THE FINANCIAL RELATIONS BETWEEN GREAT BRITAIN AND IRELAND
"It will not do to deny the obligation. The case (of Ireland's
alleged over-taxation) has been heard before a competent
tribunal, established and set up by England. The verdict has
been delivered; it is against England and in favour of
Ireland's contention. Until this verdict is set aside by a
higher court, and a more competent tribunal, the obligation of
England to Ireland stands proved."
--T.W. RUSSELL, _Ireland and the Empire_.
The contrast between the history of Great Britain and that of Ireland
during the last century--in the one case showing progress and
prosperity, advancing, it is not too much to say, by leaps and bounds,
and in the other a stagnation which was relatively, if not absolutely,
retrograde--is one of the most dismal factors in English politics. Those
who would explain it by natural, racial, or religious considerations are
probing too deep for an explanation which is in reality much closer at
hand. If the external forces in the two countries throughout that period
had been the same it would be right and proper to search for an
explanation in such directions as have been named, but that these forces
have not been so distributed it is my contention to prove.
The closing years of the eighteenth century in Ireland, coinciding as
they did with the achievement of Parliamentary independence, witnessed
in that country a remarkable growth of national prosperity. Up to the
year 1795 the taxation of the country never exceeded one and a half
millions of pounds, and the National Debt was not more than one million.
In the succeeding years the French war and the rebellion of '98 swelled
the expenditure, as did the maintenance of an armed force in the
country, which was the corollary of the rebellion, and that process
which Lord Cornwallis, the Lord Lieutenant, described as "courting those
whom he longed to kick," by which the Act of Union was passed, added
another million and a half to the national expenditure.
The result of the various causes was that in the year 1799-1800 the
taxation of the country had risen to three millions, and the National
Debt amounted to just under four millions of pounds.
It is necessary to enter into these details, because it was on the basis
of the years 1799-1800, and not on that of a year of normal expenditure,
such as was 1795, that Pitt and Castlereagh framed the financial clauses
of the Act of Union, which were to establish the taxable relations
between Great Britain and Ireland.
Having said so much we need not pause to consider how far the financial
clauses were justified. It will suffice to say that they provided that
Ireland should pay two-seventeenths of the joint expenditure of the
United Kingdom, together with the annual charge upon her pre-union debt.
One should add, however, that the Irish House of Lords protested that
the relative taxable capacities of Ireland and England did not bear to
each other the ratio which the Act enunciated of 1 to 7-1/2, but in
reality of 1 to 18.
It was no part of Pitt's scheme that there should be fiscal union. A
separate Irish Chancellor of the Exchequer, drawing up an Irish budget
and regulating an Irish debt, remained after the union of the
legislatures. Speaking in 1800 on this very point Lord Castlereagh
declared that:--
"It must be evident to every man that if our manufactures keep pace in
advancement for the next twenty years with the progress they have made
in the last twenty, they may at the expiration of it be fully able to
cope with the British, and that the two kingdoms may be safely left like
any two countries of the same kingdom to a free competition."
The seventh article of the Act of Union, which comprised the financial
proposals of the Act, has been summarised as follows in the report of a
Royal Commission, to which we shall have occasion to refer later:--
"Ireland and Great Britain had entered into legislative partnership on
the clear understanding that they were still, for the purposes of
taxation, to be regarded as separate and distinct entities. Ireland was
to contribute to the common expenditure in proportion to her resources,
so far as the same could be ascertained, and even after the imposition
of indiscriminate taxation, if circumstances permitted, she might claim
special exemptions and abatements."
We have seen how the taxation of Ireland at the time of the Union was
three millions. Five years later the figure had risen to four millions,
and it went on increasing at this rate until in 1815 it amounted to no
less than six and a half millions, having more than doubled in amount in
a space of fifteen years, while during the same time the National Debt
had risen from four and a half to ten and a half millions.
