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It was not until the year 1888 that the classification of expenditure began, which now appears annually in the returns of the revenue and expenditure of the three kingdoms, and has given occasion for many misunderstandings in Home Rule discussions. It was then adopted for the purpose of creating an empirical basis, upon which grants in aid of local taxation should be made from the Exchequer to each of the three kingdoms. The Treasury Returns now divide public expenditure into four classes : (a) 'Imperial' or 'Common’ services; (6) English services; (c) Scottish services; and (d) Irish services; and, having treated the three latter as local services and having charged the expenditure on them against each of the three countries, they estimate the balance left in each instance as the contribution of each to the Imperial or Common Expenditure.' This fourfold division is absolutely arbitrary and has no sanction from any Act of Parliament. It is directly opposed to the constitutional theory of finance under the Act of Union and the Act for Consolidating the Exchequers; but its system of classification was adopted to a large extent by Mr Gladstone in his financial proposals for Home Rule in 1893. The details of the division were never discussed in Parliament or disclosed when the proportions in which grants in aid should be made-viz. 80 per cent. to England, 11 per cent. to Scotland, and 9 per cent. to Ireland—were fixed. This segregation of inter-insular finance, unconstitutional as it is, was used as the ground of the set-off' argument in reply to Ireland's case for special consideration in taxation after the Financial Relations Report of 1896; and it is now made the basis of the argument that England should cut her loss,' and Ireland be sent adrift because the fiscal arrangements under the Union are beginning to tell in her favour.

After the amalgamation of the Exchequers, accounts were returned regularly to Parliament during half a century, showing the application of the revenues of Ireland which were each year transferred to the Exchequer of Great Britain after the Irish services had been provided for. It appears from these returns that, even at the period when local expenditure in Ireland was comparatively trivial and a large amount of revenue was remitted from Ireland to England, Great Britain had

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annually to make good some millions of money which would have been chargeable against Ireland for interest on the Irish National Debt as it stood in 1817, had the Irish debt not been consolidated with the British. These

. returns are important in the present controversy, for one of the chief arguments now put forward in support of the demand that a large subvention should be made by Great Britain to Ireland is based upon a calculation that between 1820 and the present time Ireland has made a contribution to Great Britain of between 325,000,0001. and 400,000,0001., and that she is accordingly entitled to heavy restitution. This argument is based on the 'hypothetical calculations made in the Financial Relations Report, which attempt to estimate the contributed' revenue of each kingdom.* It was formulated by Lord McDonnell in an address at Belfast on Feb. 23, 1911 : We have Treasury figures showing the contributions paid by Ireland to the Imperial Exchequer in 1820 and for the last year of each subsequent decadal period to 1900. We have also the Treasury yearly figures from 1900 up to date. Multiplying the decadal figures except the last by ten, and allowing for the contributions made in 1817-19 and from 1900 up to date, I make the total of Ireland's contributions to Great Britain to be 325,000,0001. That is, with substantial correctness, the amount of the “tribute" which Ireland has paid to Great Britain during the last ninety-three years.'

These figures are based on the Pease Returns of Revenue and Expenditure originated in 1894. But a Treasury memorandum, which accompanied the Report, makes an important reservation. ‘For the purposes of the return the two islands must be regarded as a co-partnership possessing a single banking account, drafts on which are applicable to the individual expenditure of the two partners as well as to the requirements of the partnership. ... The Treasury is only required to class the expenditure as joint or separate. ... The lapse of time and the imperfection of the record render it difficult to arrive with confidence at even approximate results. . . . The labour of analysis and the risk of error would have both greatly in

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* Sir E. Hamilton's Memorandum, Fin. Rel. Report, i, 342. + 1894, c. 313. I See Financial Relations Report, vol. i, App. III, p. 392.

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creased if it had been desired to treat England and Scotland separately as was done for later years. In fact, owing to the absence of published figures for Scotland apart from England, the work would have been almost impossible.' The basis accordingly upon which the return of expenditure was required and is made departed from the terms of the Act of Union, under which all national expenditure is 'indiscriminate,'common and Imperial. It classifies the expenditure for · local services' in Great Britain and in Ireland as if distinct from expenditure for •Imperial services, and in doing so it closely follows the definition of Imperial services contained in the Home Rule Bill of 1893. The services termed •Imperial services' in the Return include many services in addition to Civil List, National Debt, and the Army and Navy. Confessedly the calculations are to a very great extent speculative and arbitrary ; but, as Home Rule advocates base their case largely upon them, it is necessary to consider alongside of this Return the annual accounts which were furnished in compliance with the Acts for the Amalgamation of the Exchequers,* showing the dealings with the funds remitted from the Irish Exchequer to the Exchequer in England. These accounts are available for more than forty years from the year 1817.

