COMMITTEE.

HC Deb 13 February 1863 vol 169 cc328-38

Order of the Day for the House to go into Committee on Customs Acts (Tobacco Duties) read.

COLONEL DICKSON

said, he wished to ask the Chancellor of the Exchequer, whether in reducing the duty on tobacco he would allow a drawback to merchants who had paid duty on stock in hand? They had heard already of the inconvenience of sudden changes. He did not wish to make any remarks about the reduction itself; but those interested, who had just paid a large amount of duty, had some grounds to complain of the sudden- ness of the reduction. On former occasions, when such changes had been made, large amounts had been remitted, both in respect of wine duties and hop duties; and whilst the amount of tobacco duties paid within the last few days could not be of much importance to the Chancellor of the Exchequer, the sums were serious items to the merchants, on whose behalf he asked the question.

THE CHANCELLOR OF THE EXCHEQUER

said that in accordance with a rule which had applied to the reductions of Customs duties for the last nineteen years, and from which there had during that time been no deviation, it was not the intention of the Government to propose the allowance of any drawback in respect of the duty paid upon the importation of manufactured tobacco. If they were to do so, they would depart from an established principle, and involve themselves in the greatest inconvenience.

House in Committee according to Order.

(In the Committee.)

THE CHANCELLOR OF THE EXCHEQUER

said, that the Resolutions which he was about to move had been laid upon the table, and had, in conformity with recent practice, been printed. With regard to the first of those Resolutions he wished to say that he placed it upon the paper rather for the information of the House and the public than because there way any necessity for so doing. It had been found convenient in the case of reduction of duty, in order to avoid too great suddenness of procedure, to print at the very first stage of the business the rate to which it was proposed to reduce the duty; but, inasmuch as the duties mentioned in the first Resolution were all of them lower than the existing ones, it would have been perfectly competent for him or any other Member of the House to have at once introduced a Bill to substitute them for those now in force. The Resolution was not one which would take immediate effect; on the contrary, it was a matter with regard to which it was desirable that full time should be given to the House and the trade for the consideration of the subject. The question of the duties upon manufactured tobacco was a very singular one. At present they gave what was called a monopoly to the home manufacturer; that was to say, that with the exception of certain articles which were purely articles of luxury, and could afford to pay the high duty, the duty was such as to amount to a total exclusion of foreign competition. Therefore, the duties upon manufactured tobacco as they stood, might be said to constitute the only relic of the system which was once the ruling principle of our tariff. It might, perhaps, seem strange that these duties should, for such a length of time, have escaped revision. They had not been maintained on account of any conviction on the part of this, or, as far as he knew, of any Government, that considerations of justice to the tobacco manufacturers required their maintenance. On the contrary, the obvious dictates of justice would appear, at least presumably, to be that the trade in manufactured tobacco and in manufacturing tobacco, should be placed upon the same footing as all other manufactures in this country—that was to say, that they should upon as fair a footing as they could devise, be subjected to competition with the producers of other nations. The reason why no proposal had up to that time been made to reduce the duty upon manufactured tobacco had been the grave nature of the difficulties which had to be encountered in securing the interests of the revenue. It was only after a very mature and careful consideration of the regulations proper to be adopted that the Government had at length been able to arrive at what they thought a solution of the difficulty, and to propose to the House the removal of what stood at present as a very gross and in principle a very indefensible anomaly in the tariff. One portion of the regulations involved a system of manufacturing certain descriptions of tobacco in bond—"Cavendish or Negro-head,"—and that was the enactment the nature of which had required him, instead of coming before the House with a Bill which would, perhaps, have been more for the general convenience, to proceed by way of preliminary Resolution. The Resolutions could not be understood except in connection with the provisions of the Bill, and particularly the bonding provisions. As far as he was aware, it appeared to be the general feeling of the trade that it was not possible longer to maintain the duties which were now in force. He did not at that time ask the Committee to do more than to assent to the general principle that those prohibitory duties, as he might call them, should be reduced. When they came to consider the particular kind of reduction, they were involved in mysteries of a trade very difficult to understand; but he might say in general terms that they had thought it necessary to adopt a peculiar system with regard to a kind of tobacco that was called Cavendish or Negro-head. That was a description of tobacco which was very popular in some parts of the country, and which formed a considerable portion of that which was at present smuggled. The Government had, therefore, had to ask themselves