HC Deb 10 May 1897 vol 49 cc152-77

"That the Duty of Customs now payable on Tea shall continue to be charged, levied, and paid on and after the first day of August, one thousand eight hundred and ninety-seven, until the first day of August, one thousand eight hundred and ninety-eight, on the importation thereof into Great Britain or Ireland (that is to say): Tea‥ the pound . Four Pence."

MR. ARTHUR O'CONNOR (Donegal, E.)

proposed to leave out the words "Four Pence," and to insert instead thereof the words "Two Pence." He said the Chancellor of the Exchequer commenced his Budget statement the other day by a reference to the record of prosperity which he had to explain to the Committee last: year. The revenue of the country, he said, speaking of 1895–96, had never been so large, the expenditure had been immense, and yet never before had so much been devoted to the reduction of the National Debt. Financially, the right hon. Gentleman said, we seemed then, to be on the crest of the wave, and it would have been rash to anticipate that we should rise any higher; and yet, he added, we had done so. He told them that, in spite of political circumstances in the United States, which for a time had paralysed trade, in spite of distress in India, in spite of anxieties in the East of Europe, the revival of trade which had begun in the summer of 1895 had been, maintained. The foreign trade of 1896 had exceeded that of 1895 by 5 per cent., and the increase in volume had been even. greater than the increase in price. The home trade was not loss flourishing; the diminished number of failures, the improved banking and railway returns, better employment in the skilled labour market, and, lastly but not least, a good wheat crop and better prices for it, all indicated the prosperity of the country. Surely such halcyon days as the right hon. Gentleman described furnished the occasion for some measure of relief to the taxpayer. The Chancellor of the Exchequer considered himself bound to be cautious in 1896, and he said he was bound to be cautious now. Of course, anyone in the position of a Chancellor of the Exchequer was bound to be cautious, not only this year and last year, but every year; but, he submitted, that caution was not altogether incompatible with occasional reductions of taxation. He also told them the other day that after this exercise of caution on his part the receipts from the income tax had largely increased, so that they had yielded more than they had ever yielded before, and had more than made up the remissions granted by his predecessor in 1894. Moreover, the Exchequer receipts from the Death Duties had very considerably exceeded his estimates, and the right hon. Gentleman very frankly admitted that he had underestimated the Death Duties. So, alike, from the living and the dead, the Chancellor of the Exchequer had gathered in more than ever he anticipated. But this year again he told them he had to be cautious, and why? Because, although tobacco exceeded his estimate, it only produced £265,000 more than in the year 1895–96; because, where in the case of wine he had looked for a reduction of receipts he had actually obtained £40,000 more than last year, and then, as he said, it was only £75,000 above his estimate; and, thirdly, because tea, which did not disappoint him by one single penny, only brought to the revenue £54,000 more than in the previous year, from all of which the Chancellor of the Exchequer deduced the conclusion that it looked as if the times were slackening, and as if in the matter of Customs revenue we had reached high-water mark. The conclusion appeared to him to be a little startling when they considered it side by side with the fact that in this very Budget the right hon. Gentleman had estimated for no less than £700,000 of income tax alone in excess of his previous estimate, and for £250,000 beyond his inflated receipts of last year. If a redaction of taxation was not to come now when we had reached a level higher than was ever anticipated, when we had reached high-water mark, when was it to come? Were we, in times of peace, to await the outbreak of war? were we in days of admitted prosperity to await the advent of evil days, before we began to look for a reduction of taxation? This, in his opinion, was a proper occasion for a reduction, and he should venture to propose a reduction, moderate in amount, calculated to afford relief to the greatest possible number of those most in need of relief, and a reduction which, while it applied to all divisions of the United Kingdom in common, might be expected to afford some larger relief to Ireland than to Great Britain, and he hoped to show some ground why an Irish Member might be excused if he regarded that as a not unimportant aspect of the question. The figures of the Chancellor of the Exchequer showed that a very much larger proportion of revenue was derived from indirect taxation than from direct taxation, the ratio being about 49¼ to 36. The burden of indirect taxation bore heavily upon the comparatively poorer classes, and therefore Ireland, by reason of the fact that she had a larger proportion of poorer classes than Great Britain, felt more keenly than Great Britain the inequity of the incidence as between direct and indirect taxation. He sought, therefore, a reduction, of indirect taxation which should afford relief where it was most wanted, but should also go at least some little way towards redressing the inequity or incapacity to bear taxation and the actual burden of Great Britain and Ireland respectively. Naturally the Chancellor of the Exchequer could not allow the great opportunity which the Budget statement of this year afforded him to pass by without casting a glance over the last 60 years. The retrospect afforded him grounds to refer with pardonable pride to many subjects of congratulation. At the beginning of the period the export trade of the United Kingdom amounted to £42,000,000; it was now £240,000,000. The imports had risen meanwhile from £67,000,000 to £442,000,000. Where there were five-depositors in the savings banks then there were now 43, and the population of the United Kingdom had increased enormously. The right hon. Gentleman was able to sing a kind of financial paean upon the prospect between now and then. The felicitations of the Chancellor of the Exchequer with regard to that part of the United Kingdom called Great Britain were amply justified, but were they equally justified with regard to Ireland? Within the first decade of the 60 years the population of Ireland was some 8,300,000; for more than 50 years, without one single period of recovery or halt, the population had dwindled year by year until some four millions out of her former population of 8¼ millions had disappeared. Whilst they had been increasing in Great Britain the effectiveness of the wealth-producing classes, it was precisely those classes that Ireland had been losing. And yet what had they recently seen? The Government gathering in the repayments of the money grudgingly advanced for seed potatoes to the impoverished people of the West. In different parts of the country the very workhouses were being seized for debt, and the Board of Works, as mortgagees in possession, were foreclosing on the Lismore, Dungarvan and Waterford Railway. In 1837 Ireland contributed £4,496,000 to a total revenue of £50,000,000, or less than 9 per cent. Now, with all this extraordinary increase of population and wealth on the one hand, and of deterioration and exhaustion on the other, Ireland was pay £50,000,000, or less than 9 per cent. to a total revenue now more than doubled. By reason of the financial treatment and the position forced upon Ireland by the Government and Legislature of this country, Ireland had been suffering from a sort of financial hæmorrhage which had always kept her poor. The Act of Union, apart from, its provisions with regard to fiscal affairs, had most injurious results for Ireland in a totally different way. It was the first of a series of great measures of disestablishment, each and every one of which had wrought and was working results disastrous to Ireland. The first necessary and natural sequel of that Measure was the removal from Ireland of large numbers of her propertied classes, whose incomes had before then been spent and circulated in Ireland, to the maintenance and development of industries there. Ever since the Union the finances of Ireland had been administered from Westminster, and from the first days to the present decade they had been messed and muddled. Many persons required to be cautioned upon the readiness with which they received some official statements with reference to the accounts between the two countries. He gave two illustrations, one drawn from the first decade and the other from the present decade. In the year 1806 that House appointed a Committee to examine and report "on the joint charges of the United Kingdom of Great Britain and Ireland from the 1st January, 1801, to the 1st January, 1806, the proportions defrayed, and the balance remaining due from either party." The Committee reported, and they were unable to report the joint charge on Great Britain and Ireland, or to ascertain the relative situation of the two countries as to their expenditure, because the accounts furnished to them from Ireland, or on account of Ireland, they could not make head or tail of. They were faulty in construction and formation, and the Committee had to content itself with examining witnesses as to the keeping and auditing of the accounts for Ireland, and asking its Chairman to move for certain accounts during the following Session. The following Session never came. There was a Dissolution in October of that year, and he could not ascertain that the accounts in question were ever actually moved for. In the present decade there was a Home Rule Bill introduced at a time when Mr. Gladstone, the experienced financier, was the Prime Minister, and when the great Death Duties Chancellor of the Exchequer was in office. The Budget for Ireland framed in connection with the Bill only came to a few millions, and yet in one single item on one side of the account the Government was out no less than a sum exceeding a third of a million! Many English gentlemen seemed to think that poor Ireland had been somehow or other a continuous charge upon rich Great Britain. There was never, he thought, a more unfounded notion. In 1833 the first of the returns which really illustrated the situation well showed a balance of £11,389,179, which had been sent from Ireland to the English Exchequer, and how many tens of millions they had been drawing since he was not at the moment prepared to say; but it must very considerably exceed 100 millions sterling. The English Exchequer always had had a large balance of Irish money in their hands. All the money that had been spent in Ireland had been Irish money, and he defied anybody to prove that one single penny of English money had ever been spent in Ireland since the Union.

