HC Deb 20 June 1904 vol 136 cc501-60

Considered in Committee.

(In the Committee.)

[Mr. J. W. LOWTHER (Cumberland, Penrith) in the Chair.]

Clause 1:—

MR. SYDNEY BUXTON (Tower Hamlets, Poplar)

said he did not think the Committee was in a position to consider the tea duty until they knew what the effect of the other proposals in the Bill would be. There was a deficit of £5,500,000 from the previous year, and a deficit of £3,800,000 for the coming year; and the Chancellor of the Exchequer proposed to borrow to meet the former, and to impose extra taxation to meet the latter. This he proposed to do partly by direct and partly by indirect taxation. He did not object to the proposal of the Chancellor of the Exchequer in regard to the amount he was going to raise during the coming year, but he did not think the best method of raising the revenue had been chosen. Last year they thought that the right hon. Gentleman's predecessor had remitted too large a proportion of direct taxation and too small a proportion of indirect taxation, and what he desired to impress upon the Committee was that on the present occasion the right hon. Gentleman was proposing to raise an equal amount by direct and indirect taxation. Considering the very large remission of direct taxation last year, he did not think indirect taxation ought to bear any of those burdens this year, which ought to be borne by direct taxation. His reason for postponing this clause was that until they knew the decision of the Committee in regard to the income-tax they were not really in a position to decide the question of the tea duty on its merits. This was the only opportunity that would be given them of discussing the respective merits of the tea duty and the income-tax and whether an extra penny ought not to be put on the latter. If this clause were passed before they had discussed the income-tax, and the Committee decided that the income-tax should be only raised by one penny, they would be in a difficult position, because they would have voted so much towards the deficit, and it would not be necessary to press for the additional penny on the income-tax. On the other hand, if the right hon. Gentleman could show conclusively to the Committee that it was impossible to impose an additional penny on the income-tax, and that no other source of revenue was open to him, it would make a difference to them in considering the tea duty. On the ground that they were called upon now to propose an addition to the duty on tea which they believed could be met by the alternative of a penny on the income-tax; and because they were prejudiced in discussing the merits of the tea duty until they knew the result of the Budget as a whole, he begged to move the postponement of Clause 1.

Motion made, and Question proposed, "That Clause 1 be postponed."—(Mr. Sydney Buxton.)


It will not be possible for the hon. Member to raise the income-tax, but he can move to reduce it.


said the hon. Member's object appeared to be to raise the question whether the whole of the increased taxation which was necessary this year should not be charged upon the direct taxpayer instead of a proportion of it being placed upon the indirect taxpayer; and he also complained that to ask the Committee to discuss the tea duty before the income-tax-prejudiced the merits of the discussion on the tea duty and the figure at which he proposed to place the income-tax. It would be perfectly clear to the Committee that if he had put the clause relating to the income-tax first, exactly the same process of reasoning would have enabled the hon. Member to argue that the income-tax clause must be postponed because they could not allow the I income-tax to be fixed at 1s. until they had decided whether or not they were going to increase the tea duty. These proposals must be taken as a whole. When they came to the tea duty there were Amendments on the Paper which raised the particular question which the hon. Member for Poplar wished to discuss, namely, whether there ought to be any increase in the tea duty at all. He thought it would be to the convenience of all parties that they should come to the point as soon as possible instead of debating matters which really did not advance their discussion. He was quite prepared to justify his proposal to increase the tea duty as soon as he was allowed to do so. He hoped the question would be discussed on its merits and in its proper place, instead of having a discussion on a proposal to postpone the clause which necessarily limited the discussion in which they were engaged.