whether in endeavouring to get rid of the prohibitory rate, and substituting a duty which would admit of the introduction of that article from abroad, they should allow our manufacturers the free use of duty-paid materials without supervision for the purpose of making cavendish or negro-head. Unfortunately, though, as he had said, the present duties had the effect of giving a monopoly to the home producer, in this one not unimportant point they gave a monopoly to the foreign producer, because the preparation of sweetened cavendish or negro-head was forbidden to the manufacturer at home. Its importation from abroad was likewise forbidden, but there the prohibition did not take practical effect, and a considerable quantity of this tobacco found its way into consumption. They had, therefore, thought it essential, in endeavouring to get rid of smuggling, and to establish a fair rate of duty, to attempt to afford to the British manufacturer some means of entering into this competition which he did not now enjoy. There were two modes which might have been adopted—one the free use of duty-paid articles, and the other the power to work on bond. The first of these was upon general grounds the more desirable; but he was bound to say, that after consulting fully with the authorities of the Revenue Department, he could not satisfy his mind, nor could those who advised him satisfy their minds, that they could establish enactments permitting the use of duty-paid leaf tobacco for the purpose of manufacturing cavendish or negro-head without very serious danger to an important branch of the revenue, On that account he proposed, as far as that description of manufacture was concerned, to establish a system of manufacture in bond. With a regard to other descriptions of tobacco, roll tobacco of all descriptions, cut or shag tobacco, cigars, and snuff, the manufacture would continue to go on as at present. The manufacturer would continue to use duty-paid materials, and the only difference would be that the foreign article would be introduced at a rate of duty which, as the Government thought, would amount to a fair and full equivalent for both the direct and the indirect charge to which the British manufacturer was subject. Such was a very general outline of the principles of the measure which he proposed to introduce, the reasons for which did not require to be dilated upon. They were these three. In the first place, the Government aimed at applying to the manufacture of tobacco the principle of competition—competition from abroad as well as at home—which had been applied with such salutary effect to all other manufactures. In the second place, they hoped to effect a diminution of smuggling; and in the third place—though that was not the main object of the proposal, and the Government were not prepared to submit any particular estimate—they believed the results would without doubt be of a beneficial character to the revenue. He hoped he had said enough to recommend that general outline of the measure to the adoption of the Committee, and all that he then asked was a provisional assent for the purpose of enabling him to introduce the Bill. He begged it might be well understood that no practical effect upon the duties would result from passing the Resolution that night; the consideration of the Bill in Committee was the period when they would really have to settle the amount of the duties. Although he did not apprehend that any would be required, he held himself at liberty to introduce such modifications as might hereafter prove to be necessary into the proposal he had now submitted on the part of the Government. It had not been possible to have the advantage of free and direct communication with the trade before introducing the Resolution; but before the final assent of the House was asked to the scheme, the opinions of the trade would be fully and directly elicited. The right hon. Gentleman then moved the following Resolutions:— That, in lieu of the Duties of Customs now charged upon the several kinds of Manufactured Tobacco under mentioned, the following Duties shall be charged and paid thereon upon importation into Great Britain and Ireland:

		s.	d.
Segars	the lb.	5	0
Snuff	the lb.	3	9
Other Manufactured Tobacco	the lb.	4	0

That Unmanufactured Tobacco warehoused in any warehouse approved for security of Duties of Customs may, in such warehouse, be manufactured or converted into the articles denominated Cavendish or Negro-head Tobacco; and upon every pound thereof produced by such manufacture or conversion there shall be charged and paid on the delivery thereof for home consumption the Customs Duty of… 3s 8d.

SIR GEORGE BOWYER

said, that so far as he understood, the tobacco trade did not claim to be exempt from the principle of unrestricted competition applying to all other manufactures; but they felt that the change contemplated by the right hon. Gentleman placed them, in some respects, in an unfair position. They had to pay duty upon the tobacco in a damp state which was imported for the manufacture of cigars, and therefore weighed more than when it was dry, and they had also to pay duty upon stalks which were not used, and were mere refuse. They were thus placed at considerable disadvantage towards the foreign manufacturers, who were at liberty to use only the most favourable portions of the leaf. Under these circumstances, he hoped the right hon. Gentleman would allow cigars, as well as cavendish and negro-head, to be made in bond. There was no argument in favour of the regulation in the one case which did not apply with equal force in the other, and therefore he trusted the right hon. Gentleman would apply the same rule to both.