*THE CHAIRMAN OF WAYS AMI MEANS

I must remind the hon. Member that the general financial relations between Great Britain and Ireland cannot be discussed on this Resolution. The only question now before the Committee is in regard to the imposition of the duty on tea.

MR. ARTHUR O'CONNOR

said his notion was to lead up to the conclusion that in dealing with indirect taxation, including the duty on tea, the special circumstances of Ireland must needs be taken account of, and that it was impossible to appreciate the situation without having regard to that which had led up to them. However, he would content himself by drawing attention to the fact that from Ireland there had been continually flowing into this country a double stream—rental on the one hand and fiscal on the other. The second process of depletion from which Ireland was suffering at this moment, which reduced her tax-bearing capacity, and which had to be borne in mind when tiny were considering whether they would impose a duty of 4d. in the pound on the consumers of tea in Ireland, was the Disestablishment of the Church. The Established Church was endowed out of Irish property, and its income was spent in Ireland. They disestablished it and its officials, from sextons to archbishops, took their money, and in large numbers they removed from Ireland, generally to this country, leaving Ireland charged, as it was now, with the repayment of the amount to the National Debt Commissioners here. Now they had seen started a third of these processes of depletion in the disestablishment of the existing class of landlords. For the purpose of what was pleasantly called "settling the land question," they had devised a system of land purchase under which the former owner received the price of his property obtained by loan from the National Debt Commissioners. He had now lost his status as landlord, and in a largo number of cases he went away, taking his money with him. But his former property, now in the hands of his old tenants, remained a charge for the repayment of the capital money so advanced. That charge constituted a further drain upon the resources of Ireland which would run for the next 49 or 50 years. He thought he had said enough to show that in any suggested modification, however slight, of the existing system of taxation, its effect upon Ireland was a matter deserving of the first consideration. He came next to the question of the principle upon which, and the mode in which, relief should be given. In reference to this point, he had read very carefully the speeches and writings of several English Members of that House, and especially of the hon. Member for Bodmin. The hon. Member told his constituents at Liskeard that the true principle of taxation was the principle of equal sacrifice—a principle, which required that the richer a man was the bigger should be his proportionate payment. This was a true and a good principle if they started fair, if their initial situation was just all round, but in the present case the condition precedent necessary for the fair application of such a principle did not exist. The right hon. Gentleman the Member for Bodmin did not answer his own question, "Is proportionate payment obtained now?" for he went on to say: — If so, then there is no injustice, because the poor man, be he English, Irish, or Scotch, pays out of his poverty, and the rich man out of his riches. The right hon. Gentleman said "if." The French had a saying that. "With an 'if' you could put Paris in a bottle." But in truth and in fact the rich man did not pay according to his riches, while the poor man out of his poverty paid a most disproportionate amount to the revenue; and as the people of Ireland were, taken all round, poorer than the people of England, they naturally felt the pressure more. The right hon. Gentleman proceeded to argue that if Irishmen were overtaxed, that circumstance was due to their larger consumption of whisky. But this was not a question between Irishmen, Scotchmen and Englishmen who drank spirits. No one suggested that the Irishman who drank whisky in Ireland should be treated differently from the Irishman who drank whisky in England; or, indeed, that there should be any reduction in the spirit duty at all. But the principle of taxing intoxicating liquors was not equally applied. He could not understand why so many Members were so solicitous about the sobriety of whisky drinkers, or why they conceived that Irishmen or Scotchmen were more amenable to fiscal repressive measures in the interests of sobriety when they did not extend the same measures to Englishmen. There were hundreds of thousands, and even millions of people in this country, who consumed intoxicating drinks in the form of beer at one-sixth of the duty which was collected from those who took alcohol in the shape of spirits. But this was not a question of alcohol only. When it was shown that in the matter of alcohol there was differential treatment according to the mode of consumption, only part of the case was stated. Was tobacco taxed in order to reduce consumption, or to promote a right way of living? Was it deemed to be in the fitness of things that smokers should be taxed in order that non-smokers might be benefited? What was to be said about tea, of which the people in Ireland consumed more per head, though they consumed less alcohol per head, than the people of Great Britain? He asked whether anybody maintained that the hard-working washerwoman was fairly taxed by means of tea according to her resources when compared with the rich man or the poor man, who did not drink tea, and possibly regarded it as something fit for Orientals and old women? Again, were coffee and chicory and dried fruits taxed with the object of either promoting a right way of living or diminished consumption? No; one and all of these taxes were open to a common objection.