To understand the significance of these figures it must be realised that
the Napoleonic war was in progress, and that the supply, on the part of
Ireland, of provisions at enhanced war prices was the only means by
which she was able to cope with her increasing liabilities. The
conclusion of the war and the consequent fall in prices accelerated a
crisis in Irish finance. Even in the years of plenty not more than
one-half of what the Act of Union proposed could be squeezed out of the
country, and the balance, which was added to her debt, raised the ratio
which it bore to that of Great Britain from the proportion of 1 to
15-1/2 in 1800 to that of 2 to 17 in 1817. One would have thought that
such an increase of debt would have made Ireland less fitted to bear
equal taxation with Great Britain, but the statesmen of the day thought
otherwise, and in 1817 the Exchequers were amalgamated. Even then the
fiscal systems of the two countries were not in all respects
assimilated, though in regard to some taxes an equalisation was
effected, as, for example, in the case of tobacco, the duty on the
unmanufactured variety of which was raised from 1s. to 3s. per lb.,
while that on cigars and manufactured tobacco was raised from 1s. to
16s. per lb. The manner in which the change affected social conditions
in Ireland at this time may best be illustrated by the fact that the
taxes on commodities, which necessarily hit the poorest classes hardest,
rose from 4s. a head per annum in 1790 to 11s. a head per annum in 1820.
After the Consolidating Act of 1817 the annual taxation fell to about
five millions, abatements and exemptions being made every year. The
tobacco tax and the Stamp Duty of 1842, which realised about £120,000 a
year, were, it is true, equalised in the two countries, but for many
years the system of special treatment was pursued. To Sir Robert Peel
credit is due for having refused in 1842 to extend to Ireland the Income
Tax, which he re-imposed in England, and for reducing the duty on Irish
whiskey to its original figure by the remission of an additional 1s. per
gallon which he had imposed.
Soon after this the country supped full of horrors in the famine of
1846-1847. In the decade from 1845 to 1855 more than a quarter of
Ireland's population was lost. No sooner did she begin to recover from
the effects of this visitation than the Repeal of the Corn Laws dealt
her an almost equally disastrous blow. The absence of an industrial side
which she might develop, as did England, the almost complete dependence
on agriculture, joined to the enfeebled condition in which the lean
years had left her, made the adoption at this moment of the principle of
Free Trade--in her case--deplorable. Nor was this all. It was at this
moment that the opportunity was taken by Mr. Gladstone, at that time
Chancellor of the Exchequer, to reverse the discriminative policy upon
which Peel had so strongly insisted.
The Income Tax was applied to Ireland in 1853 at the rate of seven pence
in the pound. Ten years later it had risen to seventeen pence. At the
same time an additional duty of eight pence a gallon on Irish whiskey
was exacted, which in two years was multiplied fourfold, while in 1858
Disraeli assimilated for the first time the whiskey duty in the two
islands by raising it in Ireland to 8s. a gallon. The result of this new
departure in taxation may be summarised by saying that the Irish revenue
was raised from just under five millions in 1850 to nearly eight
millions in 1860, and that, too, at a time when, of all others, her
distress demanded special treatment and care.
Although the process of assimilation was carried far in 1853 and the
subsequent years, fiscal unity has never been completely effected. To
this day Ireland secures exemption from the Land Tax, the Inhabited
House Duty, the Railway Passenger Duty, and the tax on horses,
carriages, patent medicines, and armorial bearings. It will be said, no
doubt, that Ireland ought to show due gratitude for these exemptions,
but though they raise collectively a sum of £4,000,000 by their
incidence in England, Scotland, and Wales, it is calculated that if
applied to Ireland they would bring in not more than £150,000 a year, a
sum so small that one may ask whether it would bear the cost of
collecting.
By way of set-off to the imposition of income tax, which it should be
noted was at the time said to be "temporary," Mr. Gladstone wiped out a
capital debt of four millions, but it must be pointed out that, in the
fifty years which have ensued, a sum of between twenty millions and
thirty millions has been collected in Ireland as income tax. Objection
cannot--beyond a certain point--be taken to the incidence of this tax,
seeing that it does not fall upon the poorest classes, and that no
country benefits more than does Ireland from the substitution of direct
for indirect taxation. But what does call for censure is that its
application was not made an occasion for the remission of other taxes.