MR. CRAWFORD

said, he had received numerous representations from his constituents on the subject of those Resolutions. But as the right hon. Gentleman was not disposed to press them forward unduly or without listening patiently to the representations of the trade, he thought they might rest satisfied that no improper interference with their interests was intended. As no drawback was to be allowed, he hoped sufficient time would be afforded to the traders for working off the stocks they now had in hand before the Resolutions were put in force.

MR. AYRTON

said, he had been beset with representations from his constituents, among whom were some thousands of persons engaged in the manufacture of cigars and tobacco, to the effect that the proposition of the right hon. Gentleman the Chancellor of the Exchequer was not based on an accurate appreciation of the circumstances of the manufacture, and was likely to bring great distress and ruin on a large body of persons. No doubt, these cries of apprehended ruin were very general when- ever changes were proposed, but experience showed that these cries were not always raised without substantial cause. It was to be regretted that the Chancellor of the Exchequer, through the occurrence of circumstances of a painful nature, had not the opportunity of penetrating the mysteries of the tobacco trade before he brought forward his Resolutions. It was idle to talk of the tobacco manufacture coining within the principles of free trade, seeing it was an established law in this country that nobody was to grow tobacco. The tobacco manufacture and the duties imposed upon it were, according to the view which might be taken of smoking, either a vehicle for getting money out of the pockets of foolish men, or else a fine on the enjoyment of a luxury. The Chancellor of the Exchequer had moved these Resolutions with certain qualifications, and he now asked the House to suspend its judgment with regard to them. The leading manufacturers of tobacco were satisfied that the right hon. Gentleman had been misinformed; they knew the extent of the error under which he was labouring, and they were prepared to clear it up, and, if necessary, to go before a Select Committee. If the Chancellor of the Exchequer made any change in the existing laws with regard to tobacco, he would have to make many others; and he might find it impossible to maintain the superstructure of Customs regulations in relation to that article.

MR. W. WILLIAMS

said, he was always glad to welcome a reduction of taxation, but there were many other articles upon which a reduction of duty would have been attended with greater benefits. For instance, he wished the right, hon. Gentleman, instead of lessening the duty on cigars, had reduced that upon unmanufactured tobacco. It could scarcely be credited that the duty on cigars consumed by the wealthier classes of society was 35 per cent, while that on unmanufactured tobacco, consumed by the great mass of the population, was nearly 500 per cent.

MR. LOCKE

said, he regretted that the Chancellor of the Exchequer had passed by entirely the question of reducing the duty on the tobacco consumed by the working classes, to whom it had now become an absolute necessity, as most of them smoked and not a few chewed. He hoped that the right hon. Gentleman would consider the expediency of reducing the duty on unmanufactured tobacco. The effect of the heavy duty was that it was brought in in the very lightest form. It was then watered and sugared and adulterated in all sorts of ways, and all of it could be bought for less than the duty. He was convinced that by reducing the duty on the unmanufactured article the revenue would be largely benefited, and adulteration would be checked.

MR. ROEBUCK

observed, that the Chancellor of the Exchequer appeared to be in a dilemma, for, while one side urged him to consider the case of the cigar-smokers, another urged upon him the case of the consumers of unmanufactured tobacco. For his part, he had no sympathy with either one side or the other; and he heartily wished there was no tobacco grown in the world.

SIR STAFFORD NORTHCOTE

said, he considered, that as the question had been raised, there should be no delay in its settlement, lest the revenue should suffer; for if there was a prospect of the duty on cigars being diminished, nobody would be in a hurry to take them out of bond. He wished, therefore, to ask his right hon. Friend for explanation as to what the usual course was when the Committee had passed n Resolution that certain duties should be levied and no time was fixed. He (Sir Stafford Northcote) did not see why the Chancellor of the Exchequer should not have consulted the trade before he brought forward these Resolutions; the only reason, perhaps, why his right hon. Friend had not done so was that he wished to submit the matter first to the House of Commons, though it was difficult to see the use of attempting to keep the matter secret. He trusted the Chancellor of the Exchequer would take care to provide such arrangements that the revenue should not be diminished. There was another point on which he should like some explanation—he meant the reasons why the Chancellor of the Exchequer objected to the same privilege being granted to the cigar-maker as to the manufacturer of cavendish or negro-head tobacco, of manufacturing in bond. He wanted to know why, if the privilege were given to the one class of manufacturers, it should be withheld from the other? It would be a great advantage to the revenue as well as to the manufacturers, if the extension of the privilege were granted. If there were any special objections, the Committee ought to be told what they were. He should like to know whether the Go- vernment had authoritatively decided upon the subject.

