The total expenditure on revenue account for the financial year 1913-14 is stated at £197,500,000. The total may be classi fied conveniently as follows: Fixed annual charge for the main body of the debt, 124,500, 000; army, £28,000,000; navy, £49,000,000; old age pensions, sickness and unemployment in surance, £20,000,000; education, #28,000,000; mis cellaneous, including the cost of collection of taxes, the administration of justice and civil services not included under heads already enumerated, £22,000,000; post office, including telegraphs and telephones, £25,600,000; and amount handed over to local authorities, 110, 000,000. The amount credited to education is chiefly made over to local school authorities, but only on conditions which give the central government a very large measure of control, not only over the expenditure of the money so granted, but also over what is raised from local sources. The £10,000,000 granted to local au thorities, commonly called the °Exchequer Sub sidies" or °grants in aid of rates.° consist of sums which are either fixed or vary with the yield of certain taxes and are not now directly connected with central control, with the ex ception that an amount equal to half the cost of the pay and clothing of a police force may be deducted from the grants due to an authority if it fails to maintain its police force to the sat isfaction of inspectors employed by the central government. The method of distribution between the various authorities is extremely compli cated and 'differs in England, Scotland and Ire land. Scarcely anyone professes to understand it and it is based on no sort of principle except that it is largely dependent on certain propor tions which prevailed in 1888. This plan was adopted as a temporary expedient and has been continued not on account of its merits, but because it existed. These figures, again, refer to the last normal year before the war, an event which naturally influenced the whole domain of national finance.
Revenue.— The total revenue amounted to £198,000,000. The great heads were: Customs, i35,500,000; excise (internal duties on commodi ties), £39,600,000; estate duties (inheritance taxes), f27,400,000; income tax, £47,200,000; stamps, £10,000,000; house duty, £2,000,000; post office, including telegraph and telephones, L30,800,000; and miscellaneous revenue, £4,800, 000. The duty on imports of tobacco brought in £18,300,000; tea, #6,500,000; sugar, f3,300, 000; spirits, wine and beer, #4,500,000. The excise drew in one way and another over £37, 000,000 from taxes on the manufacture or sale of beer and spirits, so that about £42,000, 000, or 26 per cent of the whole tax-revenue, was derived from intoxicating liquors. The in-• heritance taxes, christened by Gladstone and now commonly called the °Death Duties,* con sist of two distinctparts, one of which is grad uated from one to fifteen per cent according to the aggregate value of the whole property left by the deceased; so that if a man dies worth £400, one per cent has to be paid and if he dies worth over £1,000,000, 15 per cent. The other part is graduated according to the relationship of the new owners of the property to the de ceased, so that for example, while property be queathed to descendants or ascendants is charged one per cent, property falling to brothers or nephews is charged 5 per cent and property falling to other persons is charged 10 per cent. Thus, taking the two parts together,
if a man leaving £16,000 bequeaths it all to his children, 6 per cent only will be paid, while on a millionaire's property left to persons not re lated to him, the duties will together amount to 25 per cent. The Income Tax was levied at the standard rate of Is. 2d. in the f (i.e., 5.83 per cent), but incomes under £160 were exempt and certain graduated °abatements* were allowed on incomes between £160 and £700. Reduced rates were charged on °came& income when the total income, earned and unearned, of the tax payer, was not over £3,000, viz., ls. in the f when the total was between £2,000 and 13,000 and 9d. when it did not exceed £2,000. Much the greater portion of this tax is °collected at the source,'' or at any rate before the income actually reaches the ultimate recipient. For ex ample, the tax on the income arising from lands and buildings is collected from the occupier, who then, if he is not the owner, has an in alienable right to deduct the tax when paying his rent; so too the tax on the income from stocks, shares and bonds of corporations is col lected from the corporation. But this practice does not defeat the right of the individual land owner or stockholder to exemption or abate ment if his total income from all sources is under the prescribed limits; he makes up ac counts with the collectors, declaring his whole income and showing how much has been de ducted from its various parts and if it then ap pears that too much has been paid, the excess is repaid to him in cash. So far as the portion col lected at the source is concerned, the tax works with great efficiency. The amount of evasion which takes place in regard to the other part, for which personal declarations of the amount of income are required, is very variously esti mated, but there is little doubt that it is in process of diminution owing to the greater pub licity of modern methods of business and to the checks supplied by the death-duties, which are administered by the same department. In 1909 a supplement to the Income Tax called the Supertax was introduced. It was a tax of 64. in the i (44 per cent) on the amount by which an individual taxpayer's total income ex ceeded £3,000. It is not collected at the source but on the declaration of the taxpayer. The yield, about #3,300,000, is included in the £47, 200,000 of income tax mentioned above. Stamps consist mainly of duties on commercial and speculative transactions. The House duty is levied at the rate of 9d. in the f (39. per cent) of the rental value, but there are lower rates for houses of between £20 and £60 rental value, and houses under f20 in Great Britain and all houses in Ireland are exempt. The difference of £6,200,000 shown between the post office revenue and expenditures is almost entirely due to the mails, the telegraph and telephone busi ness being unprofitable. In miscellaneous revenue the most important item is £1,250,000 from the Suez Canal Company's shares, which, it is well to remember, are a wasting property, the canal having been constructed on a 99-year concession.