FINANCE BILL. (Hansard, 13 June 1898)

HC Deb 13 June 1898 vol 59 cc59-96 59

§ The House went into Committee upon I the Finance Bill.

§ Upon the Amendment, page 1, postpone clause 1.—(Mr. J. A. Pease.)

§ * MR. J. A. PEASE (Northumberland, Tyneside)
I placed upon the Paper a notice to postpone clause 1, for, by post- 60 poning clause 1 and clause 2, it would be competent in Committee to raise a clear issue as to the disposal of the surplus in the hands of the Chancellor of the Exchequer, and whether it should be given in relief of the duty upon tobacco or in relief of the duty upon tea. I understand, however, that the right honourable Gentleman is not prepared to accept the suggestion that clauses 1 and 2 should be postponed—he is not prepared to give the Committee the only opportunity which they have of raising a clear issue; therefore I move that clause 1 be omitted, in order that we may be permitted to discuss the merits of the reduction of the duties upon tea as against a reduction of the duty upon tobacco. I think it is a little unfortunate that the right honourable Gentleman will not allow the postponement of clauses 1 and 2, because his action may necessitate two Debates—one in connection with the tobacco duty and another in connection with the duty upon tea. The right honourable Gentleman the Chancellor of the Exchequer stated that he was prepared to take an article in connection with indirect taxation, which was an article having a large consumption, with the view of obtaining an ultimate gain to the revenue. Now, I am of opinion that we ought to reduce the duty upon that article upon which there is the greatest certainty of the relief going to the consumer, and to deal with that article which is consumed by the greatest number in the community. Now it is the poorer classes who consume tea in large quantities, and it is they, rather than the rich, who pay a large portion of their income in indirect taxation. The honourable Member for Halifax stated that the average indirect taxation paid by the working man amounted to £1 16s. 10d. per year out of his total earnings. That is a sacrifice out of all proportion in comparison with that which the rich man pays out of his income. Now, the right honourable Gentleman the Chancellor of the Exchequer has undertaken to prove that the benefit which he proposes to confer will reach the consumer, and he has stated that some of the tobacco will be reduced in price, while some will be increased in value by the reduction 61 of moisture. Now, I believe it is admitted upon all sides that the working classes, who are the main purchasers of tobacco in the United Kingdom, can only look for benefit by reason of their securing a drier article to smoke, but the Chancellor of the Exchequer has said that we can add water to our tobacco. Unfortunately, the Chancellor of the Exchequer is under some disadvantage, he being a non-smoker, for my experience has been that tobacco which has been wetted very soon after becomes mouldy. Then there is this consideration: when a purchaser goes to a shop to purchase an article he does not want an article which he has to manipulate afterwards. He desires an article which he can consume without any manipulation upon his part. Now, the 5 per cent, by which the right honourable Gentleman the Chancellor of the Exchequer is going to reduce the moisture is, I am informed, only equivalent to 2½d. in the pound, and if he is not going to give the small consumer more than five per cent., by the reduction of moisture, it must be apparent to the Committee that the working classes of the country can by no possibility obtain a greater benefit than 2½d. out of the 6d. by which the right honourable Gentleman proposes to reduce the duty upon the unmanufactured article. There is another point, as to which it is evident the Chancellor of the Exchequer has no experience, and that is in regard to that which regulates the consumtion of tobacco in relation to the amount which a person smokes. It is not the quantity he consumes when smoking which regulates the amount; it is the amount of leisure upon his hands or the occupation at the moment. Now, if the tobacco which the working classes are going to smoke in the future is going to be so much drier, it is obvious that a man's pipe will not last so long as now, nor will he derive so much satisfaction from it. He will naturally require two pipes instead of one, and he will find at the end of the year that he has spent more in tobacco than he otherwise would. So that both in the satisfaction he derives from his pipe and the increased cost of his tobacco he finds himself worse off 62 than at present. On that ground, if on no other, the working classes will receive no benefit from this reduction. I also have been informed by the trade generally, and others who have some knowledge of the trade, that the trade itself cannot afford to give more than 3d. to the consumer, having regard to the reduction of moisture in respect of this relief which the right honourable Gentleman the Chancellor of the Exchequer expects to give to the country. Those tobaccos which will be reduced in price will only be those of the most expensive, character, or which are purchased in very large quantities at a time, and in proportion; to cheapness and the smallness of the quantities purchased, so does the benefit decrease. You have, therefore, a graduated scale, whereby the rich man derives the most advantage out of this article, whilst the benefit to the working I classes diminishes to a vanishing point. No doubt there is a large quantity of tobacco consumed in this country, but when we compare the amount of tobacco consumed in this country with that which is consumed upon the Continent we find it is very much less. In the United Kingdom the consumption is one pound and three-quarters per head of the population, as against four pounds per head on the Continent. Tea is an article of very much larger consumption than tobacco. Take sour imports. Of tea we import 265,395,000 pounds every year: of tobacco we import 83,559,000 pounds every year, or a proportion of three to one in favour of tea. Take the value of each article, and we find tea £10,563,000, and tobacco £2,411,000, or a proportion of four and a half in favour of ten. Take the consumption per head of the population, and you have five pounds and three-quarters weight of tea, as against one pound and three-quarters of tobacco. Taking the exports, you have 34,000,000 pounds weight of tea against six and a half million pounds weight of tobacco. With regard also to transhipment, that of tea exceeds that of tobacco. In these figures I have taken unmanufactured tobacco as the tobacco affected by this relief. Now I come to the question of employment. The 63 Chancellor of the Exchequer has stated that 95 per cent, of the imported tobacco gives employment to the British industrial classes, but the 232,000,000 pounds weight of tea gives employment to a far greater number of people. It gives employment to those engaged in the shipping industry, and those engaged in handling, mixing, and selling it—employment far in excess of that which is given by 83,000,000 pounds weight of tobacco. Perhaps, the most important point which we ought to consider is that we obtain 90 per cent, of the tea which comes to this country from our dependencies, Indian and Ceylon. Of the 232,000,000 pounds weight which arrives in this country, 211,000,000 come from India and Ceylon, and only 21,000,000 pounds from China. I believe that every Member of this Committee is in favour of drawing together more closely the bonds which unite the mother country to her dependencies, and I hope this Committee is not going to allow this opportunity to pass without attempting to further cement those bonds and ties which now exist between this country and India and Ceylon. Not only will the consumer gain a more direct benefit if this relief is given upon tea, but the hundreds and thousands engaged in the tea industries will have their industries increased and their positions improved. I welcome any change from indirect to direct taxation. I believe the fact of indirect taxation promotes waste in the community, whereas direct taxation will enable every taxpayer to know what he pays; and it is more likely to cause him to look with a vigilant eye after the spending department of this country if he knows what he is paying into the Exchequer. Few of the working classes realise, when they are paying threepence an ounce for tobacco, that twopence of that threepence goes direct to the State. But this proposed reduction is not enough to enable the price to be reduced by one halfpenny per ounce. If this rebate is given upon tea there is a far greater certainty of the reduction reaching the consumer than if it is given upon tobacco, and I do not think I need occupy the time of the Committee by arguing it, because it is too well known that if the duty 64 upon tea was reduced by twopence, every person who purchases tea would derive a benefit of twopence per pound in the price he would pay for tea, from it. Tea is largely consumed in every household; tea is generally consumed once, twice, or three times in every 24 hours. If you take the working classes you will find that, as a rule, a workman buys half a pound of tea each week; but if you take tobacco you will find that the average amount consumed by him is eight or twelve pounds a year. Taking eight pounds as the average, if we divide the tobacco which comes into this country by that figure we find only one in four of the population in this country are smokers. Therefore, it appears to me that the right honourable Gentleman the Chancellor of the Exchequer is only prepared to relieve one-fourth of the community, in connection with an article of consumption, and of those 10,000,000 who will be directly affected, the greater number will get no benefit whatever from this proposal for their relief. I am in favour of relief being given upon tea rather than upon tobacco, because it will reach the poorer classes of the community. The right honourable Gentleman the Chancellor of the Exchequer has already given relief to the richer classes out of the large surpluses which he has had at his disposal. I do urge the Committee to do something to-day for the poor rather than for the rich, by allowing this money to be utilised, by giving a reduction upon the duty upon tea, which is a necessity of life to the poorer classes, rather than let it go to the relief of the duty on tobacco, which is, more or less, a luxury. I believe nothing has endeared Mr. Gladstone's name to the whole community more than the fact that he was the medium through which so many reductions in taxation took place in times gone by. Now, I hope the name of the right honourable Gentleman the Chancellor of the Exchequer may also be associated with a relief in taxation upon an article which is necessary to the poorer community. I trust that it will not be said that the Chancellor of the Exchequer, when he has all this money to dispose of, has neglected again the interests of the poor rather than those of the wealthy. I hope it will not be said that 65 in selecting tobacco, rather than tea, he has, consciously or unconsciously, been giving relief to a staple industry of his own particular constituency, rather than selecting an industry by which the whole nation would be benefited. The whole argument of his speech was that the revenue would be made up by the increase of consumption, and therefore tobacco is selected. Let the Conservative and Unionist Party recognise that they cannot claim any popularity for their Government in the country by this reduction if this rebate has been given by the Chancellor of the Exchequer merely with a view to the ultimate gain which it will yield to the revenue. I would merely, in summarising my points, say that in taking tea you are not surrendering any article of taxation, and therefore, in taking tobacco, you reap no advantage; that the reduction, by five per cent., of the moisture in tobacco, as proposed by the Chancellor of the Exchequer, is absolutely inadequate, and is not equivalent to the reduction in the duty of sixpence in the pound upon the manufactured article; that the tea trade employs, in all its branches and its large shipping industries, more employees than the tobacco trade; that our fellow-subjects in India and Ceylon, the tea-producers, ought to share the benefit of the reduction, and we should thereby strengthen the bonds by which we are united to them; that the consumers of tea in this country are far more numerous than the tobacco-consuming community: that the reduction of the duty upon tea reaches the consumers with certainty, whilst in the case of tobacco it is more than doubtful; that in the case of tobacco it will only reach the trader, manufacturer, and merchant, and the rich customer, whilst, if tea is taken, the poor and the many will receive the benefit, and appreciate the boon.