In 1864 the Conservative Government recognised the serious problem of
the unequal incidence of taxation in the two islands, and appointed a
committee to consider their financial relations. Sir Stafford Northcote,
the chairman of this committee, declared that, notwithstanding the fact
that they were both subject to the same taxation, "Ireland was the most
heavily taxed and England the most lightly taxed country in Europe."
Twenty-five years later Mr. Goschen, the Conservative Chancellor of the
Exchequer, consented to the appointment of another Committee on the same
subject, but no report was ever issued. In 1895 a Royal Commission was
appointed, comprising representatives of all political parties, and
presided over by a man of commanding ability in the person of Mr.
Childers, a former Liberal Chancellor of the Exchequer. The terms of
reference were "to inquire into the financial relations between Great
Britain and Ireland and their relative taxable capacity." The following
extract will serve to show the conclusions of the Commissioners:--
"In carrying out the inquiry we have ascertained that there are certain
questions upon which we are practically unanimous, and we think it
expedient to set them out in this report. Our joint conclusions on these
questions are as follows:--
"(1) That Great Britain and Ireland must, for the purposes 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."
It is difficult to conceive a more damning indictment of English rule in
Ireland. One cannot help recalling the glowing promises of Pitt in
1800:--
"But it has been said, 'What security can you give to Ireland for the
performance of the conditions?' If I were asked what security was
necessary, without hesitation I should answer 'None.' The liberality,
the justice, the honour of the people of England have never yet been
found deficient."
One is reminded of Dr. Johnson's remark to an Irishman who discussed
with him the possibility of the union of the Parliaments:--
"Do not make a union with us, sir; we should unite with you only to rob
you."
It is a striking testimony to the fact that the approach to some men's
hearts is through their pockets; that the report of the Commissioners
brought all Ulster into line with the Nationalists. Such a vision of the
Protestant lion lying down with the Catholic lamb had not been seen
since the Volunteers had mustered in 1778, and then, too, curiously
enough, the common cause was financial, being the demand for the removal
of the commercial restraints on the island.
A conference was held in 1896, presided over by Col. Saunderson, the
leader of the Orangemen, and was attended by all the Irish members,
irrespective of party. The outcome was a resolution in the House of
Commons, proposed by Mr. John Redmond, and seconded by Mr. Lecky. The
rejoinder of the Government to the demands made was to the effect that
the postulate of the Commissioners that Ireland and Great Britain must,
for the purposes of the inquiry, be considered as separate entities
stultified the report.
One cannot characterise this attitude otherwise than as a piece of
special pleading. The appointment, not merely of the Royal Commission,
but of the Select Committees of 1865 and 1890, presupposed a disparity
between the conditions in the two countries which not only existed in
fact but were recognised by law.
In regard to the Church, the kind, the police, education, and even
marriage, the laws are different in the two countries; and we have seen
how, in respect of such widely separate things as land, railway
passengers, and armorial bearings, the systems of taxation are distinct.
The position of the official Conservatives was well stigmatised by one
of the most distinguished among their own body--Mr. Lecky--when he
declared that--
"Some people seem to consider Ireland as a kind of intermittent
personality--something like Mr. Hyde and Dr. Jekyll--an integral part
when it was a question of taxation, and, therefore, entitled to no
exemptions, a separate entity when it was a question of rating, and,
therefore, entitled to no relief."
To the argument that Ireland has no greater claim to relief, on the
score of her poverty, than have the more backward agricultural counties
of England, the answer is that Wiltshire or Somersetshire--shall we
say--have always received equal treatment with the rest of the country,
and have never entered into a mutual partnership as did Ireland when she
trusted to the pledges made to her by England, and expressed in these
terms by Castlereagh:--
"Ireland has the utmost possible security that she cannot be taxed
beyond the measure of her comparative ability, and that the ratio of her
contribution must ever correspond with her relative wealth and
prosperity."