*THE CHAIRMAN OF WAYS AND MEANS

Order, order! The hon. Member is not entitled to take a general survey of the taxation of this country on the Resolution before the Committee. That Resolution relates only to the tea duty, and the hon. Gentleman must confine himself to that question.

MR. ARTHUR O'CONNOR

said he understood it had been the custom that a general discussion on taxation should take place on the first question put from the Chair.

*TIHE CHAIRMAN OF WAYS AND MEANS

No; the general custom which has been followed this year is that the general discussion is taken until a Resolution is passed. The first Resolution, the income tax Resolution, has been passed by the House.

MR. ARTHUR O'CONNOR

said he would observe the ruling of the Chair. Tea was the luxury of the poor, and it was not the luxury of the poor, but the luxuries of the rich that should be taxed. It would be less unjust to increase the taxation on man-servants than it would be to maintain the present tea duty. He thought he had already shown that any reduction in taxation that could be made should take place in the indirect rather than in the direct taxation division of the revenue. There was some ground for relieving the numerous consumers throughout the country who at present contributed beyond their means as compared with the more affluent members of the community, and he had good reason for urging that any alteration in the duty should be such as would afford equal relief to Ireland to that which was afforded to Great Britain, and even more. But the Chancellor of the Exchequer might say that if a man proposed a reduction of taxation, he must be prepared to show that there is room for the reduction. He would remind the right hon. Gentleman that last year he had calculated a balance for contingencies of a little over £100,000, with the result that he had a balance considerably exceeding two millions. This year the right hon. Gentleman estimated for a balance for contingencies of £500,000. There was no reason whatever to suppose that the present year would be less prosperous than the past. Very opportunely there had been issued a small Parliamentary Paper giving the figures of the trade and navigation of the United Kingdom during the first four months of the current year. What had been the Treasury experience of the prospects of this year? He found that on coffee, currants, raisins, tea, spirits, wine, and tobacco, there was a substantial increase—not of rive per cent, as last year showed upon the previous year—but of something nearer eight per cent. There was abundant reason, therefore, for concluding that the balance for contingencies of half-a-million, which the Chancellor of the Exchequer anticipated on his present Budget, would considerably exceed two and a-half millions. The Chancellor of the Exchequer would assuredly obtain a sum of more than two millions in excess of his balance for contingencies, and, therefore, he was well able to reduce the tax on tea by one-half.

On the return of the CHAIRMAN of WAYS and MEANS, after the usual interval,

MR. G. C. T. BAUTLEY (Islington, N.)