§ * SIR J. LENG (Dundee)
In the Debate upon the Second Reading I ventured to say that if in the interval between that time and the Committee stage we had some further information as to what the ultimate result of this reduction of sixpence in the duty upon tobacco would be, it would be an advantage. I hoped there would have been some observations made upon the subject in the interval. Now, according 66 to my information, the reductions that have been made by several wholesale dealers to the retailers are so small that it is quite impossible for the retailers to give the consumers any advantage whatever. I mentioned, the other night, the fact that a circular had been issued by a wholesale firm in Scotland to the effect that the reduction which they were able to give out of the sixpence would only be one penny on the pound. I have no doubt that the right honourable Gentleman the Chancellor of the Exchequer calculated that out of the sixpence at least fourpence would go to the consumer of tobacco when he purchased it. Now, if only one penny be given to the retailer, the consumer will get nothing whatever. I have been looking for a statement of declarations upon the part of large wholesale dealers in England, but I have not seen what is going to the retailers and the consumers. If it be the fact that no direct pecuniary advantage is going to the consumers, I think the right honourable Gentleman must be greatly disappointed, and certainly the smokers of tobacco in this country will regard the apparent concession made as entirely a delusion. It is a large sum which the right honourable Gentleman is giving away—a million sterling. Even if half of it had gone to the consumers it would have been half a million, bur it is, apparently, to be so manipulated that five-sixths will go to the wholesale dealer, one-sixth to the retail dealer, and the consumer will obtain nothing at all. If these are the facts, it will be a great disappointment. We have here one gentleman, principally connected with one of the largest wholesale establishments in the country; and if he would enlighten us upon this matter it would be a very great advantage to us in this Debate. But without entering into the merits of tea or tobacco, I think the Committee should be satisfied as to whether it should be the consumers or the manufacturers, who have made already a large and satisfactory profit, who are to derive the benefit of this reduction.

§ SIR WILLIAM HARCOURT) (Monmouthshire, W.
Before the right honourable Gentleman the Chancellor of the Exchequer speaks, I should like to ask him one or two Questions, the replies to which, I think, would be very useful to 67 the House. My honourable Friend who has just sat down has asked a very important question. What would be the effect upon the price to the consumer of the proposed reduction of this duty? I have endeavoured to obtain some information upon that subject from one whom I consider of the highest authority upon these subjects, and this is the information which I have received. I am told that there are two classes of tobacco. There is one which we may call the lower class, which contains the greatest amount of moisture, and which is consumed by the mass of the working classes. Up to the present time the proportion of moisture added to this class of tobacco has been 35 per cent. Five per cent, of that amount of moisture is now to be prohibited, so that in future, as I understand, the extreme moisture which will be allowed will be 30 per cent., and in the pound of tobacco in future there will be five per cent, more tobacco than there is now. Therefore, there will be more tobacco in the pound and more tobacco in the ounce than there has been previously; but I am also told that the change which will take place in that class of tobacco consumed by the masses of the people will not allow of any diminution being made in the price per ounce. There will be a commodity supplied which will contain less moisture and more tobacco, but the price will remain the same; that is what I am informed will be the way in which it will work out. Of course there is another class of manufactured tobacco which at present contains less moisture. In that I suppose the amount of moisture will remain the same, and in that there will be some room for some reduction in, price. Upon that I shall be glad to know what the right honourable Gentleman would suggest as the probable reduction in price. At how much is that reduction estimated by experts? It is not the lowest class of tobacco but the highest upon which the reduction will be given, and if that be so all you will have will be the fact that on the largest amount of tobacco consumed—the lowest grade—there will be no reduction in price, but there would be an increase in quantity; which, of course, would be to the benefit of the Exchequer, because in each ounce of tobacco as sold 68 there will be more leaf consumed, and therefore a larger yield to the revenue. Now, I do not quite understand the figures of the Chancellor of the Exchequer in regard to the cost of the proposed reduction in the tax, and I ask him to give some explanation to the House upon them. The information I have received is that upon the clearing of tobacco last year, which is given to me as £68,000,000 sterling, the remission of sixpence would give a loss of £1,700,000. Now, I presume that when the Chancellor of the Exchequer calculated that loss at £1,120,000, he must, if my figures are right, have allowed for a recovery of more than £500,000, which seems to me to be a considerable sum to recover; upon that we must have some explanation. If we compare the merits of a reduction upon tobacco with the merits of a reduction upon tea, the Committee ought to know exactly what is the cost to the revenue of the one as compared to the other, and what the consumer will receive on the one in proportion to the other. I grant that the duty upon tobacco ad valorem, is a very much higher duty than that upon tea, but the duty upon tobacco is one which apparently the consumer is willing and able to pay. That is to be seen in the immense increase in the yield of the tobacco duty, which in 1883 was £8,800,000 and in 1897 £11,000,000, which showed that there had been a very large increase in the produce of the duty. Now, with regard to the duty on tea, I am told by a very high authority upon that subject that any reduction that was made in the tea duty would go directly to the consumer. Great tea dealers have talked to me upon that subject. Now, while it is a remarkable fact that all the tea dealers agree in saying that the whole of a reduction made in the duty on tea would go to the small consumer in point of price, the dealers in tobacco say that that will not be the case so far as tobacco is concerned. The reduction of twopence upon the tea duty only resulted at once in a loss of £1,000,000. The Chancellor of the Exchequer estimated that it would cost £1,500,000, but it never did cost £1,500,000 since the reduction of tea in 1891. The Chancellor of the Exchequer stated that this reduction would cost at once £1,700,000.

