§ Order for Committee read.
§ House in Committee; Mr. Bouverie in the chair.
§ Clause 1.
CAPTAIN JONESrose to move the rejection of so much of Clause 1 as imposes an addition of 8d. per gallon to the duty now payable on spirits taken out of warehouse for consumption in Ireland. The hon. and gallant Member contended that the history of these duties showed that every addition to the amount of duty was followed by a corresponding diminution in the quantity of spirits on which duty was charged for consumption, and by an increase of illicit distillation. When the duty was high in 1833, the quantity of spirits brought 1388 to charge had fallen to 8,000,000 gallons. When, in the following year, the duty was reduced to 2s. 4d., the quantity rose to 9,000,000. In the next year the quantity was 11,000,000, in the next 12,000,000, in the next 11,000,000, in the next 12,000,000, and in the next (1839) 10,000,000 gallons. Then came the temperance movement, and Sir Robert Peel raised the duty to 2s. 8d. A small falling-off was the consequence; but in 1842 Sir Robert Peel raised the duty to 3s. 8d. In consequence of the change, the quantity of spirits brought to charge fell to 5,295,000 gallons. Sir Robert Peel, however, again altered the duty from 3s. 8d. to 2s. 8d., and in the year following the reduction, the quantity of spirits charged amounted to 5,540,000, the next year to 6,000,000, the year after it exceeded 7,000,000 gallons, and the same for the next year; in 1845, however, in consequence of the famine there was some slight apparent diminution; but in subsequent years the increase was gradual until at the end of March, 1853, the quantity brought to charge reached to 8,208,000. All that proved that invariably an increase in the duty was attended with a corresponding loss to the revenue. It might not be generally known that every bushel of grain would yield two gallons or more of spirits. Oats fetched in the Irish market 22d. per bushel; and they now proposed to charge the spirits which may be obtained from a bushel of oats with a duty amounting to 7s. 6d.; and if the right hon. Gentleman would only take into consideration the great facilities afforded by the mountainous districts in Ireland for illicit distillation, the poverty of its inhabitants, and the small size of their farms, he must see that it would be impossible to resist the temptation to illicit distillation. He would now point to the effects of the increase of duty on the Irish criminal returns. For the year 1830, when the duty was first raised, there were no returns; but in 1832 the number of detections for crimes against the revenue were 5,434, and the numbers of persons in gaol were 648. Well, the duty was again reduced from 2s. 8d. to 2s. 4d., and, as a consequence, the number of persons charged with offences against the Excise laws fell from 8,192, 1833, to 4,904, 1834, and the number of persons in gaol from 1,296, 1833, to 842, 1834. After that the duty remained steady at 2s. 4d. for some years, and crime continued to diminish until 1841, when the number of offences was but 881; 1389 while the commitments only reached to 171. In 1842, however, Sir Robert Peel raised the duty, and the effect was to double the number of offences and number of commitments; while in the last year, that of 1852, the number of offences against the excise laws amounted to 2,504, and the number of persons in gaol were 537. Now by a reference to the returns for the seven years ending in 1837 he found that the average number of gallons brought to charge each year was 11,281,000; and on comparing this with the returns for 1853, which showed, as he had stated, an entry of but 8,000,000 gallons, the inevitable conclusion must be that the difference of 3,000,000 gallons was made up by illicit distillation. He had heard the right hon. Baronet the Member for Halifax (Sir C. Wood) state upon more than one occasion—and he believed it was a sentiment which was shared in by the present Chancellor of the Exchequer—that it was desirable to raise the greatest possible amount of revenue from the duties on spirits. But, let him ask, was that result to be brought about by the imposition of a high rate of duties? No such thing; for it was by a low scale of duties that the largest amount of revenue had been realised. Their annual average receipts under this head had been upwards of 1,400,000l.; and in 1838 it reached its highest level, namely, 1,434,473l., while at the present moment the duties obtained amounted only to 1,000,940l. What they were about to do now was only a repetition of the policy of Sir Robert Peel in 1842—a policy which that right hon. Baronet based upon the idea that the organisation of the revenue police in Ireland was so perfect that under no circumstances could any increase take place in illicit distillation. That idea was, as he (Captain Jones) predicted at the time it would be, very quickly renounced; and an alteration had again to take place in the scale of duties. He was afraid that the proposition of the right hon. the Chancellor of the Exchequer was based upon a similar calculation; and, if so, he believed that the result would be corresponding. He referred to the carefully prepared petitions sent from Scotland against the proposed increase to the amount of duty. One of these petitions stated that illicit distillation had provailed in Scotland to a great extent; that all the efforts made to suppress it having proved vain, the Chancellor of the Exchequer, in 1824, was induced to try the effect of a reduction of duty—a re- 1390 duction equal to nearly half the amount of the duty. The result had been most satisfactory. Crime was diminished, and in the first year, the gross amount of duty received increased very largely—about 200,000l. he believed. He would beg permission of the House to refer to an article in the Economist newspaper, relating to the regulations under which a mixture of chicory and coffee was permitted to be sold, and the numerous instances of fraud which had occurred. It stated that high duties and restrictions never deterred the bold knave. It referred to the futile attempts of the Government to prevent the smuggling of foreign silks into this country—the success which had attended the reduction of the duties—reductions carried to such an extent as to take away the premium from the smuggler. He would say, that this article, although written with a view to the chicory question, and the frauds attending it, was equally applicable to the spirit question, then before the Committee: it pointed out the true and correct mode by which the largest possible amount of revenue might be obtained from spirits in Ireland. He believed the question to be one of the greatest consequence to Ireland, and as such he submitted his proposal to the House.
