CUSTOMS ACTS—TEA DUTIES. (Hansard, 13 July 1835)

The Chancellor of the Exchequer
said, that at so late an hour he would not detain the House very long, but it was necessary that he should give some explanation on so important a subject. He was bound to express his acknowledgments to the right hon. Member for Tamworth (Sir R. Peel), who had originally asked a question in reference to the tea duties, which, however, he had abstained from pressing until the intentions of Government should be more fully formed on the subject. What these intentions were he (the Chancellor of the Exchequer) was now about to 485 state to the House. Hon. Gentlemen were aware that prior to the alteration in the East-India Charter the duties on teas were regulated by an ad valorem scale. It was perfectly obvious, however, that so soon as the opening of the trade with China had been effected, the ad valorem scale could no longer be continued. It became necessary, therefore, to revert to some other system of duties, and the object kept in view was, to try if it were practicable, without inconvenience to the trade, to lower the duty on the low-priced teas. The experiment was accordingly tried, but it gave rise to many complaints, and a Committee was appointed on the motion of the hon. Member for London, to consider the subject, and a great weight of evidence taken before that Committee went to prove that the discriminating scale of duties of 1s. 6d. per lb., 2s. 2d. per lb., and 3s. per lb., ought to be abandoned. The Committee, however, decided otherwise, though there was considerable doubt and a strong division on the question. The final recommendation of the Committee was, that the experiment of a scale of duties should be tried, and if not found to answer practically, another plan should be considered. A year had passed, and the House had now to ask itself whether it was disposed to adhere to the three rates of duty, or to have recourse to the simple plan of one duty. He would state the conclusion to which the Government had arrived, and their reasons. He thought the time had come when the principle of one uniform rate of duty ought to be applied to this great branch of trade. In the first place, did the present mode answer the purpose for which it had been introduced? If it possessed any of the advantages of an ad valorem duty, if the rate was in proportion to the value of the tea, he should be unwilling to depart from the present mode; but it was clear that it did not contain the elements of an ad valorem duty, for the tea chargeable with the duty of 2s. 2d. comprehended so many different modifications of value, that the principle of a value duty must be abandoned if the 2s. 1d. rate was continued upon that description of tea. It was not an ad valorem but a discriminatory duty; it did not refer to value, but to denomination, so that it was attended with this inconvenience, that teas of different value paid the same rate of duty. There were other inconveniences of a serious character. The qualities of 486 the teas overlapped each other, and approached each other so closely, that the effect of these discriminatory duties was, that high-priced teas paid in fact a low rate of duty. On account of this approximation and overlapping of the qualities of teas, a tremendous power was placed in the hands of the officers of the Customs, who, by deciding on the qualities, had, in effect, the power of determining the rate of duty on teas. Without imputing anything to these officers, who had done their duty with propriety, it was certain that a great discretion was confided to persons who, with salaries of 200l. or 300l. a-year, had the power of varying the duties on a cargo of tea to the amount of as many thousands as their salaries were hundreds. This was too great a power to be lodged in their hands; it offered a temptation from which they ought to be relieved. Another objection was, that as it was wished to extend East-Indian commerce, there would be a difficulty in levying the discriminatory duties in the outports, where the objections he had mentioned applied with greater force than in London. For all these reasons, he thought the time was come when we should resort to one uniform rate of duty. For these reasons he should say, that the time had come when it was imperative to fix one uniform rate of duty on all teas. The recognition and operation of that principle would be greatly advantageous to the importers, much more convenient to the Government—who, he was free to admit, would willingly have adopted it in the first instance but for the recommendation of the Committee to the contrary—and highly beneficial to the public generally. The great mass of the trade desired an uniform rate, and the revenue would not suffer by its imposition. That settled, two conditions remained—the amount of that duty and the time of imposing it. He had a document in his hand in which the rated duty of tea imported from the 22nd of April, 1834, to the 5th of April, 1835, was calculated, and which he should take leave to read for the Committee. It appeared by it that the returns in that period gave the following quantities of tea imported at the annexed duties. The duties defined the assumed or real quality as 5,300,000 lbs. at 1s. 6d. per lb., 22,000,000 lbs. at 2s. 2d. per lb., 1,300,000 at 3s. per lb.; in all 28,600,000 lbs. From this quantity the revenue derived a sum of 3,021,000l. If the whole of 487 that quantity were taken at a fixed duty of 2s. 2d. per lb. it would give a sum equal to 119,000l. over and above the actual amount received from the combined charges of the three rates. If it were taken at 2s. 1d. it would give a sum equal to it, less 1,490l.; and if at 2s. a still smaller sum, or a minus of 122,200l. on the aggregate amount. The amount of duty he meant to propose as the fixed and certain one in the resolutions which he should lay before the House was the middle term of the three latter rates, that is, of the sums 2s. 1d., 2s. 1d., and 2s.—the sum of 2s. 1d., by the adoption of which, supposing the importation to be stationary, the revenue would suffer no greater loss than the trifling one of l,500l. or thereabouts, while he was satisfied that the trade and the public would have every reason to be pleased. He should next advert to the time necessary to carry the change he proposed into effect. Nothing, in his opinion, could be more unjust than any attempt at an immediate alteration in the existing scale of duties. Many persons had introduced large quantities of bohea into the kingdom on the faith of the discriminating system being final; many more had sent out orders for it to China—all these would be inevitably sufferers to various extents if the change were made to come suddenly into operation. Those who introduced bohea into the market would be surprised to find that they had 8d. per lb. extra imposed on them, beyond what they calculated on, while those who had ordered cargoes of it would be in the same condition. To obviate these inconveniences, and that injustice he should propose that the fixed duty of 2s. 1d. per lb. should supersede the discriminative scale in the course of a year, and that it should come into operation on the 31st day of July, 1836. That period of time would be sufficient for those who had procured cargoes, and those who had cargoes on their way hither, to dispose of them at the market price, while it would give abundant time to those who had only ordered them, to countermand their orders, or at least to exchange the bohea for another tea. Such was the substance of the resolutions which he designed to propose to the Committee. He knew that at that late hour of the night no practical discussion could be had upon the subject; but there would be many opportunities in the course of the Session of taking them 488 into detailed consideration. He could assure the Committee that he had no motive in proposing them beyond those which he had stated—to relieve trade from the embarrassment and annoyance of Customhouse officers—to take away the immense power which devolved by the present system upon the revenue retainers—to extend the benefits of that branch of commerce to every part of the empire, and, for the good of all, to have one fixed rate of duty. The present system was inefficacious for the principal object of its enactment. The poor derived no such advantage from its adoption as had been hoped by its supporters. The Chinese merchants prevented that by the artificial rise which they at once caused in the price of the inferior tea when they discovered the reduction of duty. By which means the 10s. bohea was now 12s., and the 12s. bohea 14s. In consequence of which the poor had their tea no cheaper than before the alteration in the rate of duty. The discriminating system did not answer; notwithstanding which he did not regret the experiment. It did not succeed; and the Government were now doing no more than their duty in coming down in a manly manner, acknowledging their error, and offering to redress it. The right hon. Gentleman concluded by moving two resolutions:—"1. That the discriminating scale of duties should cease and determine, and that a fixed duty should be imposed in lieu thereof." "2. That this fixed rate should come into operation on the 31st of July, 1836."