§ * THE CHANCELLOR OF THE EXCHEQUER
£1,600,000.

§ * SIR W. HARCOURT
Very well, £1,600,000. Now, I should like to have some explanation of that; that is very nearly the figure at which the Customs authorities placed in 1891 the estimate of loss on the tea duty. The Customs Revenue put it at £1,500,000, and I should like to know why a similar reduction now upon tea should cost more than it did in 1891. You cannot expect to recoup so much upon this as upon a reduction of the tea duty. I do not see that the loss by a reduction of twopence on the tea duty ought to be more than £1,200,000, and I must say I should like to hear an explanation of the figures which the right honourable Gentleman the Chancellor of the Exchequer had upon that subject. Perhaps the right honourable Gentleman will throw some light upon those two points to which I have drawn his attention. If he does that, and if we have some explanation upon the matter, we shall be then able to deal with it.

§ MR. WILLOX (Liverpool, Everton)
I desire, Mr. Lowther, to meet the challenge which has been thrown out by the honourable Gentlemen On the opposite side of the House as to the effect of the reduction of the duty on tobacco, both upon the merchants and the retail dealers. I will not discuss at the present time the relative merits of a reduction of the duty upon tea and of a reduction upon the duty on tobacco, but I should like just to point out that, while the general public have not any idea of what the sixpenny reduction in the duty on tobacco means, it has entirely failed to realise the anticipations of the Chancellor of the Exchequer upon the subject. By the reducing of the moisture of the tobacco there is this fact to be considered, that it has a more serious effect upon the price of tobacco than the general public are aware of. When prosecutions have taken place in the trade it has always been assumed upon the authority of the Excise that one per cent, additional moisture represents one halfpenny in the price of the article sold. As a fact, it has represented more, so that if we take the moisture and estimate 70 it upon that authority, it represents 2½d., although really it estimates more than that sum; so that it is impossible for the manufacturers to give, and unreasonable for the consumers to expect, that they should derive the benefit of the whole of the sixpenny reduction, seeing the net result upon the higher grade tobacco is not really sixpence, but three-pence, or something like that. If the Government and the public bear that fact in mind they will see that it is impossible that there can be any reduction in price in any of the lower grades of tobacco which contain a larger percentage of moisture there. The right honourable Gentleman the Member for West Monmouth has accurately described the different phases of the trade, and correctly represented the amount of moisture introduced into the different grades of tobacco. It is quite true that the great bulk of tobacco in this country is consumed by the working classes, and is of a quality which is invariably retailed at threepence per ounce; that article has always carried the maximum amount of moisture, and the Chancellor of the Exchequer would perhaps permit me to say that, even in that case, it would be quite impossible to reduce that price of threepence at the present time, for reasons which must be obvious and apparent to everybody. In the first place there is a steady and inevitable increase in the price of raw material used, and if the right honourable Gentleman the Chancellor of the Exchequer had not altered, as he has done, the duties upon tobacco, there is no doubt that the people of this country would, within a very short period of time, have been required to pay an increased price for the article. With regard to the actual profit realised by the manufacturer and the dealer with whom it has to be divided, I may say, and I speak with authority, that the invariable fixed price at the present time for roll and plug tobacco, as they are called, is 3s. a pound paid to the manufacturer. Out of that 3s., 2s. 8d. goes immediately to the Exchequer, which only leaves a balance of fourpence for the cost of material and labour and manufacture. Of course, I am well aware that there was some compensation to be found in the amount of moisture introduced into the tobacco. 71 It is not that it is necessary for the manipulation of the reduction. It would be quite impossible to manufacture tobacco unless it was moistened, and I think it will be found in practice that we have reached almost the limit beyond which it would be either practicable or desirable to reduce the amount of moisture. Bearing in mind that figure, the fact that of the sale price of 3s. 2s. 8d. goes to the Treasury, and that the article is retailed in small quantities, with a great amount of expenditure in the shape of rent, and at the expense of great labour and trouble, at threepence per ounce, it will be seen that the working classes who have chiefly been used as the stalking horse in this matter, have no especial grievance or cause of complaint. The right honourable Gentleman the Member for Monmouthshire called attention to the fact that there was nothing lost on tobacco of a higher grade with less moisture, and sometimes none at all. I may, for his information, and for that of the Committee, say that in that article, where the duty is reduced in value by sixpence, and where the moisture is not to be a factor, there is a substantial and all-round reduction, which will probably benefit the consumer—a reduction fair in amount—I think I am right in saying it will be a reduction of at least fourpence upon the higher grade of tobacco. I think it will be seen from my remarks that, while the lower grades of tobacco have not in detail been reduced, because the conditions of manufacture will not permit it, there is a substantial reduction upon those classes of tobacco where it has been possible to make it. I am sure it must be in the interest of manufacturers, as well as the vendors, to grant every possible concession that the grades of tobacco will permit, because I know of no trade in which competition is more keen, and in which the cutting of prices has been carried to such an extreme limit than that of the trade I am now referring to. In fact, I think the public will have a share in the goods which he requires, so far as the principles of business will permit, an adequate participation in this reduction. There is also another point to which sufficient importance has not been attached in this Debate. Tea proceeds directly from the producer to the retailer 72 and consumer. It is not manipulated; it does not employ the industry of this, country. The reverse is the condition of things with reference to tobacco. Practically the whole tobacco of this country is imported in a raw state. It. undergoes processes of treatment, and in each of those processes a very large amount of manual labour is employed. Of that labour, probably three-fourths of it is female labour; so that that phase of the subject, deserves consideration. There is another point, I am sure, which will further tend to the development of the-employment of British labour, and that is the way in which the Chancellor of the Exchequer has dealt with the cigar duty, because that duty in its original amount, which placed British industries at a great disadvantage in competition especially with Continental manufacturers, is now placed upon such a basis that the higher class of labour in this country will be assured of employment against the cheaper and less well paid labour in Continental towns. I think we may very briefly epitomise the benefits of the Chancellor of the Exchequer's Budget, as it affects the tobacco duty, by saying that it will assure the labouring classes, who are the great consumers, of an article better manufactured and free from moisture, and that amongst the better classes, who are the consumers of the higher grade tobaccos, there will be an immediate and substantial reduction of price, while the effect will be to stimulate and increase the employment of British labour in our home markets.