observed that the hon. Member for East Donegal, in moving to reduce the duty on tea from fourpence to twopence per pound, had raised the great question of the relative incidence of direct and indirect taxation. This was a subject in which he had himself, for a long time, taken great interest, and in 1889 he ventured to bring the matter before the House. He then argued that, owing to the system of direct and indirect taxation, the poor man paid more out of his one pound than did the rich man out of his many pounds. Since then, however, it was only right to say that a good deal had been done in the direction of reducing indirect taxation, so that it should fall less upon the poor. The question was whether they had gone far enough in this direction? He said that the inequalities of taxation still existed, and that, to a certain extent, the poor man still paid more out his small income, relatively per pound, than the rich man. But when they came to consider how the taxation was to be adjusted and put right they encountered many difficulties, and he thought he should be able to show that, by the Amendment before the Committee, the anomalies that would be produced would be as great as those which existed now. It, was impossible by any system of indirect taxation to get a theoretical and absolutely accurate arrangement by which the incidence of taxation was proportioned exactly to the income of each individual. Take the-question of tea. Say there was a teetotal and poor family of five persons, who use! half-a-pound a tea per week. Under the present rate that family paid 2d. per week to the revenue, or 1s. 8d. per year each person to the State. If the family were to pay anything at all, was it an. unreasonable thing that they should pay 1s. 8d. each for the security, peace, and protection of the State, and all the advantages of belonging to a highly-civilised State? As long as they maintained a system of indirect taxation, which included alcohol and various adjustments in tea and tobacco, they could not do away with the anomalies which must exist under that system. No one would suggest that, for the sake of an absolutely theoretically perfect system of taxation, the duty on alcohol should be taken off, because the evil which would ensue from that would be greater than the evil which now existed. Supposing they could get over all the anomalies by doing away with indirect taxation, which produced something like £47,000,000 of their revenue, and could raise the whole by some more direct system, let them consider how the balance sheet would possibly be made out. The hon. Gentleman who moved the Amendment, suggested that other subjects should be taxed, instancing the two of man servants and persons who had large gardens. But, from many practical standpoints, such a proposition was, on the face of it, quite impossible. If only half a farthing per head per day was paid on an article consumed by the mass of the people, it would produce a revenue of £7,000,000 per annum. To place an exorbitant tax on men servants would have the effect of rendering the man servant a thing of the past; and the result of taxing large gardens would be that they would be broken up and built upon, creating greater evils to the community than that which they sought to cure. If they did away with indirect taxation, the only possible sources of income were the death duties or the income tax. Obviously they could not take a large sum from both these subjects, because if they enormously increased the death duties they would reduce the amount payable as income tax; and if they enormously increased the income tax, they must ultimately reduce the death duties. The whole corpus of the death duties was roughly about 165 millions a year, and it would take 30 per cent, of that amount to raise the sum now raised by indirect taxation. If they excluded the smaller estates, it would take 30 per cent, on all estates between.£10,000 and £100,000; 50 per cent, between £100,000 and £1,000,000; and the whole of those over £1,000,000 to raise the amount now raised in a simple and easy way by the present system of indirect taxation. As regards the income tax, it would require to produce the amount now raised by indirect taxation a 3s. tax on incomes between £1,000 and £2,000; 4s. on incomes between £2,000 and £5,000; 6s. between £5,000 and £10,000, and 10s. over £10,000. There was a common idea that it was easy to raise an unlimited amount upon income tax and death duties, but if they attempted to enormously increase these sources of revenue, they would kill the goose that laid the golden eggs. It was impossible to adjust with strict theoretic accuracy the individual burden of taxation upon rich and poor so long as the indirect taxation on alcohol was maintained. The only plan of relieving the burden on the poorer classes was by making up to them in other ways. Education in all its branches had become an enormous means of readjusting taxation between rich and poor. The expenses of sanitation and the facilities for obtaining better dwellings were advantages enjoyed directly by the poor, and only indirectly by the rich. It was by these means, rather than through any attempt to make the system theoretically accurate, by removing indirect taxation, that justice would be done and benefit conferred all round.

MR, J. A. PEASE (Northumberland, Tyneside)

agreed that it was desirable to continue the taxation on alcohol, and said so long as that was done there must be some anomalies in our system of taxation. But the present seemed to him an opportune moment to relieve the taxation on the necessaries of life. [Cheers.] The present Amendment only proposed to reduce the tea duty from 4d. to 2d. He would like to see it abolished altogether. During the past two years, owing to the increase of the revenue, the incidence of taxation had rather proved that the indirect had increased at the expense of the direct taxation. Therefore, there had been really a reversal of the policy of successive Governments in the past. Another reason for the abolition of the tea duty was that the cost of collecting indirect taxation was greater than in the case of direct taxation. Some reference had been made to the substituting of other subjects of taxation. He believed there was no necessity for the Government relieving the landlords last year, or giving money to the Voluntary Schools this year in the way they had done. But apart from that, there were subjects which might receive the favourable consideration of the Government. Mining royalties and ground rents might very well be taxed, and would yield an enormous revenue, Then the Government might consider the question of how far it was practicable to prevent the evasions of the death duties which at the present time was going on in this country. It was well known that many rich men were making in their own lifetime bequests to their heirs, simply with a view to evading the death duties. It was most desirable that the Government should prevent the evasion of what was a proper contribution to the Imperial Exchequer. With regard to the tea duty, it had in recent times been levied not so much on China as on Indian tea. Last year the Chancellor of the Exchequer told them that 87 per cent, of the tea imported came from India. That being so they ought to urge the undesirability of taxing for the benefit of our own revenue an article produced by our fellow-subjects in India. A year or two ago we declined to allow the Indian Government to raise a revenue on cotton goods manufactured in this country, and equally we ought to hesitate before we taxed tea produced by our Indian fellow-subjects, especially at a time when India was passing through a very severe famine. The tax was oppressive on the poor of this country. The duty was not an ad valorem, duty, the more expensive teas paying just as much as the cheaper qualities.

*THE CHANCELLOR OF THE EXCHEQUER

observed that, as he had shown last year, the great bulk of the tea was of medium value. Only a very small proportion was of first-class value, and there was no doubt that poor people were more disposed to buy the dearer tea than the cheaper.

MR. J. A. PEASE

urged that it was desirable to get rid of taxes upon the necessaries of life, and said that he should certainly vote for the Amendment.

