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Sm:— The accompanying Evidence and Statements, from the order in which they were printed, may not be readily undtrstood with- out furtherexplanaiion; nevertbeleti,on examination you vlll find that e|rh of those Tables aflbrd detailed information on the pointM to which thsy allude — for instance, on the subject of 1\ixo.t<0H, TaUaa No. 9 ami 10, pages 49 and ftOrgiva the increnae of Cuttomi Duties, from 3i per cent., for an average of ihreo years before, lo 5 per cent,, for the same period, since the U^ton: they have now reached ISl per cent. Also, that District Taxes in Upper Canada, have been doubled, and in some instances trebled. Table No. 14, page 65, shews the inequality of this Internal Tax, between Upper and Lower Canada. No. I, page 10, and No. IB, give the sources fron< which it is deri "ed: and No. Id, paijd 69, the total amount of Revenue received in each year. Ceararatlre AbmK ef Tana it Caia4« •■< !■ tM V. State*. Tables No. 11 and 13, pages 51 and 63, give the reliitive amount paid bv each individual, for an average of nine years, amounting, in the former, to Os. 81 d., and in the latter, to Os. 8ld., viz: — on Imports, 5s. Old., Excise, 5d., from otlier sources, Is. 8d., for the supimrt of one Provincial or local Government, against— on Imports, 6s. 8|d., for the support of an independent Govemntent; Auction duty, &c., 3d., and a direct tax, 4d., for the support of a State or focul Government: from which it ap- pears, that the inhabitants of Canada pay Jive pence per head more, for the support of one Government, than those of the United States, for the support of two; altho'igh the whole Ex- penditure of the two Govommenin arc about eoual. The dif- ference between the taxation and expenditure arises from the gain realised from the surplus 'oil, which is Co tax. PiUlc Gxpcaiilare. Table No. 0, page 44, gives the rulatire expenditure dO.the Ckil Government of Upper and Lower Canada, before and since the Union. Thin will be clearly understood, because precisely the same duties were and are (icrforincd by each separate Go- vernment Tkea, those two Governments cost £36.107 — aoie, £40,416. Aa«nt ef fnt^at* Bc4mUm. On Import or Customs Duties, £00,080. For details and full information, reference is made to Table No. 3, Letter C, pages 30 and 31. . On general expenditures, £103 030. For details, and an outline of the proposed plan, which may be readily un- derstood without waoing through anv other statements, refe- rence is made to Table No. 6, and the documents alluded to from pages 34 to 48. By some, this plan was pronounced impracticable: by others, that it made no reduction whatever, but was merely a change ill the mode of taxation. Although pursu'-ied that but few would ho deceived by this evasion, still, as members of Parlia- ment and Editors have reiterated this opinion, I am bound to be- lieve thev so understand it. It is, therefore, my duty to enter more fully into this branch of the subject. By keeping the division of the Revenue and Expenditures, as apnortioned in Table No. 6, under three separate heads, steaaily in mind, you will be enabled to understand the amount of tax paid, from what source, for what object it is proposed to be expended, and the relative duties or services performed. For instance, we take up the first item — tile tax on Imparts, In Canada, this tax is expended for the support of a Provincial or local Government, and intemal purposes, having no dutiea appertaining to an independent Govtmrnent to perform. In the United Utates, the same tax is expecded for uie support of an independent Oovemmenl for external purposes — The support of an Army and Navy, building Furtificationa and Ships of War, Fweign Intercourse, and such other duties aa appertain to an indopenMnt Government Mr. Walker, in his celebrated Report of 1848, says, the amount of public debt paid by the Federal Government, for tiw Revolutionary War, before 1706, the purchase of Louiaiaaa, in 1803, and for the War of 1813, ex(wedod «0O,OO0|.O0O— all of which was paid off before 1SS8, besides defraying the ordinary ospensus of the Government, and leavins a surplus in the Tieaaury of 9aB,(iOO,0OO, which was then depooited with the diflerent States of the Union. Thus we cm clearlv understand the obiect for which Customs Du- liaa we levied and expended, to ue re^eclite countries. In Cauda and the adjoiaing %JitM, the Jbtsmo/ Jtsesiiae* aie ex* pended for