MR. McCRAE (Edinburgh, E.)

said the Chancellor of the Exchequer had said that if they had discussed the income-tax first precisely the same argument would apply. That was not so, because it was indirect taxation they were opposing and not direct taxation. The right hon. Gentleman knew this very well. If they once committed themselves to the tea duty it would be impossible for them to go back on the decision. Another reason for postponing this clause was that it was quite possible that the right hon. Gentleman might not require all the money he had budgeted for, because, apart from the question of the deficit, which was a subject of difference between them, he thought those who looked into these proposals and compared them with the estimated expenditure must be led to the conclusion that the Chancellor of the Exchequer had underestimated the produce of the revenue. Of course he quite admitted that, after the experience of last year, the Chancellor of the Exchequer was quite justified in taking a very moderate view of the increases under the different heads of estimate, but notwithstanding this he felt confident that the right hon. Gentleman would have a larger revenue than he had budgeted for; and besides this a considerable saving was anticipated under the head of Army reform.


Those arguments are not relevant to the postponement of this clause, although they might be relevant to a Motion to cut down the amount. The hon. Member is now proceeding to argue upon the merits of the proposal, and he is not in order in so doing.


said those were reasons which he thought should induce the Committee to postpone Clause 1 until they came to those other heads of taxation, more especially with regard to direct taxation. After they had discussed that question, and in view of the fact that many of them were of opinion that the income-tax was reduced too much last year, he put it to the right hon. Gentleman that a fair and full case had been made out for the postponement of this clause.

MR. FLYNN (Cork County, N.)

said the right hon. Gentleman had not only bean unfair to the hon. Member for Poplar, but he had actually misrepresented his argument. The Chancellor of the Exchequer had stated that if the income-tax had been placed in Clause 1, the same argument could have been advanced, but the direct opposite was the case. They could not discuss now the question of the income-tax, and the question before them was the broad general principle as to whether it was a proper and feasible course for the Chancellor of the Exchequer to inflict this huge burden upon indirect taxation. Those who represented Irish constituencies had a grievance of a much larger and a more forcible kind, because their great complaint was that indirect taxation was levied on Ireland out of all proportion to the justice or reason I of the case. The proportion in Ireland was 75 per cent, of indirect and 25 of direct taxation.


Order, order! The arguments which the hon. Member is using are arguments in favour of cutting down the amount, and they are not relevant now.


contended that it would be far better to putt the income-tax in the forefront and postpone this clause 40 a later period.


said he confessed that he did not see sufficient reason for the postponement of this clause; but on the contrary, he saw some good reasons for taking the opposite course. Some hon. Members opposite desired to deal with the income-tax, but they could only do that by moving to reduce it. It was to the interests of hon. Members opposite that they should keep the tea duty as high as possible, because that would give them a better chance of taking something off the income-tax. The accredited modern method of drafting a Bill was to put the whole crux of the measure into the first clause. It was a fact that the great objection of hon. Members opposite was not so much to the income-tax but more especially to the tea duty, and therefore it was the right thing to do to place this tax in the first clause of the Bill. He thought hon. Members, if they were candid, would admit that his arguments showed that instead of being advantageous to them to postpone this clause it would be disadvantageous, and therefore he should vote against the proposal made by the hon. Member for Poplar.

MR. McKENNA (Monmouthshire, N.)

thought the hon. Member for King's Lynn had relied too much upon the letter of the law in this matter. It was perfectly true that they could not introduce a new tax, but any hon. Member might move a reduction with the object of getting an expression of opinion in favour of an increase. It was desirable that they should have some mode of considering the alternative before they committed themselves to this particular proposal. They had only got a certain amount of money to raise, and if they raised £2,000,000 of this amount by the tea duty it would be idle to propose a reduction of the existing taxation in order to get an expression from the Committee in favour of a new tax to find money which was not wanted. The Committee in considering the other proposals in the Budget ought to have their hands free from any commitment in regard to the duty on tea. He suggested that Clause 1 should be postponed not only until the other clauses in the Bill before the Committee had been dealt with, but until all the new clauses had been disposed of, and then they could take a broad view of the best means of raising the money they required. This Motion was not a mere formal proposal, for it was a definite matter of principle that this Committee should not tie its hands in discussing the various methods by which the money might be raised. Why should they settle the tea duty first of all? On the Opposition side of the House they thought that it was desirable that the Government should put in the forefront of the Finance Bill not indirect but direct taxation. It was upon direct taxation that they mainly relied for their necessary income, and this year it was more important than ever that direct taxation should stand first. He hoped that his hon. friend would press this matter to a division.