MR. J. P. FARRELL (Cavan, W.)

asserted that in proportion to the population more tea was consumed in Ireland than in England. It was remarkable how the use of tea had grown. In 1845 the consumption in the United Kingdom was only 85,000,0001b.; in 1895 it had gone up; to 240,000,0001b. Ireland's consumption was 25,000,0001b., and the Exchequer was taking from Ireland at least.£500,000 in duty, and he calculated that out of this sum £300,000 came out of the pockets of the poor. He trusted that the demand made by the Irish representatives would not be met by the usual reply, non possumus. The comments made last week by the organs of the Press—including the highest, The Times itself—ought to have convinced the Chancellor of the Exchequer that it was not a wise policy always to refuse the demands of Ireland. The right hon. Gentleman could well afford to grant this concession, as the estimated revenue for the current year would yield an ample margin. Tea was absolutely free from duty in some of the colonies. [Mr. BARTLEY: "What is the retail price in those colonies?"] He did not admit that that affected the argument. Then in Victoria, South Australia, Tasmania, and Newfoundland the tax on tea was only 3d. Surely the wealthy mother country could afford to follow the example of her colonies in this matter.

MR. HUDSON KEARLEY (Devonport)

said that the hon. Member for East Donegal, who moved the Amendment, approached the question from the Irish standpoint, namely, that all taxes at the present juncture should be resisted, because Ireland was bearing an unfair share of the burden. With that view he, of course, sympathised, but the reason why he intervened in the debate was that he held a strong opinion that the tea duty ought to be totally abolished. He had had some considerable experience in the matter, and he knew that, every time the duty was reduced, an extraordinary amount of annoyance, trouble, and expense was entailed on those interested in the business; and, although he had pledged himself over and again to what was called the free breakfast table, he would sooner that the duty should remain at 4d. than it should be reduced. Still he would not pledge himself not to vote for the reduction, because from one point of view reduction was better than nothing at all, as it would confer a benefit on the consumer; but the reduction of the duty to 2d. would be of no advantage to the duty payer. He would still be a duty payer, whereas if the duty were abolished, he would get rid of all that trouble. But this Amendment gave him an opportunity of putting another point to the Chancellor of the Exchequer, and that was as to the justification of charging those who paid the duty ¼ per cent, in addition. That was an exaction which could not be justified, and it was only fair that the Chancellor of the Exchequer should give the duty payer a quittance of it. They were told that it was charged in order to defray the expenses of collection; but surely, with an imposition of as much as 4d. a lb., this additional charge should not be made. If the Chancellor of the Exchequer was going to concede the 2d. a lb. asked for he would beg and implore him to get rid of the duty altogether.

MR. J. DILLON (Mayo, E.)

said that he would also be glad to see the tax on tea abolished, but its reduction by twopence per pound would at least be n good beginning. It seemed to him that one aspect of the question had not been sufficiently emphasised by previous speakers, and that was the question of economy. If the Chancellor of the Exchequer was to take off a tax which would make a hole in the revenue to the extent of £2,000,000 he must, of course, make it up by putting on another tax, or by curtailing expenditure. Never before in the history of the country had so favourable an opportunity presented itself to a Chancellor of the Exchequer to lighten the burden of taxation as during this tide of prosperity in the past two years. The Exchequer had been overflowing with receipts, and the surpluses had been large and unexpected. Those surpluses would have enabled the right lion. Gentleman not only to waste money on the Army mid the Navy, which appeared to be a mania at the present day, but also to take off taxes. The reduction in. the tea duty would reduce the revenue by about two millions. But in the present year there had been a million squandered in a grant to Egypt, and now there was to be a squandering of £200,000 in fresh armaments for South Africa, an expenditure which would probably lead to the waste of many millions. There was a special reason why the Irish Members desired this reduction of the tea duty. The tax on tea took from the people of Ireland, because they were poor, about three times what would be a fair proportion for Ireland to pay on this or any ether tax. In 1895 the tax on tea realised from England £2,850,000; from Ireland £524,000, and from Scotland £370,000. Thus Ireland paid about one-sixth of the amount paid by Great Britain in the tax on tea. According to the Report of the Financial Commission the highest proportion Ireland ought to pay in taxes was l-20th, as compared with Great Britain. Ireland paid £363,000 more than her fair proportion at the lowest point fixed by the Financial Commission. If the tax on tea was repealed, and the deficiency made up by, say, an addition to the income tax, or the tax on ground rents, the injustice of the present financial system as it affected Ireland would be lessoned to the extent of £363,000. This was a strong ground for causing the Irish Members to feel strongly on this matter. When they raised the question of taxes on drink, they were always met by the sneer that the Irish should drink less whisky; if they would drink less whisky they would pay less taxes. Well, that taunt would not apply on this occasion. Temperance advocates were all in favour of the consumption of tea. The poorer Irish people were all great tea drinkers. It was a remarkable thing to go into a country cottage and find better tea served up than they could get in a London hotel. He thought it showed the good taste of the Irish people. They could find no argument, no sneer, to use against the people because they were fond of tea, and they had no right to penalise the tea drinkers. The revision of this tax would be an act of justice not only to Ireland, but all over the country.