Provincial or State fiurpof ei ; having procioely tha eamo duties to perform in each, viz: the nianiigement of their Internal aflairo. In the adjoining Statea, local taxes are levied on the inhabi- tants of a county, town, or locality, and expended for object* in which they are all equally benefitted. The same principle ii proposed tor Canada. Iho public has no interest in any expenditure mode in a particular locality: for instance, the inhabitants of Montreal or Quebec have no interest in the amount of taxes imposed by the corporations of Kingston, To- ronto, or Hamilton ; neither has the county of Wenlworth in the amount imposed in Lincoln, Glcngary, or any other Muni- cipality in Upper or Lower Canot'o. Any locality may impose high or low taxes ; they may ex- pend much or tittle, without aficcting persons residing out of that locality, and without impeding :he commerce, or retarding the general wealth or prosperity of the country. Consequently, every farthing proposed to be transferred under the fifth column. Table 5, page 34, wJI bo so muoh saved to the Provincial reve- nue, and so much less tax to be paid by the public. Apart front the saving, il is inunifcstly unjust to defray a general expenditure from a local tax. It is also impolitic, inasmuch as the command of addilionni revenue encourages extravagance. In Upper Ca- nada, no difficulty exists ii! carrying the system into immediate operation; ond in n very few years Lower Canada would bo prepared with similar institutions. In the mean time, they have no direct or local taxes to provide. Aa«u( cf RcTenc and Expeailtarc rraposcd Ur th« Fa- tire (■•<«»■»( 9t Canada. For particulare, refer to page 35, Letter B. The Uovernment of the State of New-York, witn a population vi three millions of pco|>ic, is supported from an internal t.i* oi £l (0,000, and an oxjRimliture of £130,000. See 12 and >3. The question for conmderntion is, whether it is not practicabJa to 8up|)ort a Government fcr holf that number, by a tax of £>83,- 067, and an ex|)enditnrc of £350,000, as pro|K>Hud under pnge 35, Letter B. The dt^tmls of the expenditure of the Civil Ck>- vernment, will be found in Table »l, page 44. If one lo<'al Go- vernment expends for the 8up|)ort of her respective depart- ments, only £10,000 per annum, is it not practicable for another Governnncnt, with the same duties to perform, to limit its ex- penses for the support of similar departments, to £18,000! Again — take the Mminiitration of Justice, Letter A, No. 4, naj't J 31 to 33. If the province of Nova Scotia exjiends XV,3tM); New Brunswick, £0,030; and seven State Governments together, only £33,810— ought not the sum of £25,000 for the ex|M!ndi- ture r" ne Government, to be practicable, for the same service t The expenditure under this head, for Canada, will be found to be £77,038 — of which, £7,270 is securod in a fee-fund from tlie difl'urcnt districts. Therefore, the sum of £00,702 is paid from the Provincial Revenue. It is uimcccssary to adduce other instances: those noticed are Ifmte sufficient to prove that there is a necessity for Ketrench- Dtcnt — that it is practicable — and that a large sum can be saved, by the proposed plan. Th'i first step in the attainment of^ this n h ja a l, is the amend- ment of the Union Act, to contain similar provisions to the (Con- stitution adopted by the citizens of New-York, on the 0th C>eto- ber, 1840 — which provides a Sinking Fund, to pay off the public debt. This Sinking Fund may be created, either by appropriating the tolls from year to year to pay the interest, as in New * ork, as pointed out in statement No. 23, pa^e 73; or to diminish the principal, and continue the duty on Customs, to pay the in- terest. The only deviation from the Conslitut'in of New York, is, in the application of this surplus toll. Instead of appropriating it, from year to year, as it arises, it is proposed to authorise the Goycmmont to borrow the money on the credit of this surplus fund, and to pay the interest and |>rincipai out of the same, to insure the completion of our unfinished Public Works at the earliest possible period — precisely the same provision which has since been recommended by the Governor of New York. Another provision deprives the Provincial legislature of the power of increasing the public debt, and restricts the expcndi- lure of public money, unless sanctioned by an act of Parliamcntv The necessity for this, is apparent. It has been alleged, that public