* MR. J. LOWTHER (Kent, Thanet)
The honourable Gentleman who has just sat down has contributed in a very desirable manner to our knowledge on this subject. He has pointed out that the working man was made a stalking-horse in this matter. Now, we understand that the average smoker of tobacco will get no benefit at all. The honourable Gentleman pointed out to us very soundly and conclusively that the circumstances of trade do not admit of a reduction being accorded to the consumer. He has given us his reasons, which I have no doubt are sound and in accordance with his practical knowledge and experience. What advantage has the community at 73 large to get from this reduction? We have been told that this is absolutely unasked for, and that it is a reduction made simply to enable my right honourable Friend to say that he has reduced taxation. Many of us have ventured to suggest that he had better have kept the money in the national pocket; that, having regard to the demands likely to be made upon the Chancellor of the Exchequer for the time being and in time to come, it would be wise to allow the smoker of tobacco to remain in that contented frame of mind in which he was up to the moment of the introduction of the Budget. The Chancellor of the Exchequer is assenting to no demand, and as to his mode of dealing with the money, so far as I can see, he is going to please nobody. The working man has already been described as a stalking-horse by the honourable Gentleman who spoke with a practical knowledge of this subject, and the consumers of the more costly forms of tobacco—namely, cigars— have been excepted from this remission of taxation. As I pointed out two years ago, it is entirely a mistake to say, as the Chancellor of the Exchequer then did, that so much taxation is paid by the propertied classes and so much by the working classes. That fallacy, however, is, I am sorry to think, still lingering in influential quarters in this House, as the right honourable Gentleman the Member for Monmouthshire tells us, that the mass of the voters who are not contributors to the income tax already pay half of the taxation. I say they pay nothing of the kind in indirect taxation. A proper scientific analysis would show that a very considerable proportion of the indirect taxation is paid, not by what are known as the working classes, but by those who are large contributors to the direct taxation. If you remove the tea duties, you are remitting all taxation from a mass of people who, for all practical purposes, if they are not smokers or consumers of alcoholic drinks, would be non-contributors to the taxation of the country. The old Liberal doctrine used to be that taxation and representation should go together. The new Radical doctrine seemed to be that those who controlled the national destinies by their votes should be relieved of all taxation, which would be a most dangerous condition of affairs, and I hope the right honourable 74 Gentleman the Member for Monmouthshire will not lend his great authority to any doctrine so dangerous. As regards this question of tobacco, is it too late to ask my right honourable Friend once more whether any good object can be served by persevering in a reduction which, as I said, nobody asked for, and scarcely anybody appreciates? He has himself told us that his calculation has been to some extent upset by the litigation he has referred to. That, I think, is a calculation which must be largely disturbed by the growing force of opinion outside. I am not going into detail in regard to the expenditure of foreign States upon war-like preparations, knowing that he and his colleagues are prepared to regulate the naval and military expenditure by some similar expenditure. These considerations alter, and the right honourable Gentleman is entitled to ask the House to relieve him of obligations entered into without the knowledge he has now. If he has to come and ask the House for any considerable addition to meet the exigencies of the current year, I want to know where he is to get it. Everybody knows perfectly well that continual changes in these duties are found to be a serious disturbance to trade. To take 6d. a pound off tobacco duty one year and put it on again the next, wholly or partly, would be justly regarded as trifling with a national industry, and would not seriously commend itself to any experience. An amount made in a certain manner, when we are dealing with indirect taxation, has almost perforce to be more or less of a permanent character. We have to face the prospect, perhaps in the comparatively near future, of a declining revenue and an increasing expenditure, and the obligation would rest upon the Chancellor of the Exchequer for the time being of finding some addition to our national resources. Many of the items forced upon us are of automatics growth; you cannot restrain or restrict them, and there is no alternative but to find the money and raise taxes. I would suggest many economies, but I know I would not be listened to. I might point out, for instance, the monstrous demands for the support of education, which are increasing year after year. That, of course, would not be listened to—to say that we must cut our coat 75 according to our cloth, and spend less upon education. I ask him what, when the revenue shrinks, he is going to do to replace this duty? He had better keep the money, for he is sure to want it.

§ * THE CHANCELLOR OF THE EXCHEQUER
I have been attacked from very different quarters. The right honourable Gentleman who has just sat down objects altogether, as I understand, to any kind of remission at the present time.

* MR. JAMES LOWTHER
Except the Death Duties.

§ * THE CHANCELLOR OF THE EXCHEQUER
Oh, then, after all, my right honourable Friend's speech was not against a reduction of taxation, but only against the particular reduction of taxation which I have proposed.

* MR. JAMES LOWTHER
I beg pardon. What I said was that my right honourable Friend wag committing himself to the doctrine that I did not advocate any reduction of taxation, and I said I must make an exception in regard to the Death Duties. I would substitute for the Death Duty a duty on foreign imported goods.

§ * THE CHANCELLOR OF THE EXCHEQUER
That leads me into a subject in which I must decline to follow him during a discussion of a clause of the Bill. I think it is my duty to deal with the financial circumstances of each year as I find them, and if I find, as I did this year, in considering the estimates of ravenue, that I had a surplus, should I have been justified for a moment in retaining that surplus and refusing to propose any reduction of taxation, because next year additional expenditure may be thrown upon us? That may be the view of my right honourable Friend, but I confess it is not my view. The particular subject I have chosen for a reduction of taxation may be a right one or it may be a wrong one, but I do not think I have any business whatever to maintain taxation in this country because next year I may be called upon to provide for greater estimates of expenditure than I have to provide for this year. My right honourable Friend's prophecy has been made 76 before in the short time in which I have held the office of Chancellor of the Exchequer, and, so far, it has been falsified' by events. It may be, of course, that the increase of revenue may not continue at the rate at which it has gone on. It may be that there will come a change in the financial circumstances of the country. I look forward to that time, I admit, with some anxiety, but I do not contemplate any change, such as my right honourable Friend suggests, which would involve an addition of 2d. in the income tax in order to make up for the reduction of taxation which I now propose. I will deal further with the view of my right honourable Friend later on, but for the moment I turn to the objection to this clause of the honourable Member who first addressed you. I do not gather that the honourable Member for Durham considers that the tea duty, as well as the tobacco duty, should be reduced. He is prepared to admit, I think, with the right honourable Gentleman the Member for West Monmouthshire that in this matter we have not to deal with more than £1,100,000; only, in his opinion, that sum should be devoted to the reduction of the tea duty rather than to the reduction of the tobacco duty. Sir, the honourable Member put forward an argument to show that, in his opinion, tea should have the first claim. I do not at all agree with the argument drawn from the fact that there is a greater production of tea in India and Ceylon than there is of tobacco in the British Empire. That is undoubtedly a fact. But I think that in these matters our primary concern ought to be for our own people. I believe it is an undisputed fact that, as my honourable Friend the Member for Liverpool said just now, the manufacture of tobacco is a most important industry in this country, employing a very large number of persons in each part of the United Kingdom. It forms an industry to which there is nothing corresponding in regard to tea. Therefore, anything which increases the consumption of tobacco is of direct benefit to a very important industry here.

§ * MR. PEASE
I was not alluding merely to those engaged in the manufacture of tobacco as compared with those engaged 77 in the retail business connected with tea as it comes over here. My point was that there were three or four times the bulk of tea in weight to deal with as compared with tobacco, and that from the shipment of tea, and all the stages from its production to its sale to the consumer, the number of hands employed was probably greater than in the case of tobacco.