*THE CHANCELLOR OF TUB EXCHEQUER

I have no intention of going into the general question of direct as against indirect taxation. There are some hon. Members of this House who would desire to see no indirect taxation at all. I gather that that is the view of the hon. Member opposite, but it is not my view. I think we have been wise in reducing the proportion which indirect taxation bears to the whole of our revenue, and perhaps the process will be extended; but at the present moment I do not think that it would be wise to extend it. I do not think that it would be wise that, in place of the duty on tea, we should now put another penny on the income tax. I do not gather that anyone except the hon. Member opposite has suggested this, and, therefore, I do not think it necessary to trouble the Committee with an argument on such a proposal. But I should like to say a few words as to the amount of the burthen which the duty on tea inflicts on the poorer classes. The hon. Member for Devonport gave us an interesting speech, but I felt that his natural prejudices were straggling with his sense of public duty. [Laughter.] He said that he should prefer that the tea duty should be abolished, and objected to its being reduced. In that he was pleading for his own trade and not for the public advantage. ["Oh!" and laughter.] I think, on public grounds, the abolition of this duty would be a very doubtful policy. It must be remembered that the tea duty is the only way by which we make large numbers of the population contribute in any way to the Revenue, and I do not think that its remission would tend to that economy which the hon. Member for Mayo advocated in the speech he has just delivered. But does this tea duty press unduly on the people? There is no doubt that the price of tea has very largely diminished in recent years. I have figures here which show that, as compared with 20 years ago, the price of tea has largely decreased. I am speaking of the wholesale price rather than of the retail price; for there is no article which pays the country grocer so well as tea. It is an article out of which he makes his profits as largely and as certainly as the innkeeper makes his profits out of alcohol. That fact diminishes the comparative incidence of the tax upon the consumer, because the consumer, if lie be a poor man in a country village, will probably pay something; like 2s. per pound for the small quantities he buys; and therefore the duty is one thing to the wholesale dealer, but in proportion to the cost of the article a very much less thing to the consumer if he be a poor man. I have compared the decrease in the price of tea and sugar, and although undoubtedly there has been a greater decrease in the price of sugar since 1875, the duty having been abolished the year before, yet tea runs it hard. Then, has the duty stopped consumption? In 1875–76 the consumption of tea was 4.51 1b. per head of the population; in 1895–6 it was 5.77 lb., so that I do not think it can be said that the duty on tea has injuriously affected the price to the consumer, or has decreased the consumption. But I admit that it would give me great pleasure to reduce the duty on tea; and that for the reason which has been urged by lion. Members from Ireland —that tea is largely consumed in that country. But what am I asked to do? I am asked to deprive myself of half the duty on tea, amounting to nearly £1,900,000, in order to benefit Ireland to the extent of something like £250,000 or.£260,000. That is rather like killing a sheep in order to get a mutton chop. [Laughter.]

MR. ARTHUR O'CONNOR

The right hon. Gentleman is scarcely doing me justice. I declined to move anything which would not affect the poorer taxpayers in all parts of the kingdom.

*THE CHANCELLOR OF THE EXCHEQUER

Perfectly. I do not deny that, but he will not deny that three-fourths of his speech were concerned with the grievances of Ireland in the matter of taxation; he put it mainly as an Irish case. The fact is that if, when this matter has been fully inquired into, it is necessary to do something which will re-establish an equilibrium between Great Britain and Ireland in the sense hon. Members from Ireland desire, a very much larger adjustment of taxation in one way or another, either by some great change in our system of taxation, or by large grants for local purposes in Ireland, will be required than could possibly be effected by the change now proposed. I come to my real objection to the Motion. I cannot spare the money. [Cheers.] I have placed before the Committee the expenditure for which I have to provide. Parliament has sanctioned the expenditure. The House must provide for it. Parliament, I think, will sanction the expenditure upon the Navy which the hon. Member for East Mayo talks of as money squandered. Parliament, I think, will sanction the expenditure in strengthening the garrison, in South Africa—["hear, hear!"]—which to my mind is a pledge for peace. [Cheers.] And Parliament, I think, will sanction the other demands which we have made upon the taxpayers, and which we believe are necessary for the advantage of the country. If the money is not to be found by the tea duty, where is it to come from? As has already been pointed out, to suggest that nearly two millions a year could be found by an additional duty upon man-servants or large gardens is simply absurd. Those are the two suggestions of the hon. Member for Donegal.

MR. ARTHUR O'CONNOR

No, Sir. I suggested that, without any addition whatever to taxation, the Chancellor of the Exchequer has an assured surplus which would still enable him to remit the tea. duty.

*THE CHANCELLOR OF THE EXCHEQUER

I am discussing the matter on the supposition that my Estimates of Revenue are accurate. I have given those Estimates to the best of my ability, on the best possible advice, and it is impossible for me to present to the Committee anything more than that which I believe is likely to be realised. And when the hon. Member for Donegal quotes the. Returns for April of our imports as a. sufficient reason for saying that there will be a larger revenue from Customs and Excise in the year than I have ventured to anticipate, I can only say, with all deference to him—for I know the study which he gives to these subjects—that his statement shows he has not mastered the details of the matter at all. These Returns relate to only one month, to begin with. They relate, too, to all kinds of imports besides those which pay duty. I can assure the hon. Member that the duty paid on tea in April is less than the duty paid in the corresponding month of last year.

MR. ARTHUR O'CONNOR

If the right hon. Gentleman will be good enough t o look at the figures he will see that they relate to the four months from January to April.

*THE CHANCELLOR OF THE EXCHEQUER

But three of the four months have nothing to do with the matter. I am concerned with, the year from the 31st of March onward, and it does not follow that, because the last quarter of the last financial year has been a profitable one, the coming year should be more prosperous. I have provided in my Estimates for a reasonable increase both of the Customs and Excise. I have very carefully gone into the details of that increase, and I should not have been justified in giving any higher figures. The only other suggestion that has been made, so far as I know, is that made by the hon. Member for Northumberland—namely, that I should in some way or other stop what he characterised as an evasion of the Death Duties. I take it he means that people are making gifts in their lives instead of leaving their property to their heirs. In my opinion that is a very proper practice—["hear, hear!"]—and certainly, as long as I am Chancellor of the Exchequer, I will do nothing that would be so tyrannical and so unjust as to interfere with the liberty of a healthy man to dispose of his property to whomsoever he will. [Cheers.] I have no suggestion before me which would in any way compensate for the source of revenue with which I am asked to dispense, being, as I have said, nearly £2,000,000 a year. Whatever the future may have in store, I can only say that for the present it is impossible for me to accede to the Motion that has been made, and, although lion. Members opposite may not approve of the expenditure which we have incurred, and therefore may not feel themselves bound to provide the resources to meet it, I think I may fairly appeal to the majority of the Committee, who do approve of that expenditure and who are, therefore, bound to provide the revenue to meet it, to support me in the course I have taken. [Cheers.]

