HC Deb 15 May 1884 vol 288 cc451-60
MR. MACFARLANE

, in rising to move— That, in the opinion of this House, a revision of the Import Duties upon Tobacco is expedient and necessary; that the system upon which Duty is now levied upon unmanufactured and upon manufactured Tobacco is beneficial to home manufacturers only, and is detrimental to the interests of the consumers in the United Kingdom, said, the method of levying duties on tobacco was very inequitable. It was a subject which affected almost exclusively the working classes in this country, because the duties were imposed chiefly on the kind of tobacco consumed principally by the working classes. The present system was one of enormous protection—a protection in favour of a few English manufacturers. He had been informed that protection as now accorded to the British manufacturer of tobacco was granted practically to 12 men who were large manufacturers in the United Kingdom. When this system was first proposed it might not have been intended that it should be in fact a protective duty. It might have been only intended to meet what would be the supposed loss in the manufacture of dry-leaf tobacco on which duty was placed. He would show, however, that there was no foundation for this belief, and that it had come to be an enormous protection. If they took 100 1bs. of ordinary tobacco of commerce, as sold in this country and consumed by the working classes, it would contain about 65 1bs. of dry-leaf tobacco, on which duty had been placed. The remainder would be water, and the duty upon that 65 1bs. would amount to £11 7s. 6d. If 100 1bs. of the same material were taken, manufactured outside the United Kingdom and brought into the Custom House, it would be charged not only upon the increased weight due to the moisture used in the manufacture, but it would be charged 1s. 4d. per 1b. more. The result was that 100 1bs. of foreign manufactured tobacco would pay a duty of £24 3s. 4d. as against £11 7s. 6d., the actual duty paid by the English manufacturer for the production of the same quantity of commercial tobacco for sale to the working classes of this country. Tobacco as consumed by our working classes was sold wholesale at 3s. 2d. per 1b. or thereabouts. The duty on that tobacco was 3s. 6d.; the cost of the tobacco he took at the low figure of 6d. as it left the manufacturer, making up a total cost of 4s. per 1b. How, then, were the English manufacturers able to sell at an apparent loss of 10d. per 1b.? Where was the profit to come from? The profit came from the pump; the tobacco was soaked in water and saturated with moisture of every description; and for that reason they were able to sell at 10d. less than the cost. Now, the manufacturers themselves were not satisfied with this system, and at their meeting on the 2nd of February, the hon. Member for Coventry (Mr. Wills) said that the addition of 4d. in thepound to the duty by the right hon. Gentleman (Sir Stafford Northcote) meant the adding of more water to the tobacco. Now, Cope's work, The Tobacco Plant, stated that there was nothing worse for tobacco than water; that it destroyed and deteriorated it. Therefore, the present system in inducing adulteration was bad. But it was even worse in the case of foreign manufactured tobacco. Suppose that a tobacco manufacturer in India proposed to import tobacco into England, when he brought it to London or Liverpool he was charged 4s. 10d. instead of 3s. 6d and adding 8d. as the prime cost of the tobacco at the docks or bonded warehouse that made up 5s. 6d. per 1b.; and that Indian manufacturer was expected to compete with the English manufacturer, who made a profit by selling at 3s. 2d. per 1b. That was because the English manufacturer was protected by the differential duty and also by the enormous adulteration in the shape of liquid. Great injustice was done to India by the present system. Taking 100 1bs. of tobacco as it arrived from India, and assuming that there was the same percentage of dry tobacco in it as in the case of 100 1bs. manufactured here, the Chancellor of the Exchequer under that system, instead of levying 8s. 6d. on that dry tobacco, levied a duty of about 7s. 6d. per 1b. The effect of that had been to prevent importation. Did the Chancellor of the Exchequer when tobacco was being re-exported from this country give a drawback on the water contained in it? By no means. He only charged for water; he did not pay for it. Now, his Motion would not interfere with the Revenue. He asked the Chancellor of the Exchequer to make a small return to India for the £1,000,000 which she was obliged to give up on the demand of the Lancashire cotton manufacturers. India had levied a tax of 5 per cent on Lancashire goods; and what was the ground on which that tax was abolished? Not that its abolition would be an advantage to the manufacturers of Lancashire, but that it would be a great benefit to the people of India themselves. He did not ask the Chancellor of the Exchequer now to deal with the question of Indian tobacco on the same principle as was applied to Lancashire goods imported into India. He asked for nothing more than absolute equality between the English and the Indian manufacturers of tobacco. This was a question of policy as well as of justice. Was it a wise thing to treat India in this way—India that could give them a splendid and unlimited supply of the best tobacco, not like the stuff which the working men were now compelled to smoke? He thought that it was worth the while of the Chancellor of the Exchequer to encourage that country, especially as it would not affect his pocket. If this country was going to be a Protectionist country, let the fact be announced; but if we were to have Free Trade, then he wished to see it carried out with regard to India as well as to other countries. The system of Excise in America was a satisfactory one and worked well, tobacco being sold under a Government stamp. He did not wish to obtain any special favour; but he claimed that India should be allowed to manufacture tobacco and sell it to the working classes in this country without being handicapped by the system now in force, which, he believed, only existed because this question had never really been brought before the notice of the country. He had discussed the question with a good many Members of the House, and it was the universal opinion that the present system was indefensible. It was obviously desirable that the working man should have a really first-class tobacco instead of the rubbish which he was at present condemned to smoke. He was sure, if the facts of the case were known to the public, pressure would be brought to bear upon the Government, in order to bring about a change so desirable. He did not think that the argument would be made stronger by unduly prolonging it; but he desired to say that, under the present system, a premium was put upon smuggling. The extent to which this system was carried on around their coasts was enormous. Every day they had prosecutions; but still he did not believe that more than one case in every 10,000 was detected. Under the present system the temptations were great, and the amount lost to the Revenue was impossible to calculate. He hoped the Chancellor of the Exchequer would see his way to introducing a fair taxation upon tobacco when in a state fit for consumption. The hon. Member concluded by moving the Resolution, which stood in his name.