§ Amendment proposed, in p. 2, 1. 9, to leave out "and Ireland respectively."
§ MR. JOHN MACGREGORsaid, having given some considerable attention to this question, he had laid it down as a maxim, that from spirits and other articles, not being those of necessity, they should raise the highest possible duty. The principle that he went upon was to levy the same duty on all spirits, wherever produced, and from wherever imported. With regard to Ireland, he should like to see the duty raised to 5s, It could not be good for the morals of the people to have spirits at a low price in any country. He should support the plan of the Government, and he should have done so all the more willingly, if, with respect to Scotland, they had increased the duty on spirits by 2s. instead of 1s.
§ MR. BAILLIEcould not believe that a Gentleman usually so well versed in statistics as the hon. Member for Glasgow (Mr. Macgregor) had upon the present occasion consulted them, otherwise he could never have stated that it was a matter of little importance to the people of Scotland that an additional duty of 2s. or 1s. per gallon upon spirits should be imposed. For, had 1391 he clone so, he would have found that in 1823, the year in which the reduction upon Scotch spirits took place, the number of gallons brought to charge was exactly doubled. And he would also have ascertained that in 1826, two years subsequently, when the Government thought they had reduced the duty upon spirits a little too low, having imposed an additional duty of 6d. per gallon, the effect was that in the following year the number of gallons brought to charge were diminished by 2,000,000. But to maintain that the actual consumption of spirits in Scotland had been reduced to that amount would be absurd, as the fact was nothing more or less than that the deficiency had been supplied by illicit distillation.
§ MR. JOHN MACGREGORadmitted that an increase did then take place in the amount of illicit distillation.
§ MR. BAILLIEBut if the hon. Member imagined that there was no illicit distillation now going on in Scotland, he was very much mistaken. Why, it was only last winter that a very large still had been discovered in the woods near his own residence, at which no less than sixteen men were engaged; and when the officers of excise made an attempt at seizure, they met with a defeat, and the distillation was still carried on.
§ MR. JOHN MACGREGORwished to explain that though illicit distillation went on in Scotland, it proceeded to a much greater extent in London, where the duty levied was much higher.
§ MR. M'MAHONdissented totally from the doctrine of the Chancellor of the Exchequer, and of the two hon. Gentlemen who last addressed the House. He (Mr. M'Mahon) contended that the imposition of this tax was for the purpose of carrying out the one-sided system of free trade, which enabled the manufacturers of this country to protect their own manufactures against foreign and colonial competition by high duties; to sell those manufactures in the dearest market, and then to buy the produce of agricultural labour—in a market cheapened to the lowest possible point by unlimited competition with foreign and colonial producers. Freedom of trade was a very good thing, but freedom of tillage was equally good. The whole system of free trade had tended to favour the foreign at the expense of the home producer. Throughout the whole Budget of the Chancellor of the Exchequer, no remission of duty was made to the agri- 1392 culturists; all that was done was done in favour of trade and commerce; and he (Mr. M'Mahon) did think it was most unjust to carry out that system in favour of trade and commerce at the expense of agriculture. At present the agriculturists were prohibited from raising tobacco on their lands—they could not make sugar from beetroot, without paying a duty the same as the foreign producer; they could not grow hops without paying a duty equivalent on the average to 10l. an acre; while all excise restrictions were substantially removed from the manufacturers, and their trade was protected from competition by heavy duties on foreign and colonial manufactures. The French farmer might grow tobacco, or hops, or make sugar from beetroot, without restriction, and yet it was pretended that he came on equal terms into competition with the agriculturists of this country, who were subject to so many restrictions, under which it was impossible for them to prosper. He protested against the imposition of those additional restrictions on agricultural produce for the mere purpose of carrying out the indefensible and one-sided system of free trade.