MR. SYDNEY BUXTON

said the Chancellor of the Exchequer had received the proposal in such a very amiable way that they might hope that, if the chances of fortune were with him and trade improved, he might be able to meet their views on a future occasion. He did not intend to go at length into the question of the merits of direct and indirect taxation, but he desired to say that he did not wish to see all indirect taxation abolished. He did not believe that any Member of the House desired that indirect taxation on intoxicating liquor, for instance, should be abolished or reduced, and he thought that while many Members might think that the duty on tobacco might with advantage be altered, no one desired that a less duty should be levied. But it was indirect taxation on articles of household consumption to which they attached considerable importance. The Chancellor of the Exchequer had said he did not see his way to reduce the duty on tea, though it was quite evident that during the present year the proposed remission would not amount to a loss to the revenue of more than a million and a-half sterling. The supporters of the present Motion felt that, as the right hon. Gentleman had now been in office two years and had had surpluses of £7,000,000 in the aggregate, it was his duty not to bungle away the money as he had done—["Oh, oh!"]—either in expenditure or in giving grants and doles to different interests, classes, and localities, but to reduce the tea duties, which would have done far more to conduce to the personal comfort and convenience of the masses of the people. He was glad the Chancellor of the Exchequer admitted two things, which were very strong arguments in favour of the present proposal. The right hon. Gentleman said that the actual pressure on the consumers of tea at the present moment was not so great as it was some 10, 15 or 20 years ago, because the price of tea had considerably fallen; but, as his hon. Friend pointed out, the fact that the price had fallen had increased the weight of the tax.

*THE CHANCELLOR OF THE EXCHEQUER

Not on the consumer.

MR. BUXTON

did not say on the consumer; but, after all, it came to the same thing. ["0h!"| The Chancellor of the Exchequer had admitted that the consumption of tea had very largely and quickly increased since the last reduction in the duty; and that was one of the strongest arguments in favour of a further reduction. Another reason for urgency was that, while 20 years ago, the proportions of Chinese and Colonial tea consumed in this country were 84 and 16 per cent, respectively, they were last year 16 and 84 per cent, respectively. That was a most satisfactory fact from the Imperial and commercial point of view. ["Hear, hear!"] The argument that the abolition of the Tea Duty would give a certain part of the population immunity from taxation was only true in one sense. Employment, rent, and wages were all affected by the fact that so many millions had to lie raised from the community in taxation. Besides, the amount raised from the Tea duty was comparatively so small—amounting to about 2s. a year on the individual—that its abolition was hardly to be considered from that point of view. It might be said that we ought not to tamper with the basis of taxation; but with its enormous reserves this country would never depend nowadays on the Tea Duty in time of war. He hoped, from the tone of the speech of the Chancellor of the Exchequer, that next year or the year after he would see his way to continue this beneficent policy of reducing the indirect taxation. ["Hear, hear!"]

SIR HOWARD VINCENT (Sheffield, Central)

said that he had advocated the reduction or abolition of the Tea Duty in the House and in the country, and he felt bound to support the Amendment. He was sure that any reduction in the Tea Duty would be very well received. As to recouping the loss to the Exchequer which would follow from the abolition of the Tea Duty, he had no sympathy with the proposal to increase the tax on man-servants; for that would make employment harder to get, though, if the suggestion had been for a tax on the employment of foreigners and German waiters, there might have been something in it. Neither could he sympathise with the suggestion for an increased Income Tax, which was far higher now than it ought to be in time of peace. There was much in what had been said by the hon. Member for Poplar as to the increased consumption of colonial tea. When they j found that the course of trade was tending so much in favour of articles produced in the British Empire as the tea trade was at the present time, they had this additional reason for the Chancellor of the Exchequer taking this matter into his most serious consideration. He had another reason for urging the reduction or the abolition of the duty, and that was that it was paid entirely by the consumer in this country, and did not in any degree benefit any producer in this country. If this tax were transferred from tea to articles which competed with British trade he thought it would be infinitely better for the whole of the community. Two per cent, on the importation of foreign manufactured goods would find the Chancellor of the Exchequer with the £2,000,000 he would require if this Resolution were accepted by the Committee. It might not be possible for the Chancellor of the Exchequer to do so in the present year, but he did venture to assure him that what many supporters of the Unionist Party desired was a transference of this indirect taxation to taxes which would benefit the trade and labour of this country. The Chancellor of the Exchequer would readily find a new source of revenue in the large and increasing importation of goods which competed with the trade and labour of this country, and he hoped that his right hon. Friend would at some future time be able to reduce, if not to abolish this duty upon an article produced largely within the British Empire, and one which was paid entirely by the consumer.