MR. WARTON

seconded the Motion.

Amendment proposed, To leave out from the word "That" to the end of the Question, in order to add the words "in the opinion of this House, a revision of the Import Duties upon Tobacco is expedient and necessary; that the system upon which Duty is now levied upon unmanufactured and manufactured Tobacco is beneficial to home manufacturers only, and is detrimental to the interests of the consumers in the United Kingdom,"— (Mr. Macfarlane,) —instead thereof.

Question proposed, "That the words proposed to be left out stand part of the Question."

THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)

said, he hoped that the House would not consider it necessary to go into the whole question of the tobacco duties. The hon. Member had referred to the question of smuggling; but he thought the question of whether the tobacco duties as a whole were excessive or not was outside the present question, and he hoped that House would not discuss it; but he would say a few words on the actual Motion before them. The figures quoted by the hon. Member were accurate so far as he was aware. The hon. Member appeared to think that in the adjustment of duties on tobacco, as between tobacco manufactured at home and that manufactured abroad, especially in India, there was some unfair incidence of taxation, and that the tobacco manufactured out of this country paid more than it ought to do according to the principles of Free Trade. On this question he would remind the House of what the history was of the adjustment of the duties on tobacco. The former duties on tobacco, before the year 1863, were 3s. per 1b. on unmanufactured tobacco, and 9s. per 1b. on manufactured, including cavendish, with an addition in each case of 5 per cent. In 1862, the whole question of the tobacco duties was raised upon the representation of influential importers, not from India, but from Europe; and the Board of Customs undertook an exhaustive inquiry as to what would be a fair rate of duty to impose according to the principles of Free Trade. As the result of that inquiry, the following decision had been arrived at:—In the first place, there was an increase made of 4d. per 1b. with respect to artificially-dried, unmanufactured tobacco coming from abroad. At the same time, the duty on manufactured tobacco brought from abroad was reduced to 4s. 6d., or 4s. if manufactured in bond. So the duties remained until, a few years ago, the late Government increased the duties by 4d. per 1b. or thereabouts, making the rates on unmanufactured tobacco 3s. 6d. and 3s. 10d., and on manufactured 4s. 4d. and 4s. 10d. So far as could be ascertained from the Returns of the manufactured tobacco at home and the imports, the system had worked very fairly; and until the Notice of the hon. Member's Motion was put upon the Paper he was not aware that any considerable number of people disputed its justice. The hon. Member appeared to think they should deal specially with tobacco imported from India, because of its especial character; but, speaking generally, foreign manufacturers of tobacco were perfectly satisfied with the present duties, which were adjusted some time ago upon their own representations. When they established duties on imported articles as compared with duties on articles of the same character manufactured at home, they must do so upon general principles; and he could not consent to an alteration of the general duty on imported manufactured tobacco, with the simple object of giving India an opportunity of sending us more tobacco, to the detriment both of the foreign and home trades. They could not differentiate the duties on articles manufactured in other countries, so as to enable each to send us articles here at a profit. He quite admitted it was impossible for tobacoo from some countries to come in at a profit; but it had never been the theory of our fiscal system that duties could be so regulated as between different countries that their produce could be imported alike at a profit. That was the fault of the circumstances of the country and its produce, not of the incidence of the duty. He could only say that he was not prepared to reduce the duty on imported tobacco; and with much regret he must oppose the Motion of the hon. Member.