§ * THE CHANCELLOR OF THE EXCHEQUER
My information is to the contrary. I do not think the number of hands in the two industries can for a moment be compared. That, I confess, is one reason why I prefer tobacco to tea. I do not want to go into the respective merits of the two articles to-night. I have been favoured with a good many letters on the subject of tobacco, from individuals who are members of anti-tobacco leagues, and I have been denounced in the most vigorous language for what they consider an absolutely un-Christian proposal to lower the tax on so noxious a weed. I think that tea and tobacco may be considered as very similar objects. I do not believe in either of them as necessaries of life in the sense that water or food are necessaries of life. They are articles of great consumption; they are very useful and valuable as stimulants for all classes of the population, especially the poorest among them. They are consumed, no doubt, by many persons to a greater extent than is good for them. But I do not think it can be said for a moment that tea is a necessary of life, and tobacco is a luxury. I think we must put the two articles as necessaries of life upon the same basis. I have to deal with the admitted amount of £1,100,000, and the question is whether it should be devoted to a reduction of the duty on tea or a reduction of the duty on tobacco. The Member for West Monmouthshire suggested, as he has suggested before, that the sum of £1,100,000 would be sufficient to reduce the duty on tea by twopence in the pound. I am obliged in matters of this kind to be guided largely by the opinions of my advisers, and I find their calculations do not bear out that conclusion. The right honourable Gentleman referred to the occurrences of 1891. 78 What happened at that time? I will quote the figures as to tea. The yield of the tea duty in the year ending 31st March, 1889, was £4,630,000, and in the following year it was only £4,490,000, a falling-off of £140,000, in spite of an increasing population. Now, the reason for that decrease in 1890 has been carefully examined, and proved to be due to the decrease in the payments on tea in anticipation of the reduction in 1891, so that tea which otherwise would have been cleaned in the year 1889–1890 remained to be cleared until the duty was reduced. And, therefore, it happened that in the year 1890‱1891, after the reduction of the duty, the receipts were, as the right honourable Gentleman has said, only short by a million of the receipts of the previous year. And as the following year shows almost precisely the sam receipts as the year 1890–1891, I think it will be seen that the year 1890–1891 was credited with more receipts than properly belonged to it, and that, therefore, the apparent loss at that time was not a normal or fair test of the actual cost of the reduction of those duties. Now, I will state to the Committee the calculation made for me with regard to the probable cost of a reduction of 2d. on tea. Each penny on the tea duty now produces £980,000. It has largely increased since the days of which I have spoken, and therefore there would be a reduction of £1,960,000 for the year on 2d. Assuming that a month would pass before the new duties were levied there would be a sum of £150,000 to set against this, besides the gain arising from increased consumption, which is calculated as about 11,000,000 pounds of tea. But it must be remembered that the gain from increased consumption in 1891 produced a much larger duty at that time than a similar increase would produce now, because the duty was 4d. instead of 2d., as on the assumed reduction it would be now. Therefore, my adviser have shown me that in their opinion the net result of a reduction of 2d. in the pound on the tea duty now would involve a net loss in the year of £1,700,000, so that practically the sum of £1,120,000 would only allow a reduction of the tea duty by a penny and a 79 farthing in the pound. That, I think, is a calculation made by some honourable Members at an earlier stage of this discussion. Now, it is said that the reduction on the tobacco duty will not reach the consumer. Well, now, in my belief, both with regard to tea and with regard to tobacco any reduction must, eventually reach the consumer. It may be that it will not reach the consumer at once, for some little time must be allowed for arranging fresh prices, but it will eventually reach him, and if a penny farthing in the pound is to be divided amongst a number of ounces so that the small purchaser may reap the benefit, surely such a division is much more difficult than to divide a reduction of 6d. on tobacco amongst a number of ounces. Evidently the smaller the reduction in the pound the more likely it is to be attached by the manufacturer and the retailer before it reaches the consumer at all. But, now, what is the case with regard to tobacco? The right honourable Member for West Monmouthshire has asked me how I have arrived at my figure of £1,120,000 for the loss in the year as a consequence of the reduction of the tobacco duty by the sum of 6d. Well, Sir, the estimated gross proportionate loss would be about £1,750,000, and against that there is to be allowed a considerable sum for a period of three weeks or a month, during which the duties stood at the old amount, and for the anticipated increase of consumption on the reduction of duty; and there was a further reduction of estimated loss by no less than £200,000, on account of the reduction of moisture. Now, I am very glad that my honourable Friend the Member for Liverpool has stated to the Committee the important effect of the reduction on moisture. I do not think that when we were dealing with this matter at an earlier stage it was really understood what an important matter that was, not only to the consumer, but also to the manufacturer of tobacco. I can quite understand that the manufacturers are justified in referring to the reduction of moisture as a very important factor as affecting the future prices of tobacco. I have studied a good many of the new price 80 issued throughout the country showing the reduction in the price which they have made owing to the reduction of the duty on tobacco. Sir, I find in these lists reductions commencing at a rate larger than the reduction of duty, showing that there are other factors in the question besides the rate of duty. I find reductions commencing at 7½d. in the pound, and going downwards from 6d. to 3d. and to quite small sums upon the cheaper classes of tobacco. Well, I admit that with regard to the cheaper classes of tobacco the reduction in the price will be small as compared with the better classes of tobacco, and that is precisely on account of the important effect of the reduction of moisture in these classes of tobacco. But the consumer of the cheaper class of tobaccos will have an immense benefit from the reduction of moisture, and will obtain more tobacco for his money, and that, coupled with a certain reduction, will certainly tell in his favour. But I demur altogether to the suggestion that the working classes consume only the cheapest kinds of tobacco. Why we see cigarettes consumed by all classes of the population, and cigarettes are made of all kinds of tobacco, and certainly not, as a rule, of the cheapest kind. I believe that in regard to tobacco as in regard to other articles which they buy, very often the working classes are more particular than some of those above them in the social scale, and it would be contrary to the fact to suggest that the small reduction on the cheaper class of tobacco proves, as is argued by the honourable Member for Durham, that this reduction will benefit the rich, and will not benefit the poor. But now I come to another argument of the honourable Member, who compared the consumption of tea in different households in the country, and contended that a reduction of the tea duty would affect individually more persons than a reduction of the tobacco duty, because there were more consumers of tea than of tobacco. The question is not how many consume these articles, but what taxation the household bears. The taxation upon tobacco is infinitely higher than the taxation on tea, and I am convinced that a greater number of households will gain by a reduction of taxation upon tobacco than by a 81 reduction on tea. No doubt single women would benefit by a reduction on tea rather than by a reduction on tobacco, but the single man would certainly benefit by a reduction on tobacco rather than by a reduction of the duty on tea. But, Sir, after all, there is a matter which I think it is very desirable should be considered by the Committee in comparing the two proposals, and which has already been alluded to by the right honourable Member for Thanet. I think that last year the honourable Member for Devonport, who is very well acquainted with the tea trade, told the Committee that he was strongly in favour of the abolition of the tea duty, but opposed to the reduction of 1d. in the pound upon the duty. I think I am justified in inferring from the speech of the right honourable Member for Durham, and those who are prepared to vote with him, that it is not by any means so much the reduction of a penny and a farthing in the pound, or whatever it may be, on the tax upon tea that they desire, as a total abolition of the tax upon tea, which they think would necessarily follow from their proposal. Well, Sir, as I have previously explained to the House, I do not desire a total abolition of the duty on tea. I do not desire to lessen the number of articles which are at present in our customs tariff. If you abolish the duty on tea you must also abolish the duty on coffee and chicory, and that class of articles, and you would reduce general taxation by something like£4,500,000 a year. Well, Sir, that is a considerable amount in itself, but by abolishing that taxation you would, as my right honourable Friend the Member for Thanet has said—and I am glad in this matter to find myself in complete agreement with him—relieve from Imperial taxation altogether every person in the community below the income tax limit who neither uses alcohol nor smokes. Sir, I certainly will not be responsible for such a financial proposal as that. I have, therefore, proposed not to remove any article from the customs tariff altogether and not to deprive the revenue of what I believe it will need in the near future, any great amount of that which it now receives, but simply to reduce a duty which is in itself an enormous duty, and 82 which has remained for 56 years, as it is now, the cause of an average increase of 500 per cent. on the cost of the unmanufactured article. That, reduction, in my belief, and in the belief of all the authorities who, whether they approve of the reduction or not, have expressed themselves on this subject, will certainly lead to increased consumption, and therefore to an increase of the revenue. It will be a boon to the consumer either by a reduction in price or a reduction of moisture. It will prevent that reduction of the revenue in the future to which my right honourable Friend the Member for Thanet looks with great alarm, because the revenue will come from increased consumption. And therefore, in spite of what my right honourable Friend has said, I would suggest that even from his point of view he should support me against the proposal of the honourable Member for Durham. I bear in mind not merely the necessities of the present time, but the possible necessities of the future. I believe I can provide for those necessities, but I have no right to ask the country to bear a greater amount of taxation than I believe is necessary. Therefore I have made this proposal, and I hope it will be supported by the Committee against the proposal of the honourable Member for Durham.

§ MR. BAINBRIDGE (Lincoln, Gainsborough)
Sir, I do not know why in the conduct of the financial department of the Government, of which the right honourable Gentleman has charge, the principles on which ordinary business is carried on should not be observed. As the right honourable Gentleman the Chancellor of the Exchequer said on a previous occasion, we have passed through a good year and have a good surplus, and it seems to me to be desirable, in view of the great competition which we have from abroad, that something should be put aside to meet it. We have to deal with increasing competition with America, with its great resources, and with. European nations with low wages and a splendid education, and I beg to urge upon the Committee that instead of taking something off the duty on tobacco it would be better to apply this money to the purposes of technical education.