MR. J. W. LOGAN (Leicester, Harborough)

said he heartily supported the Amendment, and regretted that it had not received warmer and more strenuous support from the Front Opposition Bench. The Chancellor of the Exchequer suggested that, if the duty were removed, it would have the effect of taking off the shoulders of large portions of the community the only remaining contribution which they made towards the maintenance of the country. Who were those people? The very poorest of the poor—the people who could afford to drink nothing but tea. This duty was a heavy tax on the poorest people of the country. He could not for the life of him understand how well-to-do people could be comfortable while they knew that large portions of the population of this country had to pay what was a heavy impost upon their slender means. In a rich country like England they ought to take off the shoulders of people this miserable tax of 4d. a pound upon tea. On the other side of the House there were many Members who had been sent to the House by the agricultural labourers, and lie sometimes asked himself what the agricultural labourers were thinking of when they voted for those hon. Gentlemen. But on behalf of those poor men who, to the eternal disgrace of England, only receive 9s. or 10s. a week wages, he claimed support for the Motion from their representatives on the other side of the House. The Chancellor of the Exchequer had asked how the loss to the revenue was to be made up if the duty on tea were repealed. For his part he would a thousand times rather have a penny in the pound added to the income tax than that poor old women and agricultural labourers should be taxed to the extent of 4d. in the lb. on tea. The Government had done a great deal for the wealthy people of the country. They had given two millions a year to the rich landlords, and £600,000 a year to the parsons. Let the Chancellor of the Exchequer now commemorate the 60th year of the glorious reign of Her Majesty by knocking off the tax on tea.

MR. LOUGH

hoped that hon. Members opposite who represented the masses of the people in large centres of population would join in the excellent example set by the hon. Member for the Central Division of Sheffield—[Sir HOWARD VINCENT: "Hear, hoar!" (Laughter.)]—in saying that he would vote for the Motion. He thought the speech of the Chancellor of the Exchequer was extremely interesting. It was probably the best speech in support of the Irish case that had been delivered in the course of the Debate. He hoped the Irish Members would take to heart the speech of the Chancellor of the Exchequer. The right hon. Gentleman had pointed out that in order that Ireland might get £650,000 he was asked to give up two millions. The right hon. Gentleman had said in effect, "Don't be so solicitous about Great Britain; ask what you want for your own country." He would do it if his hon. Friends from Ireland did not, and he would move at a later stage that the tea tax should be taken off Ireland without being disturbed in. Great Britain. The right hon. Gentleman said that no suggestion was made as to where the two millions might come from. Why should not a tax be put upon silk rather than on tea? In that way two millions might easily be obtained. There would be just as much free trade in the one tax as in the other. It was not true to say that if the tax on tea were taken off some people in this country would pay no tax at all. If the poor did not pay in tea they paid in depreciated wages and increase of rent. He pointed out that when a little tax of £50,000 was put on a trade, the trade was always glad to pay it; they were not taxing the trade, for they levied, not £50,000, but £200,000. [Cries of "Oh!"] The Chancellor of the Exchequer said the proportion of the duty to the price of tea was less now than formerly. He was entirely wrong about that. [Ministerial cries of "Oh!"] He knew something about it. It was no disadvantage in that House for a man to talk of what he understood. Those Members very often talked the most who knew the least. [Cheers.] The Chancellor of the Exchequer said the average price of tea was 2s. per lb. Throughout the country it did not exceed 1s. 6d. or 1s. 4d., as the retail price to the consumer. So if the duty was 4d. in the lb., that was no less than 25 per cent, on the retail price. The Chancellor of the Exchequer created a great deal of discontent in the trade by his statement of the high price at which tea was sold. But if they left out the expensive qualities, the average price of tea sold in England was 6½d. or 7d. in the public sales, and on this a duty of 4d. in the lb. was levied. He supported the Motion of the hon. Member for East Donegal.

MR. ARTHUR O'CONNOR

contended that the Chancellor of the Exchequer had in no way answered the case he put forward. His contention was that the Chancellor of the Exchequer could afford this remission of duty without disturbing any portion of his Budget. He said he had to meet certain expenditure which the House had sanctioned for the Navy, for war purposes, and other matters. But his own point was that, without disturbing any of this sanctioned expenditure, there were abundant funds at the disposal of the Treasury. Last year the Chancellor of the Exchequer reckoned for a balance of £433,000, and this year for a balance of £503,000. But instead of £433,000, he realised £2,442,000. There was every indication that this year they would have a repetition of the experience of last year, but on a larger scale. The right hon. Gentleman did not deal with this, nor did he explain why he anticipated that we had reached high-water mark. From the figures the right hon. Gentleman had given, he must anticipate that this year would be more prosperous than last- year. If we were still on the rising tide, and the Chancellor of the Exchequer had £2,442,000 where he expected £433,000, might it not be expected that he would receive.£2,500,000 where he expected £50:5,000? He himself had taken the official figures from the 1st January, 1897, and had compared them with the figures of the first four months of 189(5, and they showed conclusively that the progress and development and increased duty on articles was greater now than it was last year. The contention that he would have £2,500,000 surplus at the end of the financial year had not been touched by the right hon. Gentleman. If the unofficial Estimates proved to be true against the Treasury Estimates, would the Chancellor of the Exchequer next year, if he found he had £2,000,000 beyond what he estimated, agree to a reduction of 2d. in the 1b. on the tea duty?

THE CHANCELLOR OF THE EXCHEQUER

I am afraid I can make no promise with regard to next year's Budget.

Question put, "That the words 'four pence' stand part of the Question."

The Committee divided:—Ayes, 209; Noes, 95.—(Division List, No. 200.)

Main Question put and agreed to.

Resolved, That the Duty of Customs now payable on Tea shall continue to be charged, levied, and paid on and after the first day of August, one thousand eight hundred and ninety-seven, until the first day of August, one thousand eight hundred and ninety-eight, on the importation thereof into Great Britain or Ireland (that is to say):—Tea the pound Four Pence.

Resolution to be reported To-morrow at Two of the clock; Committee report progress; to sit again upon Wednesday.