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FEDERAL FINANCE. of being permanent; (4) it gives the national authorities a sense of financial responsibility, and would tend to check extravagant expenditure, a point of utmost importance; (5) it is fair to the Imperial authority, and would enable surplus revenue from sources reserved to the Imperial authority to be used for the reduction of the national debt. Under a plan based on the first principle, the quota to be contributed by each country being fixed, the whole of the surplus due to an expanding revenue would go to the national authority, who would use it for its own purposes.

The following plan is based on the first principle:—

The quota of Imperial expenditure to be borne by each country to be fixed (subject to periodical revision in to accordance with predetermined principles). The exceptions to the powers of the national legislatures in finance should include only customs, excise (excluding licences and railway duty), and postal rates; all powers over these sources of revenue should be reserved by the Imperial Parliament to itself. Excepting the reservation of licences and railway duty to the national legislature, the Imperial Parliament would also have full and unfettered power to impose whatever other taxes might be necessary to meet its expenditure, provision being made for the adjustment of balances between the Imperial Exchequer and the several nationalities, in accordance with the quota due from each of the latter. And beyond this reservation (but not within it) the national legislatures would also have full power to impose any taxes required to meet their several expenditures. Thus there would presumably be a concurrent use of income tax, estate duty, and stamp duties by the Imperial and national authorities. 109