MOTION FOR A SELECT COMMITTEE. (Hansard, 4 May 1886)

§ MR. MACFARLANE (Argyll)
, in rising to call attention to the adulteration of Tobacco, and the mode in which duty is now levied upon it, and to move— That a Select Committee be appointed to inquire into the working and effect of the present system of levying Duty upon Tobacco; to consider, having due regard to Revenue requirements, whether any change should be introduced, and to inquire and report upon the excessive use of moisture contained in manufactured Tobacco, said, that having entered fully into the subject as regarded the differential duties imposed upon this article on the 15th of May, 1884, he did not propose, on the present occasion, to do more than show a primâ facie case for the appointment of a Select Committee, which, if the Government granted, would inquire into all the details with regard to adulteration and duty. On the former occasion, the 15th of May, 1884, to which he had referred, a Member of the late Parliament, who was also a tobacco manufacturer (Mr. Wills), told him that if he carried his Motion, he would ruin every tobacco manufacturer in England. He had no wish to do that; but he believed there were grievances and anomalies connected with the present system which ought to be removed, and he could assure the right hon. Gentleman the Chancellor of the Exchequer that he had no desire to make a raid upon the Revenue. He recognized that, in existing circumstances, a large revenue from tobacco was a necessary evil. All he wished for was to see whether it was possible, by a more equitable system of levying the duties, to get a better quality of the article for the majority of the 272 consumers without exposing the Revenue to any loss. By law all adulteration, except with water, was prohibited; but any quantity of water was allowed to be added, and the result was, that the tobacco which was sold to the poorer classes was about half water. A few samples of tobacco, 22 in number, had been analyzed for him to show what proportions of water they contained. In No. 1 sample, a bird's eye tobacco, at 5s. a-pound, the analyist found from 5 to 8 per cent of water; in tobacco No. 2, at 4s. 8d., from 10 to 14 per cent; in tobacco No. 3, at 3s. 10d., from 21 to 26 per cent; in tobacco No. 4, at 3s. 4d., from 40 to 45 per cent; in tobacco No. 5, at 3s. 2d., from 45 to 50 per cent; while tobacco No. 6, the lowest priced article, sold at 3s. 1d. a-pound, contained from 55 to 60 per cent of water. The three lowest qualities in his list represented three-fifths of the whole of the tobacco consumed in this country, and they were almost exclusively used by the working classes. In these the lowest percentage of water was 44, and the highest 53. The ordinary tobacco consumed by the working classes was sold across the counter at 3d. an ounce, which was 4s. a-pound; but the working man got only 50 per cent of tobacco for his money, and, consequently, he really paid 8s. a-pound for the tobacco he consumed; while the richer classes paid 5s. and 6s. a-pound and got 92 per cent of pure tobacco. He thought that was a great and strong proof that the working classes had a considerable grievance in the matter, and that a serious injustice was done them respecting it. They were entitled, as far as the necessities of the Revenue would permit, to get the best article they could for their money; and yet they paid a higher price than the rich did for the very finest tobacco. ["Oh, oh!"] He said that the working classes paid 25 per cent more for their tobacco than probably most Members of the House did for the tobacco they consumed. The total quantity of pure tobacco imported into this country in 1883 was 49,000,000 lbs.; but the total amount of manufactured tobacco sold over the counter was 84,000,000 lbs., showing that the addition made by water was 35,000,000 lbs. At 3s. 6d. a-pound that would represent a revenue of £6,000,000 sterling. In his opinion, the duty on tobacco ought not to be 273 charged simply by weight. It should be an ad valorem duty. A former Chancellor of the Exchequer said, some time ago, that this country had for ever given up ad valorem duties; but that was hardly so, as they were still imposed on wines. It was not fair or equitable that a penny or a twopenny cigar should pay the same duty as one sold at 1s. or 1s. 8d. At the same time, he did not advocate a minute system of ad valorem duties, which would give great trouble. In the Wine Duties there were great leaps and wide intervals, and it might be so in the case of tobacco. The rich man's cigar ought to be more heavily taxed than that of the poor man. He objected also to the protective duty on foreign manufactured tobacco. If we took 100 lbs. of tobacco manufactured in this country, it would contain 50 lbs. of duty paid leaf; and the duty payable upon that was £8 15s. Upon 100 lbs. of imported tobacco with the moisture in it, not only was the moisture charged with duty, which was not the case with the article manufactured at home, but 1s. 4d. per pound more duty was imposed, and the result was that 100 lbs. of manufactured tobacco imported into the United Kingdom would pay, instead of £8 15s., £24 3s. of duty. The result was protection to the home manufacturer to the extent of £15 8s. 4d. upon every 100 lbs. of tobacco, at the cost of the consumer, which meant that the manufacturers were thus enabled to fatten on the masses of the people. If this country was to have Protection, let them say so; but let them not pretend that they had Free Trade, when they had not. Let that be clearly understood. As he had before observed, an eminent tobacco manufacturer said to him in the House when he brought this subject forward—"If you succeed in your Motion, you will ruin every tobacco manufacturer in the United Kingdom." He (Mr. Macfarlane) understood that assurance to mean that the tobacco trade was fattening on the bad Customs' laws that existed. At the same time, the then Chancellor of the Exchequer said that his (Mr. Macfarlane's) figures were accurate, and the hon. Member referred to said that he agreed with all that had fallen from the Chancellor of the Exchequer. If the analyses he had submitted were correct, surely there was a fair case for inquiry, and, when it was established, for prohibition. 274 Not only did the water put into the tobacco defraud the poor man, but the effect of the excessive wetting it received was to spoil the article. In order to keep up the weight the retail traders were obliged to continue the process of saturation, and the tobacco was soaked until it was like sponge when it was put into the pipe. It was almost impossible for one honest manufacturer to live. The only way to obtain honesty was to make it compulsory on all. There was, at all events, a case for inquiry as to whether we could not prevent this gross adulteration to the detriment of the poor, and make the duties paid by the rich and the poor more equitable without doing injury to the Revenue. If we adopted the American system, as he would suggest we might, we should probably receive a larger revenue and secure the supply of a better quality of tobacco to the people. He challenged contradiction on the facts he had stated, and maintained that the state of things at present existing was a scandal, and it was in order to end it that he now made the Motion of which he had given Notice.