The contention that Ireland has paid since 1817 a tribute in the nature of blood money' to Great Britain, and has been robbed' to the amount of 400,000,0001. during the last hundred years is based upon the assumptions (a) that Ireland started debt-free in 1817, when the Exchequers were amalgamated; (b) that Ireland should not have been required to contribute to the Civil List, Army, Navy or National Debt services; (c) that she should not have been taxed for anything but her internal services; while it is forgotten that during the greater portion of the period the economic doctrine of laissez faire prevailed, and that no contributions were made from the Exchequer to England, Scotland or Ireland for any other services than Civil List, National Debt, defence, foreign affairs, and the administration of justice; that subventions to local rates and other expensive demands of modern social ameliorative legislation were unknown;

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* 56 Geo. III, c. 98 ; 57 Geo. III, c. 48. Vol. 216.- No. 430.

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and that the vast sums now voted for education in the United Kingdom are the growth of recent years.

The annual returns of the Public Debt, Revenue and Expenditure of Ireland to the House of Commons contained elaborate tables giving an account of the expenditure of Ireland from Jan. 5, 1817, distinguishing (so far as possible) the payments for the Army, Navy, Ordnance and miscellaneous services, the charges on the Consolidated Fund, advances for public works, employment, etc., also the annual charge for the Consolidated Debt of Ireland as it stood on Jan. 5, 1817, showing the total aggregate charge, the total payments into the Exchequer, and the amount required from the British Exchequer each year to make good the aggregate charge.* These returns show that Ireland contributed for the military services an average sum of about 925,0001. annually from 1817 to 1819; that the annual charge for interest on the 130,561,0001. of Funded Debt of Ireland, as it stood in 1817, continued at 6,000,0001. down to 1821, after which it fell gradually to 4,176,0001. in 1844; and that the British Exchequer had to provide sums varying from 7,000,0001. to 2,500,0001. annually to make good the total annual charge for Ireland. The amount so advanced

' from 1817 to 1857 exceeded 141,000,0001.

The policy pursued after the amalgamation of the Exchequers had for its object the placing of Great Britain and Ireland on the same footing in regard to all matters of commerce and taxation; but Ireland was undoubtedly hit comparatively hard by the method pursued. According to Sir D. Barbour, The assimilation of the systems of taxation in the two countries may be said to have been carried out by abolishing the taxes which were in force in Great Britain but not in Ireland, and raising the rates of duty in Ireland in the case of taxes which were levied at lower rates than those which prevailed in Great Britain.'t Under the new system a few articles were selected for taxation; the selected articles happened to be largely consumed in Ireland ; and, when an increase was required, the number of taxable articles was not increased, but the taxes on the

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* See e.g. H.C. 1847, No. 192; 1849, Nos. 423, 520. See these accounts set out in ‘Thom's Directory,' 1850, p. 174 ; 1859, p. 582.

† Report, Financial Relations Commission, p. 117.

few articles already taxed were raised. Ireland has a much more substantial claim to consideration on account of this method of taxation than on account of the war loans raised before 1817 and the debt which accumulated during that period, but was taken over and consolidated with the British debt. Between 1817 and the Great Famine, a

sum of 22,000,0001. per annum was taken off the taxation of Great Britain. In the same period the taxation of Ireland was increased by a quarter of a million. The taxes retained were the great Irish taxes. The tea tax was equalised, that is to say, reduced in Great Britain and raised in Ireland. In 1819 the tobacco tax was equalised. The spirit duties were gradually raised in Ireland. Notwithstanding this, the average Irishman paid between 1816 and 1853 only between one-fifth and one-fourth as much in taxes as the average inhabitant of Great Britain; and in no decennial period between 1820 and 1860 did the true revenue of Ireland exceed 5,500,0001.

The closing years of the first half century after the Union were disastrous to Ireland. But these disasters were due to economic, not to political causes. The abolition of the English Corn Laws and the introduction of the Free Trade policy rapidly destroyed the Irish export trade in cereals ; while the introduction of steam-power soon neutralised the value of her proximity. But this was in no sense due to the Union. Once England threw her ports open to the world, the result would have been the same, Union or no Union. Ireland was blasted by the famine and the epidemics which followed on it. Her gentry and peasantry were alike impoverished. Yet Gladstone chose this moment to deal her, in the name of financial equality, a blow from which she has never fully recovered, and which left a long legacy of national ill-will and economic suffering behind it. In 1853, although he had a large surplus in the Exchequer, he suddenly increased the taxation of Ireland by 40 per cent., imposing the income tax, raising the spirit duties, and introducing the succession duties. He thus increased the taxation of Ireland by about 2,250,0001. The era of Whig finance began, based on the idea that identity of imposts meant equality of taxation; the Act of Union was disregarded ; and, under the system of laissez faire, famine-stricken and

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