interval of fifteen years before revision left ample time for the new Irish Government to put its house in order. I venture to think it would have been wise to make good the error in estimating the "true" revenue of Ireland (which invalidated the scheme) by an Imperial Grant, at all events for a time. Under the scheme the Imperial Government provided 500,000 for the constabulary. If it had granted 300,000 or 400,000 more, the net Imperial contribution derived from the Customs would have been reduced to say 1,400,000, not a large sacrifice for the end in view-reconciliation with Ireland.

The Bill as amended pa.s.sed the House of Commons but was thrown out in the Lords. This Parliament refused to accept Mr. Gladstone's proposals to give Ireland Home Rule, and nineteen years elapsed before a third Home Rule Bill was submitted to Parliament.

In the three schemes of 1886 and 1893 the Imperial contribution was very similar, perhaps somewhat larger in 1893. In all three schemes, also, the net gain to the British Exchequer was reduced by the grant from that Exchequer of 500,000 to the cost of the Irish Constabulary.

The difficulty of devising a financial scheme fairly simple and workable, which was experienced in 1886 and 1893, has been disappointing, but not discouraging. It was inevitable but it can be surmounted.

THE BILL OF 1912

In 1911, Mr. Asquith pledged the Government to take up again in the ensuing session the question of Home Rule. In 1910 the Conservative Party, at least a considerable part of it, in presence of a probable dissolution on the Parliament Bill, showed, as in 1885, a disposition to coquette with Home Rule, but the movement came to nothing, and the Party settled into determined opposition to the Home Rule policy, submitting themselves to the lead of the Ulster extremists, who preached sedition in no measured terms. In other respects, the prospects of Home Rule are fairly favourable. England, apart from Scotland, Wales, and Ireland, still returns a majority opposed to Home Rule, but public opinion does not show any signs of vigorous or violent opposition as in 1886. The Liberals, the Irish, and the Labour Party are united in its favour. The pa.s.sing of the Land Acts is rapidly removing the agrarian evil, and the landlords have not the same cause for anxiety as formerly. The grant of Local Government is working well, and in spite of much poverty the condition of the people is improving. Lastly, the pa.s.sing of the Parliament Act has made it possible, in spite of opposition in the Lords, to pa.s.s a Home Rule Act within the limits of the present Parliament.

On April 11th, the Prime Minister introduced the Government Bill. He regarded it as the first step in a comprehensive policy of devolution. It retains permanently at Westminster 42 Irish Members, so that Ireland will have a voice, not only on questions in the Imperial Parliament which concern Ireland, but on questions of Imperial interest, such as war and peace. The Bill of 1886 reserved to the Imperial Parliament certain questions. The Bill of 1893 also made necessary reservations, though its tendency was towards more complete autonomy; but in the interval between 1893 and 1912 great changes have taken place, and the Imperial Government finds itself hampered by new liabilities. The Old-Age Pension Act, the Land Purchase Act of 1903, the National Insurance Act, and Labour Exchanges have added very greatly to Irish expenditure. On the other hand, the contribution to Imperial expenditure, unluckily for the British taxpayer, has disappeared. The problem is, therefore, a new one, and the Government solves it, at all events for the present, by keeping in its own hands a large number of Services, as will be seen hereafter.

In 1885-6 Ireland contributed a surplus of considerably more than 2,000,000 to Imperial expenditure; in 1895-6, 2,000,000.(103) The Government estimates the true revenue of Ireland in 1912-13 at 10,839,000; and the expenditure on Irish services at 12,354,000.

Therefore the new Irish Government will start with a deficit of 1,515,000. That deficit is now charged on the British taxpayer. It results from British management of Irish finance, for, on the one hand, Irish revenue is limited by the relatively limited means of Irish taxpayers; on the other hand, England has regulated Irish expenditure on the lavish scale of her own expenditure.

The Government lays down certain principles on which Home Rule finance will be based:

(1) Ireland must manage her own finance and must have powers of taxation consistent with leaving to the Imperial Government a field of taxation sufficiently wide for Imperial needs.

(2) The Budgets of the two countries must not hamper each other.

(3) Ireland must bear the cost of any increase arising hereafter on Irish services, but she must benefit by economies in those services.

(4) She must have power to reduce taxation if her economies permit it.

The scheme which will give effect to these principles may be described as follows.