SIR H. DRUMMOND WOLFF

said, the Chancellor of the Exchequer had, by declining to take the question of the tobacco duties into consideration, refused to avail himself of a method of increasing the Revenue. In the year 1864 the duties were reduced by an Act which was passed in the previous year. The revenue from tobacco in 1863 was £5,774,000, and in 1864, with a reduction of duty, it rose to £5,984,000. In 1878 the duties produced £8,000,000; in 1879, £8,500,000; and this year, £8,892,000, or not £1,000,000 more than in 1878. This slightly increased revenue, however, was raised upon a much lower amount, and, consequently, the consumer suffered. When the late Government raised the duty in 1878, the retailers found that the consumer would not pay the additional farthing per ounce, and the manufacturers thereupon added 10 per cent of water to the tobacco. The poor man, therefore, continued to pay 3d. per ounce for his tobacco, but he got 20 per cent instead of 10 per cent of moisture. This was really a poor man's question. As the case now stood, the rich man paid a comparatively small duty. A decent cigar might be had at the cheapest for 40s. the 100, the duty being 5s. 6d. But the poor man, whose tobacco was only worth 6d. per 1b., paid 3s. 6d. per 1b. duty. The latter, accordingly, paid many hundred per cent of the value he received, whereas the rich man paid a trifling duty. Last year a Paper vas laid upon the Table, which showed that between 1881 and 1883 the value of the smuggled tobacco seized was £14,373; the penalties imposed, £22,000; the persons arrested, 3,000; and the quantity seized, 43,984 1bs. But these were merely the cases which had been found out, and which were but a small per centage of the whole. He thought the Chancellor of the Exchequer should look into this question. The Government were going to lower the franchise, and they might depend upon it that the 2,000,000 voters they were going to add to the constituencies would look into the matter for themselves. Tobacco was the only luxury of the poor man, and his most innocent enjoyment. He could not conceive how Government after Government, with all their professions of Free Trade, and of their desire to promote the happiness of the lower classes, should fear to deal with a duty yielding, he believed, £9,000,000. If they reduced the duty, they would not reduce the revenue. That was proved by what had taken place in 1864, when the reduction of the duty increased both the consumption and the revenue. The effect of reducing the duty would be that the poor man would get a better and wholesomer article instead of the dear and adulterated weed which he now smoked. The Chancellor of the Exchequer was going to debase the gold coinage; why should he not rather lower the rates on tobacco? Representing a constituency where this question was much discussed, and which was given to smoking, he could assure the right hon. Gentleman that if he dealt with the matter he would add much to the happiness of the working people.

