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PROBLEMS OF EMPIRE. represents expenditure on courts of justice), Post Office expenditure, cost of collection of customs, which would in any case remain an Imperial charge, and half the cost of collection of inland revenue, some items of which would be allocated to the Imperial and others to the national authorities, the national expenditure (or local expenditure, as it is called in the returns) in 1900-01 was as follows:—

Of the above expenditure, 12,500,000l. is devoted to education, and nearly 11,000,000l. represents grants in aid of local taxation.

Provided that the national authorities are given at the outset sufficient revenues to meet the above expenditure, and adequate powers of taxation to enable them to meet any possible increase, a plan based on this principle appears to be as fair to them as that of fixing the quota which they are to contribute to Imperial expenditure. Moreover, a plan based on this principle has great advantages: (1) it is simple and easily intelligible; (2) it obviates the necessity for periodical inquiry as to taxable capacity; (3) it adjusts the financial relations on a basis which has a reasonable prospect 108