The attitude of Ireland in this matter is perfectly plain. While
deprecating in the strongest terms the means by which the Union was
carried, she is prepared, so long as it remains in force, to abide by
its terms. It partakes of the nature of what lawyers call a bilateral
contract, imposing duties and obligations on both sides, and these
liabilities can only be removed--as in the case of the Disestablished
Irish Church--by the consent of both the contracting parties to the
treaty.
The spectacle of the richest country in Europe haggling over shekels
with the poorest is a sight to give pause, while Great Britain's
insistence upon her pound of flesh is the more unpardonable because
Ireland declares that it is not in the bond. That the highest estimate
of the taxable capacity of Ireland arrived at by the Commissioners was
one-twentieth, while the actual revenue contribution of Ireland was
one-eleventh of the total for the United Kingdom, throws much light upon
the social conditions of the smaller island. The rate of taxation per
head per annum went up in the second half of the nineteenth century more
than 250 per cent.--rising from about £1 in 1850 to more than £2 10s. in
1900. This occurred simultaneously with a diminution of population in
the same period from seven millions to four and a half millions, a
change which is in glaring contrast with the concurrent increase in
Great Britain from twenty millions in 1850 to more than thirty-eight
millions at the present day. Whatever may be the other causes which have
led to the stream of emigration from Ireland it may certainly be claimed
that not least among them is the ever-increasing incidence of taxation
which is year by year laying a greater burden upon the privilege of
living in that country.
A recent Report, issued by the Labour Department of the Board of Trade,
gives statistics with reference to the earnings of agricultural
labourers throughout the three kingdoms. It concludes that on an average
a labourer in England obtains 18s. 3d. a week, in Wales 17s. 3d., in
Scotland 19s. 3d., and in Ireland 10s. 11d. It may be noted that in no
English county is the average lower than 14s. 6d., while in Ireland in
seven counties it is less than 10s., Mayo being the lowest with an
average wage of 8s. 9d. The present writer has had occasion in the
course of the last few months to hear old men on political platforms in
a typical English agricultural constituency pointing a moral from their
own or their fathers' recollections of the days before the Corn Laws
when wages ran from 8s. to 9s. a week. What is recalled with horror in
England as the state of affairs in the "hungry forties" is the present
condition in several of the Irish counties. It would be idle to multiply
proofs to show the desperate condition of the country. Even in the ten
years which have elapsed since the issue of the Report of the Royal
Commission the taxation of the country has increased by more than two
and a half million pounds, while the population, it is estimated, has in
the same period diminished by no less than 200,000. On the assumption
arrived at by the Commissioners, that the proper share which Ireland
should pay was one-twentieth of the contribution of Great Britain, the
country was overtaxed ten years ago to the extent of two and
three-quarter millions; yet in spite of that fact in the course of those
ten years two millions of additional taxation has been imposed. Two
years ago the Chancellor of the Exchequer, in answer to an inquiry,
announced to the House of Commons that in the year 1903-4, the latest
for which figures were available, the proportions of tax revenue derived
from direct and indirect taxes were:--
Great Britain Ireland
Direct Taxes 50.6 per cent. 27.8 per cent.
Indirect Taxes 49.4 per cent. 72.2 per cent.
These figures show very clearly to what an extent in Ireland taxation
falls, not on the luxuries of the rich, but on the commodities which are
to a great extent the necessaries of the poor. The manner in which this
state of things is maintained was expressed by Sir Robert Giffen in his
evidence before the Royal Commission:--
"It is only evident that in matters of taxation Ireland is virtually
discriminated against by the character of the direct taxes which happen
to be on articles of Irish consumption."