COLONEL DUNNE, as no Member of the Government would rise to meet the question which had been raised, must enter his protest against the proposal of the Chancellor of the Exchequer. The effect of the proposed increase would inevitably be the increased consumption of illicit spirits, and, consequently, of the great demoralisation of the people of Ireland. For the last few years that country had been remarkable for its habits of temperance. But when corn was cheap, and the duty on spirits was high, it was impossible that the Government could prevent illicit distillation. He believed that the increased duties would not be worth the trouble of collection, and in a few years they would be obliged to follow the late Sir Robert Peel's course, and repeal those taxes. The men enlisted latterly in Ireland were of a much more sober character than they had been previously. He would refer particularly, as a proof of his assertion, to the gallant 88th Regiment, or Connaught Rangers. The hon. and gallant Member concluded by declaring his opposition to the measure of the Government.
§ MR. M'CANNcandidly confessed that he was not opposed to this small increase of duty upon Irish spirits. He, however, implored of the Government not to employ that admirable force the constabulary in 1393 any of the duties that were discharged by the revenue police. The constabulary were now a most popular body in Ireland, but nothing was more calculated to injure that corps than to make them still-hunters.
§ SIR JOHN YOUNGadmitted that great caution ought to be, and no doubt would be, used in employing the ordinary police for the collection of revenue. At present, no resolution had been come to of the kind which the hon. Gentleman supposed. He concurred with the hon. Gentleman in thinking that the Irish constabulary had the general confidence of the people; and this was owing to their uniform good conduct. The practice of illicit distillation had not at any time prevailed generally over Ireland. In some large counties—Meath, for instance—there had been scarcely any. It had been for the most part confined to the poorer and more hilly districts, where oats were extensively grown, and the people were generally poor. The want of roads in those districts had also stimulated illicit distillation, but in the last 20 years much had been done to remedy this. The people were now enabled to bring their oats to market, and there was no necessity for them to resort to illicit distillation. There were good grounds to hope that this very small increase of duty might be safely made. A few years ago there was great excitement about allowances being made for waste in bond; and it was said that if the distillers had this concession made, they were quite ready to submit to a shilling duty. This had been done; and taking the allowance at an average of 2d. only, the increase of duty was really 6d., and not 8d. per gallon. He hoped that the question of employing the constabulary would be reconsidered; the increase of duty was so small that it might not be necessary. Illicit distillation prevailed very partially; farmers had greater facilities for bringing their oats to market, and the wages of labour were so good that he hoped the people would not fall into these practices.
§ MR. GEORGEcomplained that no answer had been given to Colonel Jones's statistics. The question had not been considered as one of Irish taxation at all. The important consideration was whether the proposed increase would have the effect of increasing or diminishing the revenue from Irish spirits. A tabular statement for the last 21 years showed that the amount of duty and the amount of revenue realised, were exactly in an inverse ratio to each 1394 other. Whenever the duty had been increased, the revenue had fallen; and vice versâ. The increase of duty had so greatly increased the temptation to illicit distillation, that the result had been a great increase of crime. It was said the distiller had received a boon in the allowance for waste. This amounted at the utmost to 40,000l. or 50,000l.; while the proposed increase of duty was no less than 238,000l. Not only would the increased duty cause an increase of illicit distillation, but it might lead to illicit practices in the regular distilleries. He also deprecated the employment of the Irish constabulary in aid of the revenue police. To make them spies and informers would destroy the confidence of the country, and render the force useless. He hoped the Chancellor of the Exchequer would give his best attention to the tables that had been referred to, showing that every increase of duty had diminished the revenue, and tended to demoralise the people.
§ Question put, "That the words proposed to be left out stand part of the clause."
§ The Committee divided:—Ayes 100; Noes 38: Majority 62.
§ MR. CRAUFURDsaid, that the distillers would not object to the increased duty on spirits if they were allowed to distil from malt.
§ MR. P. O'BRIENsaid, the Scotch distillers enjoyed a great advantage over the Irish distillers in the matter of the drawback. In 17 years the former had received drawbacks to the amount of no less than 4,248,584l.; while the Irish distillers had received in the same period only 70,211l. This was felt by the Irish distillers to be a great grievance.
§ MR. JOHN MACGREGORsaid, he wished to see all spirit duties equalised, wherever the article was produced, whether the increase was 1s. or 2s. He would support this Bill, but regretted that it did not go to the extent he had suggested.