§ * SIR J. LUBBOCK (London University)
Sir, I should be glad to say a few words, because while I agree with the honourable Gentleman opposite that if the duty were to be reduced either on tea or tobacco it would have been wiser to reduce the duty on tea, I am unable to support the present Amendment. I will not detain the Committee by going into a full discussion of the subject, but must confess that I am not satisfied with the statement of the Chancellor of the Exchequer of his reason for giving a preference to a reduction on tobacco. I believe it would be better for the country if our people smoked less tobacco and drank more tea. Moreover, the reduction proposed will in the main benefit men only, while a reduction of the tea duty would have been an advantage to both sexes. The interests of the women ought surely to have been considered. But, Sir, I am unable to vote in favour of the Amendment proposed by the honourable Member opposite, because I am disposed to agree with the honourable Member who has just sat down, in the opinion that in view of the expenditure which in the near future may be necessary, it would be better not to make any reduction of taxation at all at present. The Chancellor of the Exchequer has told us that he does not consider that he should look forward to the future, but that he should deal only with the circumstances of the year as he finds them. I am not quite sure that in all cases that is a desirable view to take, especially in a year like the present, when the Government must know that there is a large expenditure looming in the future. But, Sir, there is another consideration which I think disposes of the argument of the Chancellor of the Exchequer. The Committee will remember that in the earlier part of this Session we had the Naval Works Bill before us, by which it was proposed to take £2,000,000 of the surplus of last year's revenue, which would have been available for the reduction of the National Debt, and to apply it to naval expenditure. Well, Sir, we made no objection to that Bill, because we thought it would be useless to pay off debt if we had to borrow again a few months afterwards, or to impose additional taxation in order to meet the 84 large expenditure on the Navy. But, Sir, if we had known that the money which ought to have gone in reduction of the National Debt was going to be diverted in order to reduce the tax on tobacco, I must confess that I for one should have had very great scruples in supporting that Bill. I must express my regret that Her Majesty's Government should have taken the surplus of last year to make a reduction of the duty on tobacco.

§ MR. J. H. LEWIS (Flint Boroughs)
Sir, the Chancellor of the Exchequer and the right honourable Gentleman the Member for Thanet have denounced the idea of a total abolition of the tea duty. May I recall to the recollection of the Committee what happened only so recently as the year 1893? The honourable Gentleman who was then the honourable (Member for the Eye Division of Suffolk, whom I do not see in his place at this moment, proposed an Amendment to the Bill to the effect that this House was unwilling to sanction a Bill which involved the continuance for another year of the tax upon tea. That was a proposal to abolish the tax upon tea altogether, and for that proposal almost the whole of the then Opposition voted. It is true that it was just on the eve of a General Election, but I regard a promise given on the eve of a General Election as a solemn pledge to the electors, and there must be a great many honourable Gentlemen present, if not right honourable Gentlemen, who voted on that occasion for the abolition of the duty upon tea. I am glad to see in his place the honourable Member for North Islington, who has taken a great amount of interest in the condition of the working classes. We all know the work he has done in that direction. Well, Sir, in the same Debate, or on the same day, he produced a very interesting calculation, of which I will remind the House. I will leave it to the honourable Gentleman to explain it in his own way, but he said a man who earns £1 a week pays out of it to the State 1s. 6d., a man who earns £500 a year pays 1s. 2½d.,. and the man who earns £10,000 pays 10d., and those who have between £10,000 and £100,000 pay 7d. in the £ to the State. That calculation, I think, 85 is a sufficient answer to the arguments put forward by the Chancellor of the Exchequer and the right honourable Member for Thanet in regard to this question. But, Sir, there is another point, and I am glad to see the honourable Member for the Ecclesall Division of Sheffield in his place on this occasion. The honourable Member, I have not the least doubt, having regard to his previous utterances upon this question, will walk into the same Division Lobby with my honourable Friend. May I remind the honourable Member, who appears to take such a large amount of interest in the whole of the British Empire, that 900,000 of our fellow-subjects in India and Ceylon are employed in the production of tea, and in view of that fact I ask the honourable Gentleman to support the Motion now before the House. Two years ago 88 per cent, of the amount of tea imported into this country came from India and Ceylon, and only 12 per cent, from China. I believe that since that time the amount imported from India and Ceylon has considerably increased. I believe since then the amount imported has considerably increased; but, however that may be, a reduction would be a very great advantage not only to the consumer of ten in this country, but also to the very large number of people who are engaged in the production of tea in India and Ceylon. I regret that the Chancellor of the Exchequer has been unable to devote a portion of his surplus to reducing the taxation upon this necessary article. During the last three years we have had very large surpluses, and if the reduction does not take place at a time like the present I suppose it will never take place at all. At all events, I call upon honourable Gentlemen who in 1893, by their voice and by their votes, supported the same proposal as is now before the House to take a similar course to-night.

§ * COLONKL SIR H. VINCENT (Sheffield, Central)
I only wish to say one word, and that is that, having supported the proposal on a former occasion, I desire to support it again. I am heartily glad that the Chancellor of the Exchequer has recognised the necessity of reducing the taxation on articles which we can produce in this country. At the same time I am sorry that he has not seen his 86 way to increase the number of articles upon which duty is levied at our Custom Houses. I quite agree with what he said upon the inadvisability of reducing the number of articles upon which that duty is levied. If he would like me to produce a list of the articles upon which a tax may be levied I shall be most happy to supply him with a list, and if not in this House at any rate in the country, he will be able to gain a very considerable volume of support for it. There are one or two articles especially from which a very considerable revenue might be obtained with great advantage to our trade. I would earnestly invite the attention of my right honourable Friend the Chancellor of the Exchequer to the very serious condition of trade, as is shown in the recent trade reports. The imports have increased in the five months of this year by seven millions, and the exports of British and Irish produce have fallen by five and a quarter millions. These figures give the Chancellor of the Exchequer ample food for reflection, and material for seeing if he cannot possibly pave the way for a Budget which will be productive of benefit to the British producer more than in recent years. I shall certainly support the proposal which has been made by the honourable Member for Durham, and supported by the last speaker.

§ * SIR W. HARCOURT
I have put a question to the Chancellor of the Exchequer as to the amount which would be lost by the reduction of the tea duty. The right honourable Gentleman founded his reply upon some observations which I am bound to respect. He has told us that the Customs authorities estimate that a reduction of 2d. in the tea duty would cost between £1,600,000 and £1,700,000.

§ * THE CHANCELLOR OF THE EXCHEQUER
It would cost £1,700,060.

§ * SIR W. HARCOURT
I entirely adhere to the opinion I have expressed, that the reduction of the tea duty would be a very much better thing than the reduction proposed in the tobacco duty. In fact, everything that 87 has been said by the honourable Member for Liverpool, who is a great authority on the subject, convinces me more and more of the comparatively less advantage of the reduction of the tobacco duty as compared with, the tea duty. I cannot, however, give a vote which will lead to a deficit; that would not be consistent with my views on sound finance. I very much regret that we did not get a sufficiently large surplus to enable both the tea and the tobacco duty to be reduced. As the Chancellor of the Exchequer said, it is quite true that our choice is between the one and the other, and, as a reduction of the tea duty would mean a loss to the amount of £1,700,060, and as I believe the Estimates the Chancellor of the Exchequer has made this year are pretty close, both as to revenue and expenditure, though I cannot give a vote for the reduction of the tobacco duty, at the same time I cannot give a vote which would lead to a deficit in the balance between the expenditure and revenue.