improvement, and not the ordinary expenses of the Pro- vincial Government, caused the excessive outlay, under the prs- ient system. It may be well to understand the true amount gf thii expenditure, aim the value the public has received there- for. For instance — from 1843 to 1849, inclusive, by adding the returns from the public Accounts in 1860, we have the foU lowing result. :% ' 4 h CMMlMate4 F»d. Gross amount of Customs Duties, ... do. from Internal Resourccu, Loan in 1840, to make up the deficiency in the ordinary Expenditure, .... Net Territorial Revenue, .... Territtrial Rctciu Ftti, Grosb amount received in the Crown Lands Office, .... £010,663 Loss, paid Receiver Goaeral, • - 103,&e7 raklic DeM. The amount appears, from tlio return of the pre. sent year, about ... £4,6^ ),000 Less, Loon, 200,000 £3,043,810 1,010,447 200,000 163,507 £5,023,R54 £747,006 4,300,000 Making the total amount received for the last nine years, £10,070,930 From which deduct the value of our Public Works, 3,000,000 Leaving the Expenditure, .... £7,070,920 Without including the amount of specific revenue derived from lands, (pofie 50;) nor docs it include the Lunatic Asylum tux. Tavern Licenses, or any Municipal AsscssmcMt. The amount received from Public Works, last year, was only £53,000. Therefore, by the some rule the New-York canals are estima- ted, (see page 64,) the I'alue of our Public Works would not exceed £1,000,000; but the entire expenditure on the Provin- cial Works, as shewn by the Reitort of 1849, is here assumed — which will cover the (!X|)cnHiture upon local and unproductive Works, since the Union. If those returns arc correct, there has Iwen expended either for the supiKjrt of the Govetnnient, or in some object which yields no roturr. for the capital invested, over £800,000 per annum, since the union. This unprecedented cxpcn 'iture, with- in so short a poriixl, is conclusive proof that no Legislature should Ix! entrusted with the appropriation of public money, withoot a (.'oiistitutionni cbjck. (See No. 18.) It will appropriate the proceeds of public lands for the sup. port of Common Schools and District Librariei), limiting the expense of sale to six per cent., and creating a Uoard of Man- agement. It will invest all capital derived from certain specific funds, in aid of Rail Roads, or other Public Works. It will make the proceeds of those lands ciriMU a double object — to yield an in- terest, and furnish a certain resource for aiding useful improvc- meiils, without deviating in the slightest degree from the pro- posed policy, and without hazarding the payment of the public debt. For details, see Statement No. 17, page 00. The [.ractical operation of the system of finance, established . in Ni"' -lork, has already develo(>cd her resources to their fuKkdt extent, and reduced the exp(Ui8es of her Government to the most economical scale. In 1800, her commerce will be exempt from tolls, (except •680,000 for the support of the State Government,) and her citizens will \>c frcd from every description of State tax. Why will not the same management insurer the same resul" here! The great reduction we can make in our public expenditure, and the great additional reve- nue we possess, will eiiable us to pay off the public debt in a much shorter time. The public domain will realise an ample ' fund fbi' all pur|)oses of Education; Customs Duties will be di. minished, and tolls increased, in proportion to the extent of the trade created. In truth, it will be dinicult for the most sanguine to realise the amount of prosperity it would insure to this highly favored country. At the same time, there are many difficulties to contend against. Any attempt at a reduction of the public expenditure, it at all times not only a Herculean task, but a most unplea- sant duty; I am fully pursuaded, however, that it can be car- ried into successful operation, without any embarrassment to the Government, and with the same beneficial results which have been realized in the State of New-York. It is an object worthy of your attontive consideration : examine the statements with care; and if you concur with me in the opinion, that no re- duction in the public expenditure of moment can bo made, and if ■o made, its permanency cannot be relied u|)on without the pro* posed check in our Constitution, you will feel it a duty to give your earnest support in carrying ii into operation. Your obcd't serv't, WM. HAMILTON MERRITT. St. Cafharinet, June, 1851.