In the first place the Imperial Government retains in its own hands the imposition and collection of all Irish taxes, the Post Office duties alone excepted, which will be transferred to the Irish Government. _Normal_ increase in Irish Revenue will not be applied to Irish services. It will reduce the deficit. The Irish Government, however, will have supplementary powers of taxation.

An Irish Exchequer and an Irish Consolidated Fund will be created, and an Irish Auditor-General appointed. Further, a joint Exchequer Board, consisting of Treasury and Irish officers, will adjust the accounts between the two Exchequers, based upon what it declares to be the actual cost of Irish services when the Act comes into operation. If the Irish Government, using its supplementary powers of taxation, increases or reduces taxes, the Exchequer Board will vary accordingly the sum to be paid by the British to the Irish Exchequer on account of Irish expenditure, and it will determine the effect of any other changes taking place in the relations between the two Exchequers. Lastly, if and when normal increase of Irish revenue puts an end, during a period of three years, to the existing deficit, the Exchequer Board will make a report to that effect, and the financial arrangement between the two countries will then be reconsidered in order to secure a fair contribution from Ireland to Imperial expenditure.

The Government, as I have stated, estimates the revenue of 1912-13 at 10,839,000. That sum represents the whole "true" revenue of Ireland, viz., taxes and miscellaneous, 9,485,000; Post Office Revenue, 1,354,000. The Imperial Government adds to this revenue of 10,839,000 a free gift of 500,000 at the cost of the British taxpayer, in order to give the Irish Government a fair start. The total Irish income in the year 1912-13 will therefore be 11,339,000.

On the other side of the account, the Imperial Government retains in its own hand various Irish Services, termed in the Bill "_Reserved Services_,"

described later. It transfers from the British to the Irish Exchequer the sum allotted to Irish Expenditure (outside the Reserved Services), estimated in 1912-13 at 5,462,000, the cost of the Postal Service 1,600,000,(104) and 500,000, the free gift mentioned above, making a total transfer of 7,562,000.

If in the future the sum of 5,462,000 allotted to Irish Expenditure and the free gift of 500,000 are exceeded, the Irish Legislature must provide the necessary ways and means.

The transfer of 7,562,000 from the British to the Irish Exchequer leaves a balance on the British Exchequer on the Irish Account of 3,777,000(105) free to that extent to meet the charge of the Reserved Services.

These Reserved Services are:

(1) Old-age Pensions 2,664,000 (2) National Insurance Labour Exchange 191,500 (3) Land Purchase 761,000 (4) Constabulary 1,377,500 (5) Collection of Revenue 298,000 Total 5,292,000

Therefore the excess of Irish Expenditure in 1912-13 over Irish Revenue as provided results in a deficit of 1,515,000 payable by the British taxpayer, and if the free gift of 500,000 by the British taxpayer included in the provided revenue be added, the total charge on the British taxpayer in 1912-13 on account of Irish Expenditure is 2,015,000.

This annual gift of 500,000 is after three years to diminish yearly by 50,000, until a minimum of 200,000 is reached, which will eventually represent the gift of Great Britain to Ireland, until prosperity or good management enables Ireland to pay her own way, and at the last to make a contribution to Imperial Expenditure.

The Government estimates a normal growth in Irish Revenue of 200,000 a year, which, to the extent it is realised, will reduce the deficit payable by the British taxpayer.

The Imperial guarantee on Irish Land Stock is to continue in full force.

EFFECT OF FUTURE MODIFICATION

If the Imperial Parliament increases or reduces taxation, the change will not affect the Irish Budget, for the transferred sum will remain unaltered.

The Irish Parliament will have power to reduce taxes levied in Ireland. It will also have power to impose taxes. It may add at will to Excise duties, and if so the Customs duties on beer or spirits must vary with the Excise duties. It may levy new duties which do not interfere with the Imperial system of taxation-for instance, a house duty, or establishment licences.

It may add to Income-tax or death duties, and also to Customs duties (other than beer and spirits) provided that the addition does not exceed 10 per cent. of their yield. This 10 per cent. resembles the "centimes additionels" which are levied in foreign countries on direct taxes, and are applicable there to local expenditure. But the Irish Parliament must not trench on Imperial taxes. This increase or reduction of Irish duties will not affect the British Exchequer, but it will increase or diminish the "sum transferred" to the Irish Exchequer.

The Irish Parliament will not have power to tax articles not subject to Imperial taxes for the time being. If in the exercise of its power it differentiates Customs or Excise duties in the two countries, there will be a differential duty on such goods pa.s.sing from one to the other.