§ * MR. COURTNEY (Bodmin)
I rise to express my approval of the choice which has been made by the Chancellor of the Exchequer to reduce the duty on tobacco instead of tea. It has been said that the consumer will not get the benefit of the reduction. I am entirely sceptical as to that assertion, and I do not accept it for a moment. Even if the benefit does not come in price, it will come in the quality, and the smoker will get more tobacco per pipe instead of tobacco and water. Well, Sir, I should like to say a word or two as to why I prefer the reduction on tobacco to a reduction on tea. I agree with the reasons brought forward by the right honourable Gentleman the Member for Thanet, and approved by the Chancellor of the Exchequer, that unless you contemplate an absolute abolition of the tea duty you must beware of reducing it 2d. in the £; I am strongly in favour of the reduction of indirect taxation, so as to secure equal proportions of contributions, or their equivalent, from all the taxpayers of the community; but I am persuaded that you cannot realise that unless you maintain some system of indirect taxation, in which something like the tea duty is a necessary and 88 essential element. But why do I say the tobacco duty instead of the tea duty? One reason why I prefer the reduction of the tobacco duty is, because that duty is much more heavy in proportion to its value than the duty on tea; indeed, immeasurably more. Directly you reduce the duty you will find such a reserve of consuming power on the part of the community as to get back the whole of the revenue within a very short time, and you will get, at the same time, a reduction to the consumer without any equivalent loss to the Exchequer. That, from the point of view of the Chancellor of the Exchequer, is eminently in favour of a reduction of the tobacco duty. There is another reason which has got weight with me. We heard a good deal last year about the financial relations between Great Britain and Ireland. I myself altogether dispute the conclusions drawn from the investigations of the Royal Commission as to the difference of burden between the two islands. But I admit that the investigations of the Royal Commission show that there is a difference of burden between the different classes of the community, which consume what may be called, perhaps, the rougher forms of excisable articles taxed by the Chancellor of the Exchequer. The consumer of spirits, the consumer of beer, and the consumer of tobacco contribute much more than their share towards the revenue of the country. By reducing the duty on tobacco you will get a greater approximation to a proper adjustment of taxation between the different classes of the community, and in that way you will get a truer approximation to a proper adjustment of taxation between the two islands which constitute the United Kingdom. Now, there is only one point in the proposal of the Chancellor of the Exchequer from which I am bound to say I dissent—I allude to the point raised by the honourable Member for Liverpool. My right honourable Friend the Chancellor of the Exchequer reduces the duty on tobacco, but he will not reduce the duty on manufactured cigars. Now, the duty on manufactured cigars ought to be reduced at the same time. The duty has been adjusted, but it has not been accurately adjusted. It has been so adjusted that it does not give any advantage to the English manufacturer over the foreign manufacturer of 89 cigars. That is the principle of Free Trade. But the Chancellor of the Exchequer, in reducing the duty on tobacco while not reducing the duty on cigars, gives a bounty of the home manufacture of cigars which is in entire disagreement with the principle of Free Trade. I therefore protest against it.

§ MR. LABOUCHERE (Northampton)
I gather from the Debate that it is admitted on both sides of the House that only one-half of the reduction on tobacco will go into the pockets of the consumers. ["No!"] It is admitted—["No!"]—yes, by the wholesale dealers of tobacco themselves, that one-half will go into the pockets of the consumer and the other half into their own pockets. [" No !"] Yes, it is a face. My honourable Friend the Member for East Bristol [Sir W. H. Wills] said so himself in this House. It seems to me, putting aside every other consideration, that it would have been far more reasonable to have reduced the duty on tea than on tobacco. But why does the Chancellor of the Exchequer say he will not reduce the duty on tea? He has put forward two reasons, and they are really such extraordinary reasons that I think we ought to take note of them. The right honourable Gentleman says that it would be impossible to reduce the duty on tea, because, if unjust, we ought to take the duty off altogether.

§ * THE CHANCELLOR OF THE EXCHEQUER
I said I thought it would be difficult to take the duty off tea.

§ MR. LABOUCHERE
Well, "difficult" and "impossible" is almost the same thing with a Chancellor of the Exchequer. The right honourable Gentleman says, then, that it would be difficult to reduce the duty on tea unless we are prepared to take the duty off altogether, that the consequence of a further reduction would be that we should have to do away with the duty on tea altogether. Well, Sir, we reduced it by 2d. in 1890, but we still have a duty of 4d. It does not, however, follow as a necessary consequence that because we reduce it we are obliged to take off the duty altogether. But then the Chancellor of the Exchequer went on to say that he objected to 90 the abolition of the duty on tea, coffee,, chicory, and such like articles, because, they provided the only way by which poorer people paid now towards taxation. Now, Sir, there I and many honourable Members on this side of the House join issue with the Chancellor of the Exchequer. If a large revenue is to be collected, when it expands we ought not to leave out of consideration the taxes which press upon the poor people. Mr. Bright was always in favour of a free breakfast table, and although many of the economic doctrines of Mr. Bright have been repudiated, Liberals still hold that it is desirable to remove the taxes on the breakfast table. But the Chancellor of the Exchequer, as, I presume, the exponent of Her Majesty's Government, declares that the, as a matter of principle, objects to taxes being taken off the poor and placed on the shoulders of the rich.

§ * MR. BARTLEY (Islington, N.)
I do not think the honourable Member for Northampton is really in earnest as to the statement he has just made, for it certainly is not strictly in accordance with the fact.

§ MR. LABOUCHERE
Which statement?

§ * MR. BARTLEY
That we on this side of the House are in favour of the taxation of the poor, and not of the rich. I only rise because reference has been made to a speech which I made some three or four years ago on the subject of the taxation of the poor. It is deduced from that argument that I am in favour of taking off the duty on tea rather than tobacco. To a certain extent it is true now that the poor pay more out of their small incomes than the rich, and, as has been pointed out, that must be so as long as we tax alcohol, and no one proposes to abolish that tax. But that is no argument for taking off the tax entirely upon tea. As has been stated by the Chancellor of the Exchequer and others, it is clear that if we take off the tax on tea we relieve a large section of the community who pay practically nothing to the revenue of the State. It is quite clear that a teetotal family learning 10s. or 15s. a week and consuming half a pound of tea a week only pay 2d. a 91 week towards the Imperial revenue, and although that may be a large tax to them, it is not, perhaps, an unreasonable sum to pay for all the advantages which a family gets in the way of protection at the hands of the country. I think it would be a very evil thing if, in trying to adjust the taxation of this country, we should do away with a tax on any one particular class. It is also quite true that during the last three or four years we have done a great deal to make the taxation of the rich heavier than it was before. The memorable Budget of the right honourable Gentleman the Member for West Monmouthshire, of course, did a great deal in that direction. As far as that went most of us strongly approved of it. The tendency to make those who paid a comparatively small income tax pay on death practically means the payment of an accumulated income tax, and that adjusted, to a great extent, the anomaly to which I drew attention. But it is quite clear that as long as you tax alcohol, whether you take off the duty on tea or not, there must be an anomaly. I hope the Chancellor of the Exchequer will bear in mind the fact that if the tea duties are abolished it will do a great deal of mischief in the sense that we shall have a large number of persons paying nothing to the revenue. Taxation and representation, it seems to me, ought to be the backbone of all principles of political economy, but it seems to me that if the tax is taken off tea the principle of taxation and representation will be very much done away with. I certainly am not in favour at the present time of taking off the tea duty in preference to the tobacco duty.