The heavy duties on tea, tobacco, and alcohol--articles which form a
larger part of the family budget of the Irish peasant than of the
English labourer--are the causes of this burden. The reasons for the
larger consumption of what may be roughly called stimulants by the
Irishman is undoubtedly to be found in climatic conditions, and also in
the smaller amount of nourishing food which he is able to afford. With
regard to alcohol, the form in which it is most used in England--namely,
beer--is subjected to a special exemption at the expense of the
whiskey-drinking people of Ireland and Scotland. Cider is not taxed. The
tax on whiskey is between two-thirds and three-fourths its price, while
that on beer is one-sixth of its price; so that sixty gallons of beer
bear the same weight of taxation as does one gallon of whiskey. The
usual standard of taxation of liquor is its alcoholic strength, but the
special treatment accorded to the Englishman's principal drink
reduced--according to the Royal Commissioners--the taxation to which, in
proportion to its alcohol it should be subjected, from 1s. to 2d. per
gallon. Even in respect of tea and tobacco, the inequitable treatment of
Ireland is obvious to any one who considers that what is spoken of as
equality of taxation is, in reality, identical taxation on articles
consumed in vastly different proportions in Great Britain and Ireland.
The argument by which the charge that Ireland is overtaxed was rebutted
by the late Unionist Government was that the balance is restored by the
amount of money spent in the administration of that country. When the
complaint is heard that she is contributing at this day no less a sum
than,£9,750,000 to revenue, the answer is made that she has no grievance
since the cost of Irish services amounts to more than £7,500,000, the
balance, a paltry two and a quarter millions, forming her Imperial
contribution.
Ireland is being bled to death, and to her complaints the answer is that
she is being expensively administered. To fleece a poor man of his
pittance and to justify the action by telling him that it is on every
appurtenance of a spendthrift to which he objects that it is being spent
is scarcely to provide a satisfactory justification. The two cases are
exactly parallel, and it is a weak position which has to entrench itself
behind the fact that the cost of government per head is in Ireland
double what it is in England.
The country is against its will saddled with a Viceregal Court, of which
the Lord Lieutenant enjoys a salary twice as great as that of the
President of the United States. The government is conducted by more than
forty boards, only one of which is responsible, through a Minister in
the House of Commons, to the country. Official returns show that
Scotland, with a population slightly larger than that of Ireland,
possesses 942 Government officials as against 2,691 in Ireland. In
Scotland the salaries of these public servants amount to less than
£300,000, while in Ireland the corresponding cost is more than
£1,000,000 per annum, showing that the average salaries in the poorer
country are considerably higher than in the richer. Of the £7,500,000
devoted to Irish services, £1,500,000 goes to the Post Office and
Customs, while one half of the remainder is consumed by the salaries and
pensions of policemen and officials.
To take a single example--the Prison Boards of Scotland and Ireland work
under identical Acts, dating from 1877. It is instructive, therefore,
to compare the conditions of the two. The estimates for the year 1905
were calculated on the assumption that there were 120 fewer prisoners a
day in Irish prisons than in Scotland. In spite of this the cost of the
Irish Board for the last year of which I have seen the figures was
£144,597, and that of the Scottish Board was only £105,588. The ratio
between these figures is as 1.3 to 1, which is in nearly the same
proportion as is the number of the officials on the two boards--namely,
622 in Ireland and in Scotland 467, and this, too, in spite of the fact
that further statistics show, namely, that there are five convicted
criminals in Scotland for every three in Ireland.
These are a few facts which show the value of the case for the present
state of affairs, based on the assumption that over-taxation is balanced
by profligate expenditure. The maintenance--to take only one point--of a
police force about half the size of the United States army, when at the
present time white gloves--the symbol of a crimeless charge--are being
given to the judges on every circuit, is a state of affairs which is
intolerable, while the small proportion which in the returns Ireland is
shown to bear of the Imperial contribution is the result of the
inclusion of the Viceregal and Civil Service charges, not, as should be
the case, in the Imperial account, but in the separate Irish account.