Mr. Crawford
said, that there was not a single point in the speech just made by the right hon. Gentleman which had not been urged upon the Committee last year, and which ought not (in his opinion) to have influenced their determination. What the right hon. Gentleman had now stated to be the fact, had been distinctly foretold by him (Mr. Crawford). If ever a subject connected with fiscal arrangements had been treated peculiarly in defiance of all acknowledged commercial principles, it was the settlement last year of the duty on tea. As to the practical result to be expected from the proposed change, the right hon. Gentleman had spoken of 28,600,0001bs. of tea, as having been the quantity brought to charge from the 22nd of April, 1834, to the 5th of April, 1835. Now the consumption of tea in 1833–1834 was 33,000,000 of lbs., and he was 489 perfectly satisfied that there was an increasing consumption, and that the annual consumption now was 36,000,000 of lbs. If the object of the right hon. Gentleman was to obtain an increase of revenue from the duty on tea, then he might be justified in proposing the uniform duty of two shillings and a penny a pound, but if his object were merely to secure the same revenue as at present, he (Mr. Crawford) was convinced that a uniform duty of two shillings a pound would be enough. Further, he would say, that if the duty on all teas but Bohea were immediately reduced to two shillings and a penny per pound, and the duty on Bohea kept at its present rate of eighteenpence per pound, the increased consumption of Bohea would be such as greatly to increase the revenue.