§ MR. RYLANDS (Burnley)
, in seconding the Motion, said, that he did so on the ground that his hon. Friend the Member for Argyll (Mr. Macfarlane) had made out a good primâ facie case which would justify inquiry. There could be no doubt that there was a large amount of water in manufactured tobacco, which had unfairly to be paid for by those who consumed it. It would be of great advantage if the duty could be imposed on, say, a pound weight of the pure material, instead of on about three-fourths as at present. The Tobacco Duty also ought to be altered in such a way as to impose an additional duty on the expensive tobacco used by the luxurious smoker, as against that placed upon the inferior article used by the working and humbler portions of the population. If there was any ground for the contention that tobacco manufacturers enjoyed the benefits of protection, he hoped steps would be taken to abolish such a system, because he did not see why they should enjoy a privilege of this kind over other traders of the country. On the case submitted by the hon. Member he thought there was ground for inquiry. The matter ought to be thoroughly thrashed out before a Committee 275 of this House, and he therefore hoped a Committee of Inquiry would be granted.

§ THE SECRETARY TO THE TREASURY (Mr. HENRY H. FOWLER) (Wolverhampton, E.)
said, he thought the House would agree with him that when they had a very large revenue of between £8,000,000 and £9,000,000 arising from a particular article the collection and administration of which had not only been carefully considered by the competent servants of the Crown, but also by successive Chancellors of the Exchequer, belonging to both political Parties, from 1844, when the question was first raised, down to 1863 when the present system was practically adopted—when they had a fiscal system, which was working without friction—was producing that very large revenue—was inflicting no injury on any class of the community, and was working satisfactorily as between the manufacturers, the importers, and the Treasury, it was a very undesirable thing to disturb fiscal arrangements of that sort, even by the appointment of a Committee of Inquiry. The hon. Member who introduced the subject had made some strong assertions in the course of his speech; but he had made out no great or urgent case for inquiry. There was another question of a practical character to be considered. The present Parliament had appointed more Select Committees than any previous Parliament had ever appointed in such a short space of time. Even if the case were 10 times stronger than it was, he thought the House would not be well advised, if it were to agree to an increase in the number of its Committees. The case of the hon. Member was threefold; he had based his case on adulteration, protection, and the unsatisfactory mode of levying the duty upon tobacco. The hon. Member stated that there was a large amount of water used in the manufacture of tobacco. He (Mr. Henry H. Fowler) was not a tobacco manufacturer himself nor a tobacco consumer, 276 and, therefore, his testimony was perhaps tainted with a little ignorance. He was informed, however, that there was no article of consumption in this country at the present time which was more free from adulteration than tobacco. The hon. Member, as he (Mr. Henry H. Fowler)had said, complained of the quantity of water that was to be found in that article; but he could assure the hon. Gentleman that it was practically impossible to manufacture tobacco in a dry condition. The opinion of the authorities was that there was an average amount of moisture in the tobacco of something like 35 per cent. But, taking the premisses of the hon. Member, he would admit, for the sake of argument, that there was too much water used. Who was to draw the line between the use of sufficient moisture and too much? What Government authority was to step in and say to the manufacturer, this article should contain only so much moisture? There were 600 tobacco manufacturers in England, each of whom would require to be placed under Government supervision. For that purpose an army of Excise officers would be needed; and not only would they have to superintend the manufacturer of tobacco, but they would have to watch the dealers, who numbered quite 300,000 persons. This large