§ The CHANCELLOR OF THE EXCHEQUERhoped the Members of the Committee, and especially Irish Members, would bear in mind the emphatic testimony to the moderation of his proposition which had been borne by the hon. Member for Glasgow. No doubt it was very difficult to make this question of spirit duties at all intelligible to the unitiated; he hardly knew a more hopeless task. A cruel contest had long been raging between Ireland and Scotland on the subject of the malt drawback enjoyed by the latter. He be- 1395 lieved that, while Scotland was anxious to retain that drawback, she took very little interest in the question of allowances for waste—a boon which had just been conceded to the Irish distillers; and as it was customary with Irish distillers to keep their spirits longer in the warehouse, in order that they might acquire a mellow flavour, that allowance was of more importance to them. He did not propose to make any change with regard to the malt drawback; but he would give the Committee the assurance that the whole question was under the careful consideration of the Government—whether it was possible or not to arrange a system by which distillers might be enabled to distil from duty-free malt. That would be an immense boon to Scotland; and it might be the means of assisting them to a settlement of this great spirit-duty question on a larger and broader basis. The Irish distillers, who objected strongly to the drawback of the Scotch distillers, would be perfectly well satisfied to have the boon of distilling from duty-free malt, though undoubtedly that would be a greater advantage to the Scotch distillers. Such a proposal it would be impossible to connect with the present Bill, on account of the vast amount of revenue dependent on the collection of the malt duties, and the necessity of avoiding any opening for their wholesale evasion; these were matters which required the most minute, detailed, and elaborate consideration. A great question of that kind must not be made to wait upon the political convenience of putting forward a fiscal measure like the one before the House. The question would receive the most serious consideration; to him it would be a matter of great satisfaction if they were able to arrange it; but, at the same time, after the very fair concession that had been made for wasteage, he thought that Ireland should be content to allow the Scotch distillers to enjoy their drawback on malt. Though that malt drawback appeared to impose an extra duty on Scotch whisky as compared with grain spirits, the difference in reality did not amount to so much as was supposed, owing to the improvements which had taken place in the mode of distilling.
§ SIR TIMOTHY O'BRIENsaid, it was the practice of the Scotch distillers to ship their whisky to Ireland, and get the drawback there; the spirit remained in the warehouse perhaps ten years, and the distiller enjoyed the advantage all that time. 1396 It was not just to allow half the drawback to the Scotch, and deny it to the Irish distillers.
§ Clause agreed to; as were also Clauses 2 to 14 inclusive.
§ Clause 15.
§ The CHANCELLOR OF THE EXCHEQUERsaid, he would now state the principle on which he proposed to allow for the waste in spirits. He understood from the hon. Member for Dundalk (Mr. Bowyer) that the Irish distillers complained they did not receive the same allowance for waste that the foreign and colonial distillers received. Now, that was not a very rational complaint, because much depended not only upon the nature of the spirit, but also upon the vessel in which the spirit was kept. If there were any difficulty in ascertaining the waste of home spirits, that might be a good reason for adopting the rule laid down in the case of foreign and colonial spirits; but, in truth, there was no difficulty whatever. The maximum allowance for waste provided for in the Bill was one gallon in the 100, and he could state, from a return he held in his hand, that during the quarter ending the 5th of January, 1853, out of 2,000,000 of gallons distilled by eleven distillers in England, the officers of excise had ascertained that the actual waste of spirits was one-third per cent. In Scotland, for the same period, out of 1,250,000 gallons, the waste was one-eighth per cent, and in Ireland, out of 1,500,000 gallons, the waste was one-fifth per cent. That being the case, and seeing there was no difficulty in ascertaining the facts, it was thought far better to ascertain the actual amount rather than resort to any imaginary standard, such as that of the home and colonial spirits.
§ MR. GROGANsaid, there was great dissatisfaction among the distillers on this point, and he could not understand why, if the actual waste was so easy to be ascertained, the same rule was not applied to foreign and colonial spirits.
§ MR. BOWYERsaid, there was a committee of distillers who sat last year who gave it as their opinion that, as a general rule, it would be impossible to ascertain the exact amount of waste.
§ The CHANCELLOR OF THE EXCHEQUERsaid, in answer to the hon. Member for Dublin, that the rule adopted with regard to foreign or colonial spirits might be a very good one for the Customs, and yet not suited for the Excise.
§ MR. SERJEANT MURPHYsaid, he understood the allowance for waste was not to be made till after the passing of the Bill, while the increase of duty had already taken effect. As the one was considered as a set-off against the other, he thought the allowance ought to take place at the same time with the increase.
§ The CHANCELLOR OF THE EXCHEQUERexplained that as the Bill was to allow only for the actual waste, that presupposed a close inspection of the spirits according to prescribed regulations, which could not be made till after the passing of the Bill. The Government was open, however, to a reconsideration of the question if any means could be shown by which the revenue would not be injured.
§ SIR TIMOTHY O'BRIENasked whether any drawback would be allowed on the spirits that were now in bond, and for waste that had occurred previous to the passing of the Act?
§ The CHANCELLOR OF THE EXCHEQUERsaid, it was quite impossible to give the drawback any retrospective effect.
§ Clause agreed to; as were the remaining clauses.
§ House resumed; Bill reported.