As an instance showing how exorbitant exactions defeat their own end by
diminishing, and not raising, the available revenue, it should be noted
that in 1853 an income tax of 7d. in the pound raised £200,000 more than
did an income tax of 8d. in the pound at the date of the Royal
Commission. Of the remedies which are suggested, the alteration of the
Fiscal system, by making abatements in the Irish Excise and Customs, is
not likely to be attempted. Reduction of expenditure, liberating money
which may be made to serve a useful purpose, is obviously the first
step, but any scheme of allocation of large sums for Irish development,
without full and proper financial control, will undoubtedly fail to meet
the case. The multiplication of irresponsible boards must be stopped,
and to what extent anything, save economies in expenditure, can be
effected without far larger changes remains a moot point. Of one thing,
at any rate, one may be certain--the present Liberal Government when in
Opposition joined forces with the Irish members in driving home the
tremendous admissions of the Royal Commissioners, and it is impossible
to think that, now they are in power, they will repudiate their
obligations, the more so as the present Chancellor of the Exchequer last
year announced the intention of the Government to see how far it is
possible to adjust the financial relations between the two kingdoms on a
fairer basis.
Sir Hercules Langrishe, the friend and correspondent of Edmund Burke, is
said to have accounted for the swampy condition of the Phoenix Park by
saying--"The English Government are too much engaged in _draining_ the
rest of the kingdom to find time to attend to it."
Enough has been said to show that the process of which Sir Hercules
spoke is still going on. One would have thought that counsels of
prudence would have made an end of it. It remains to be seen whether the
uncontestable facts to which they themselves have subscribed will
prevail with the Government. "The liberality, the justice, the honour of
the people of England" are concerned in it now, as truly as when Pitt
spoke. Moreover, it is one of the instances in which the claims of
justice and of expediency coincide. The findings of the Financial
Relations' Commission fully justified the attitude of the Irish Party to
the proposal, under Mr. Gladstone's Bill, that the Irish contribution to
the Imperial Treasury should be one-fourteenth of that of Great Britain,
while Mr. Parnell declared that it ought to have been one-twentieth.
The population, since the publication of the Report of the Commission,
has decreased by a quarter of a million, but taxation has increased
from,£7,500,000 to £10,500,000. If Ireland had secured the fixed
contribution, against the height of which she protested, she would
nevertheless have been guarded from such a disproportionate rise of
taxation.
Whatever test be taken, be it population, a comparison of exports and of
imports, the consumption of certain dutiable articles, relative
assessments to death duties, income tax, or the estimated value of
commodities of primary importance consumed, every one of them shows the
relative backwardness of Ireland as compared with Great Britain, in view
of which the fact that the cost of government per head of population is
double in Ireland what it is in England, shows the extent to which the
one is liable in damages to the other. The increased expenditure on the
navy obviously does not benefit equally the two countries, of which the
one only has dockyards and manufactories, and this is especially the
case seeing that the country which lacks these things is also without a
commerce needing defence; while any advantage resulting from a portion
of the army being quartered in Ireland is minimised when it is found
that arms and accoutrements are purchased in England.
The attempt to stultify the findings of the Commission on the ground
that its report was based on a fallacy, since Ireland has no more right
to be considered as a separate entity than an English county, is
remarkably disingenuous in view of the acknowledgment of this in the
separate treatment which she received in the matter of grants made in
relief of local taxation and for the establishment of free education in
the years 1888 and 1890 and 1891. Moreover, it was impliedly admitted
that she was a separate entity in the appointment of a Select Committee
on taxation in 1864, and again by Lord Goschen in 1890, and the whole
history of her separate legislation bears the same construction. One
cannot give a better commentary on what has been seen of the economic
condition of the island than by quoting the peroration of the speech of
John Fitzgibbon, Earl of Clare, the "great father of the Union,"
speaking in the Irish House of Parliament:--"It is with a cordial
sincerity and a full conviction that it will give to this, my native
country, lasting peace and security for her religion, her laws, her
liberty, and her property, an increase of strength, riches, and trade,
and the final extinction of national jealousy and animosity, that I now
propose to this grave assembly for their adoption an entire and perfect
Union of the Kingdom of Ireland with Great Britain. If I live to see it
completed, to my latest hour I shall feel an honourable pride in
reflecting on the little share I may have in contributing to effect it."