trading interest would resent an interference of this description, and would say that they knew how to carry on their trade, being, as they were, subject to the general law with regard to adulteration. The Inland Revenue Authorities also said that, judging from past experience, a restriction of the kind proposed with regard to the amount of water could not be carried out by them, and would result in failure. The relations between vendor and purchaser and manufacturer and consumer were that of the ordinary competition of trade; and for the Government to say that there should be a certain amount of water in the tobacco would be to go outside the proper function of a Government.

§ MR. MACFARLANE
I do not propose that the Government should interfere with the quantity of water, but that they should charge duty on the water.

§ MR. HENRY H. FOWLER
said, the case of the hon. Member was that there was an amount of adulteration in tobacco which called for the appointment 277 of a Select Committee. His contention, on the other hand, was that no such case of adulteration had been made out; and the question of excess or not of water was not one for legislation, but should be dealt with in another manner. As to protection, he would tell the House what the duties on tobacco were. The duty on unmanufactured tobacco was either 3s. 6d., or, if it contained less than 10 per cent of moisture, 3s. 10d.; the duty on cigars, &c., 5s. 6d.; and other tobacco, 4s. 10d. The only arbitrary figure was the amount of duty levied on the raw material. In 1863, when the present Prime Minister was Chancellor of the Exchequer, that matter was most carefully considered; and the judgment arrived at was that, looking to all the circumstances of the case, when the English manufacturer was charged a duty on the raw material of 3s. 2d., and the imported article was charged 3s. 10d., the duties were practically the same; there was no protection whatever for the home manufacturer. The very highest and most competent skill had been directed to adjusting the duties, so as to put the manufactured article on the same level as the unmanufactured, and that they should both contribute as nearly as possible the same amount to the Revenue. Reference had been made to Indian manufactured tobacco coming into this country; but a former Member for Coventry (the late Mr. Wills), who was especially conversant with the matter, had stated, in the debate on that subject in 1884, that under no circumstances, short of a Preferential Duty, could Indian tobacco have any chance of obtaining a ready sale in this country, on account of its inferior quality. Another question that had been raised related to the quality of the duty levied on various classes of tobacco. It had been stated that the Chancellor of the Exchequer, in 1884, said they had abandoned the principle of ad valorem duties, and the case of the Wine Duties had been mentioned as being inconsistent with that assertion. But they levied no ad valorem duties on wine, the duty was levied on the strength, and not on the price of wine. On the first impression he should be inclined to agree that they should, if possible, impose a higher duty on the expensive article than on the inferior one; but there were a good many questions 278 to be considered. If they put a higher duty than 5s. 6d., which was the present charge, on cigars, the effect of that might be to decrease the number of persons who smoked the better class of cigars, and to increase the number who consumed the inferior, and so to decrease the revenue. On that point, however, he expressed no opinion; but he thought it was one worthy of consideration, and would promise that it would receive attention from the Chancellor of the Exchequer. That, however, was not a matter for a Select Committee, but rather for the Chancellor of the Exchequer and the Revenue Authorities; and he did not think that the hon. Member had made out any case of injustice, inequality, or unfairness in the mode of levying them that would justify the House in disregarding the opinion of those who, under successive Governments, had been concerned in the collection of those duties. Under all the circumstances, therefore, he did not think that in the month of May, with the number of Committees already appointed, a case had been made out for granting a Committee.