THE CHANCELLOR OF THE EXCHEQUER

said, that the points raised during the conversation on the subject he had introduced called for but a few observations from him. He had listened with great regret to the speech of the hon. Member for the Tower Hamlets (Mr. Ayrton). The hon. Gentleman had shown the cloven foot at once, and it was obvious that his idea was that the present duties should be retained in force. With reference to his statement that there already existed free competition between the tobacco manufacturers of this country, he would only say that when the monopoly in corn was attacked, they were told that there was free competition between agriculturists. The day for fighting that battle had passed away. The hon. and learned Member for Southwark (Mr. Locke) said that a reduction of the duty on unmanufactured tobacco would be followed by an increase of revenue. That, however, was one of the largest questions of revenue which could be raised, and could hardly be dealt with in a measure such as this, which was a mere measure of trade. Reduction of duty and increase of revenue did not invariably go together; and, from the inquiries he had made on the subject, he was convinced that any material reduction of the duty on unmanufactured tobacco would lead to a very large reduction of revenue. Practically, the question which the Committee would have to consider, would be whether they would select that article in preference to other articles. Those selected would, he believed, yield additional revenue, and, to a great extent, prevent smuggling. With reference to the possible loss of duty from the circumstance that no date was named from which the reduction would take effect, he believed that vast as were the payments on unmanufactured tobacco, the payments on manufactured tobacco were extremely small, and a week or a fortnight was of very little consequence. The effect of naming no specific time in the Resolution was that a Bill similar in form would be introduced, and the reduction would take place only when the Royal assent was given to the Bill. It was desirable that they should not proceed with precipitancy; but at the same time they ought to deal with the proposition without undue delay. With regard to the manufacturers, he merely desired to give them such time as might be necessary to enable them to bring their views fully before the Government and the House. He should himself think that a very short time would suffice for that purpose; and if the House went into Committee upon the Bill in a fortnight, they might within that period very well dispose of all the questions that might be raised. Then there was the practical question put by his hon. Friend as to the manufacture of cigars in bond. It must be borne in mind that the manufacture in bond was at best a very defective, clumsy, and costly expedient. It was, however, better sometimes to permit such manufacture than to prohibit the trade altogether; but the privilege given to manufacturers was attended by various drawbacks. The enjoyment of it was absolutely limited to a very few spots where the customs had considerable establishments which enabled them to conduct the necessary supervision. The opinion of the Government was that there was no sufficient reason for granting power to manufacture cigars in bond; but when he was asked whether that was an irrevocable opinion and was an essential part of the proposition, most certainly he thought that all such matters were perfectly open for discussion. The considerations by which they were guided were considerations in which all took a common interest—namely, a desire to reconcile as well as they could the several interests of the consumer, the manufacturer, and the revenue. Therefore, he held himself entirely open to examine further the extension of the bonding privilege to other places than he had named; but he was bound to say, that as far as his investigations had hitherto gone, he was not aware of any sufficient reasons why it should be so extended.

1. Resolved, That, in lieu of the Duties of Customs now charged upon the several kinds of Manufactured Tobacco under mentioned, the following Duties shall be charged and paid thereon upon importation into Great Britain and Ireland:

		s.	d
Segars	the lb.	5	0
Snuff	the lb.	3	9
Other Manufactured Tobacco	the lb.	4	0

2. Resolved, That Unmanufactured Tobacco warehoused in any warehouse approved for security of Duties of Customs may, in such warehouse, be manufactured or converted into the articles denominated Cavendish or Negro-head Tobacco; and upon every pound thereof produced by such manufac- ture or conversion there shall be charged and paid on the delivery thereof for home consumption the Customs Duty of… 3s. 8d.

Resolutions to be reported on Monday next.