The Chancellor of the Exchequer
begged to say some words in reply. The figures which he had read did not comprehend the whole year, but they were just as good for his argument. With respect to the proposition of the hon. Member, it was one which, on reflection, he (the Chancellor of the Exchequer) was sure the hon. Member would not persevere in recommending. The hon. Member proposed to suspend the operation of the proposed measure on the lower descriptions of tea; but to carry into effect the reduction of the duty on the higher descriptions. Now in what condition would that put the owners of large quantities of the lower descriptions of tea, who had bought it when there was a high duty on the higher descriptions? It would drive them out of the market.

§ Mr. Hume
regretted that his Majesty's Government had determined to abandon the discriminating duty. It appeared to him to be contrary to all principle to lay a duty of 300 per cent. on cheap teas, and a duty of not 100 per cent. on others. If Government were determined on this measure, there was no alternative, but he could have wished they had tried the existing system for another year.

§ Sir John Rae Reid
declared that he had never entertained a doubt but that the system which the right hon. Gentleman now proposed was the system which ought to have been adopted in the first instance. Large sums had been lost by the course which had been taken; but that circumstance might, perhaps, ultimately do good.

Mr. Goulburn
was disposed to give his right hon. Friend credit for acknowledging the error of the Government, and coming forward manfully to redress it. He confessed that it was peculiarly agreeable to him to perceive that the arguments, and even the very words made use of on his side of the House in opposition to the measure originally, were now quoted by the Government who brought it forward. He regretted that the plan proposed by his right hon. Friend had not been adopted then, as by that means a year's vexation and trouble and expense would have been saved, and the trade would have been in a more healthy state than it was at present. With respect to the amount fixed by his right hon. Friend, he should only say that he had his own doubts as to whether two shillings would not be amply sufficient for all fiscal purposes.

§ Mr. Pease
thought the arrangement and scale of duties proposed by the right hon. the Chancellor of the Exchequer would be highly beneficial to the community. He much regretted, however, that the present system should be suffered to exist for another year.

§ Mr. George F. Young
asserted that the rate fixed by the right hon. Gentleman would have the effect of increasing the absolute amount of revenue without proportionately benefiting the community. He thought that there would be no difficulty in extending the old system of auction to those outports at present permitted to enter tea; and to reimpose the ad valorem duty of 96 per cent. would, under those circumstances, he was satisfied be productive of much profit to the Government as well as satisfaction to the community. The charge on the public, by the right hon. Gentleman's proposition, would be much greater than it ever was before.

The Chancellor of the Exchequer
denied that the charge on the public would be greater than before. As to the suggestion of the hon. Member, it would be quite impossible, consistently with justice and fair dealing, to adopt it.

§ Mr. Warburton
approved of the plan of the right hon. Chancellor of the Exchequer, but he thought it was in the power of that right hon. Gentleman to diminish the rate of duty below what he had fixed it at. For instance, he thought that two shillings would be found amply sufficient while striking off the odd penny would 491 have the advantageous effect to all parties of simplifying calculations on the subject.