MR. WILLS

said, that every year the Revenue sustained a considerable loss through the smuggling of tobacco; but he was not in a position to suggest how the difficulties of the case could be dealt with. He was afraid that his hon. Friend the Member for Carlow (Mr. Macfarlane) was not as successful in obtaining correct information as he might have been before he brought this question before the House of Commons. As a practical man, he (Mr. Wills) entirely agreed with everything which had fallen from the Chancellor of the Exchequer, and he be- lieved that very few beyond the Mover of the Resolution had any doubt that the duties which were fixed in 1862 were arranged on a fair and equitable basis. Those who adjusted them, and worked them out had no pecuniary interest in the matter. Under no circumstances short of a preferential duty could Indian tobacco have any chance of consumption. On account of its inferior quality, it would never find a ready sale in the English market.

MR. JOHN HOLLOND

said, he would suggest that the Chancellor of the Exchequer might make some provision for facilitating the sale of cigars and tobacco in railway carriages. He thought some Revenue might be derived from issuing licences for this purpose.

MR. LABOUCHERE

said, at a time when tobacco was an absolute necessity to the comfort of a large majority of the human race there should be a revision, of the enormous duty upon it. They at present charged 3s. 6d. per 1b. duty on the commonest tobacco, while the article itself was sold at a lesser figure through being adulterated with water and certain deleterious compounds. The Scotch people, although they smoked more than, the English, consumed less tobacco, because the intelligent Scotch people after they had smoked a pipe took out the small portion of tobacco which remained at the bottom and placed it on the top of the next pipefull and resmoked it. The English people, however, had not arrived at that pitch of economy, and not only had they to pay 3s. 6d. for what was not worth more than 6d., but they had to throw away a considerable portion of what they put into their pipes. On the commonest tobacco the duty was 700 per cent, while only 10 per cent was paid on fairly good cigars. Therefore, while the Chancellor of the Exchequer paid only 10 per cent duty on the cigars he smoked, the poor man paid 700 per cent duty on the tobacco he smoked. If the Exchequer would insist on these obnoxious indirect taxes, to which he (Mr. Labouchere) was entirely opposed, there ought at least to be equality between rich and poor. Personally, he thought that the rich man ought to pay higher taxes than the poor man.

SIR GEORGE CAMPBELL

said, this debate had raised a much larger question than that of the duty on tobacco; it raised the whole subject of the incidence of taxation in this country. It seemed to him that in seeking uniformity we had sacrificed justice. Her Majesty's Government had set up the principle that duties must be uniform, whether the articles were tea, tobacco, or any other. It was a monstrous injustice to charge several hundred per cent on the tobacco of the poor man, while they charged a very moderate percentage on the cigars of the rich man. If it was possible to charge ad valorem duties in other countries it ought to be possible in this, and much easier, on account of the greater simplicity of our system and the very much fewer articles that we taxed. From his experience, he could say that the principle of an ad valorem duty worked without any practical difficulty in India; and where there was a will there was a way. He hoped the day might come when they would be able to produce a superior tobacco in India. As it was, they had not got to that point; they had quantity but not quality. The result was that under the system, by which cheap and dear tobaccos were charged at the same rate, the Indian tobacco was practically shut out, and injustice was done to our Indian subjects. This was undesirable and unfair at a time when they had abolished all import duties on articles sent from this country to India. He thought his hon. Friend had done very good service by bringing this matter forward.

SIR JOSEPH M'KENNA

said, that the consequence of the existing state of things was that the trade of India with this country in tobacco was crushed out.

MR. RITCHIE

said, he agreed with the hardships that were inflicted on the working class by the present incidence of the tobacco duty; but he did not understand that was the question raised in the Resolution of the hon. Member for Carlow. The question now raised was solely with regard to the differential duty on manufactured and unmanufactured tobacco in this country, and as an adjustment of the duty had been made, not only in 1862, but much more recently, he could not support his hon. Friend if he went to a Division.

THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)

said, he sympathized with much that had been said during the discussion; but he could not see his way to any alteration of the duty on tobacco in the direction in- dicated by his hon. Friend the Mover of the Resolution. He also fully sympathized with the suggestion of the hon. Member for Brighton (Mr. Hollond) relative to the sale of tobacco in railway carriages; but he feared it would raise the much more serious one of the sale of liquor in dining-cars. This, he confessed, he should be sorry to have to face.

Question put, and agreed to.

Main Question, "That Mr. Speaker do now leave the Chair," again proposed.