§ MR. DILLON (Mayo, E.)
I am glad that the Chancellor of the Exchequer has decided to adhere to his original proposition to reduce the duty on tobacco. I cannot agree with the statement of the honourable Member for Northampton that this proposal, compared with a proposal to reduce the tax on tea, is in favour of the rich and against the poor; because I maintain, and have always maintained, with regard to the poorest parts of Ireland with which I am acquainted, that the reduction of the duty 92 on tobacco gives more relief to the labouring man than the reduction of the tea duty; because, whether for good or for evil, the poorest labouring man, as a rule, spends more on tobacco than he does on tea. I believe that the reduction of the tobacco duty, as has been stated by the right honourable Gentleman opposite, goes a longer distance towards diminishing the grievance under which Ireland at present suffers, under the existing system of taxation, than would be the reduction of the tea duty. There is one other point which I should like to mention in connection with the income tax. It has been assumed Toy a good many speakers that we must treat tobacco as a luxury and tea as a necessity. Well, I consume both myself. I am very fond of tea, but I must confess that every year I live I become more strongly convinced that tea is not a necessity any more than tobacco, and that it would be a very great benefit to large sections of the community if they never drank another cup of tea in their lives. Our American friends are discussing the question year after year, and I know a large part of the country where the nerves of the working classes are very seriously injured by drinking too much tea. However, that is another aspect of the question. The only reason I have risen is to point out that it is not quite just, in dealing with the tobacco tax and the tea tax, to assume that tea is an absolute necessity and tobacco only a luxury. Tobacco to some working men is, practically speaking, as much a necessity as tea, and for these reasons I feel compelled to-night to vote in favour of the Chancellor of the Exchequer's proposal. There is only one fault that I have to find with the reduction, and that is that the Chancellor of the Exchequer did not fix the reduction at such a figure as would ensure that the consumer felt the immediate relief of the reduction of the halfpenny in the ounce.

§ * MR. LOGAN (Leicester, Harborough)
I regret that greater reduction of taxation has not been made for the benefit of the poorer portion of the community. I understand that the object with which my honourable Friend has moved his Amendment has been with the view of raising the 93 question of the tea duty. Personally I regret very much indeed that the Chancellor of the Exchequer has not reduced the duty on tobacco very much more, and that he has not seen his way to abolish the duty on tea altogether. We on this side of the House have always told the people of this country that we should support the abolition of the tea duty, and every time the Budget comes before the House I shall feel it my duty to do all I can in that direction. I am surprised that, after there has been a year of unexampled prosperity like the present year, the Government, although they have been able to give large sums of money away to their friends, the Chancellor of the Exchequer did not see his way to be just before he was generous, and endeavour to do something to remove the heavy burdens of taxation from the shoulders of the very poorest portion of our community. Both the tobacco duty and the tea duty, I maintain, are very heavy burdens upon the very poorest people in this country. There are very few people who consume tobacco who understand that when they pay 1s. for tobacco they are really only getting 2½d. worth of tobacco, and paying 9½d. for duty. I contend that in a year like the present, when money has been flowing into the Exchequer to such an extent as it has done, the Chancellor of the Exchequer ought, in common fairness to the struggling masses of the people of this country, to remove these great burdens of taxation from their shoulders. We are told, Sir, that the burden of the tea duty is but a very little burden. Well, it may be a very little burden, but it is an illegitimate burden to put upon the shoulders of the people. The right honourable Gentleman the Member for Thanet said that if the tea duty were removed then the last vestige of taxation would be taken off the shoulders of the electorate of this country. I am sorry that the right honourable Gentleman is not here. Had he been here, I should have liked to have asked him who it is that finds the whole of the money that pays the taxation of this country. It is, Sir, the present day toilers who find the whole of the money that pays the taxation of the country. If the honourable Gentleman doubts it, I 94 would ask him how he would be able to get at the minerals in his land without the assistance of the toilers. I contend that if you remove the toilers of this country, the whole of the land minerals and machinery are absolutely of no use at all; therefore, the money which goes to pay the taxation of this country is eventually found by those who toil. I am sorry that the right honourable Gentleman the Colonial Secretary is not here, for it is only a very short time ago that he said— Do what you may, you cannot remove the burden of the taxation of this country from the very poorest of the people. But upon whoever's shoulder this burden does fall, there can be no doubt that to the poor man receiving 12s. a week— and there are many thousands and hundreds of thousands who do not get a bigger wage than 12s. a week—this burden of the tobacco duty and the tea duty is a most serious one, and it amounts to quite 5 per cent, of their total income, and I say that 5 per cent, of a man's earnings is a very heavy burden indeed. I think that in a year of prosperity like the present the very least which the Chancellor of the Exchequer could have done was to have endeavoured to reduce that burden somewhat. Indeed, Sir, it is a marvel to me how honourable Gentlemen in this House, returned as they are by the votes of the poorer portion of the population to a greater extent than by the votes of the rich men, can allow the Chancellor of the Exchequer to leave this burden on the shoulders of the poor people, when millions of money have been given away to a favoured class of the community. There can be no doubt about that. Every year for five years two millions have been given to the English landlords; £100,000 reduction has been made off the land tax; and this year a further sop has been given to Ireland to relieve agricultural depression there. In the face of that fact honourable Gentlemen opposite, representing to a much greater extent the poor man than they do the rich, it is a marvel to me how they can support Measures which they have supported while they refuse to press upon 95 the Chancellor of the Exchequer the absolute desirability, in the interests of the poor people, of reducing the burden of taxation which now falls so heavily upon their shoulders. No doubt the Chancellor of the Exchequer will very likely say: "How am I to meet the expenditure if I cannot get the money in the way I suggest?" Sir, I do not pretend to suggest how he can get it, but there are many ways in which the Chancellor of the Exchequer might have further extended the principle of the graduated income tax which he has accepted himself this year. And then, Sir, there is one other source of income which, upon every Budget that comes forward, I shall press upon the Chancellor of the Exchequer as a means of providing money for the necessities of this country; I mean a tax upon the land values.

THE CHAIRMAN
The honourable Gentleman is really making a Second Reading speech. The question under consideration is whether the tobacco duty should be reduced.

§ * MR. LOGAN
I did not intend to make a Second Reading speech. I only wanted to show the Chancellor of the Exchequer how he could find money by putting a tax upon the land values of this country. Now, the land values of this country—

THE CHAIRMAN
Order, order! The honourable Gentleman ought to have raised that upon the Second Reading, and he is not in order in making those remarks now.

§ * MR. LOGAN
I have no intention of making a Second Reading speech, but I thought that if I suggested the remission of taxation I was entitled to anticipate the Chancellor of the Exchequer's answers. However, I will bow to your ruling, and, in conclusion, for this is all I have to say, let me express my regret again that 96 the Chancellor of the Exchequer, in his unexampled year of prosperity, has not seen his way to reduce the taxation upon those shoulders on which it presses so heavily—that is, upon the shoulders of the very poorest portion of our community, who to-day pay a much greater proportion of their income in taxation than do the very richest in the country, and therefore, Sir, I think they are entitled to our first consideration.

§ * THE CHANCELLOR OF THE EXCHEQUER
I admire the ingenuity with which the honourable Gentleman has brought up his favourite topic. I beg to point out, however, that if he desires—and he says that he does desire—that the duty on tobacco should be reduced he ought to have supported this clause. I have only risen to express the hope that, as we have had a very full discussion upon this subject, the Committee may now be disposed to come to a decision.

§ * MR. J. A. PEASE (Northumberland, Tyneside)
If the honourable Member will permit me to say so, I also am in favour of a reduction of the tobacco duty. I proposed that this clause be postponed to allow of a clear issue; although many of us are in favour of a reduction of the tobacco duty, we feel bound to vote against this clause.

§ Amendment put, and negatived without a Division.

§ Question put— That clause 1 stand part of the Bill.

§ Agreed to.

§ * MR. J. A. PEASE
moved— Page 2, postpone clause 2.

§ Amendment negatived.

§ Question put— That clause 2 stand part of the Bill.

§ Agreed to.

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CLAUSE 3. 1,498 words, 1 division

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CLAUSE 6. 5,101 words

c114

CLAUSE 7. 218 words

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CLAUSE 10. 16,072 words