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PROBLEMS OF EMPIRE. be utilised for the purpose of developing the resources of the country.

For this plan the following advantages may be claimed:—

1. The national authorities would be provided with sufficient revenue to meet their national expenditure, and they would not depend (with the exception of the grant suggested for a specific purpose to Ireland) on doles or grants-in-aid from the Imperial exchequer, which are open to the gravest objection.

2. The revenue permanently allocated to Ireland should suffice not only to meet the cost of civil government when Ireland is governed with the consent of its inhabitants, but to yield a handsome surplus. If Ireland is governed for the same cost as Scotland, this surplus should amount to 1½ millions per annum, which could be used either for remitting taxation or on works of public improvement.

3. The Imperial revenue would be elastic, for the Imperial authority, though parting to some extent with the revenue from excise, would retain in its own hands income tax as well as estate duties (except in the case of Ireland), and customs. Income tax is by far the most elastic branch of the revenue, and is that which in the case of an increase or decrease of the tax rate gives the most definite and calculable and immediate result. It is this which makes it so important as a tax to meet Imperial emergencies.

4. The Imperial revenue as well as the national revenues would be raised from direct and indirect taxes.

5. The Imperial authority would reserve to itself sufficient sources of revenue to meet Imperial 116