said that what had been said went to show the way in which the House tied its hands in this matter. The Chancellor of the Exchequer said that all the clauses ought to be taken as part of one scheme. It was quite true that every proposal now put forward by the Chancellor of the Exchequer must be accepted as it stood, or at all events the taxes could only be diminished and could not be increased. Consequently those who wished to postpone this clause would find themselves hampered and tied by the Rules which governed the proceedings in regard to this Bill. As his hon. friend had stated, if changes were announced by the War Office this week that might do away with the necessity for the increase of the tea duty altogether. The tax which he disliked most of all was the tea tax, and it was because he regarded this tax as the worst of all in the Budget that he thought they should proceed to deal with it last of all.

MR. WHITLEY (Halifax)

supported the Motion of the hon. Member for Poplar on the broad ground of principle. He thought when a Budget was being framed it ought first to be decided what taxes were to be put upon the rich and, after that, only put the balance of taxes which it was absolutely necessary to raise, upon the poor. The Chancellor of the Exchequer in bringing forward this Budget had taken exactly the opposite course, and had first imposed the burden upon the indirect taxpayer and then taxed the rich to make up the balance. He looked upon the clause they were now discussing as an illustration of the way the present Government looked at taxtion as a whole. They first asked themselves, "How much dare we put upon the poorer classes of the community" and then said, "We will ask the income-tax payer to pay the residue." The Motion for the postponement of this clause was not a mere matter of form,

but was the embodiment of a very substantial principle. Taxation ought to be so placed upon the people that the burden might be imposed where it could be best borne, and the smallest possible remainder placed upon the poor through their necessaries of life. He hoped the Motion for postponement might be carried and might be taken as a precedent of the method to be adopted in proceeding with the Budget in the future.

Question put.

The Committee divided:—Ayes, 132; Noes, 207. (Division List No. 157.)

Abraham, William (Cork, N.E.) Grey, Rt. Hon. Sir E. (Berwick O'Connor, James (Wicklow.W.
Ainsworth, John Stirling Hammond, John O'Kelly, Jas. (Roscommon, N.)
Allen, Charles P. Harcourt, Lewis V.(Rossendale O'Shee, James John
Barran, Rowland Hirst Harcourt.RtHn SirW(Monm'th Palmer, Sir Charles M.(Durham
Black, Alexander William Hayden, John Patrick Perks, Robert William
Blake, Edward Hayter, Rt, Hon. Sir Arthur D. Pirie, Duncan V.
Boland, John Hemphill, Rt. Hon. Charles H. Power, Patrick Joseph
Brunner, Sir John Tomlinson Henderson, Arthur (Durham) Rea, Russell
Bryce, Rt. Hon. James Hutchinson, Dr. Charles Fredk. Reckitt, Harold James
Buchanan, Thomas Ruburn Jacoby, James Alfred Redmond, John E. (Waterford)
Burke, E. Haviland Jones D. Brynmor (Swansea) Rigg, Richard
Burt, Thomas Jones, William(Carnarvonshire Robertson, Edmund (Dundee)
Buxton, Sydney Charles Kennedy, Vincent P.(Cavan,W Robson, William Snowdon
Caldwell, James Kitson, Sir James Roche, John
Cameron, Robert Labouchere, Henry Runciman, Walter
Campbell, John (Armagh, S.) Lambert, George Russell, T. W.
Causton, Richard Knight Law, Hugh Alex. (Donegal, W. Samuel, Herbert L. (Cleveland)
Churchill, Winston Spencer Lawson, Sir Wilfrid (Cornwall) Schwann, Charles E.
Clancy, John Joseph Layland-Barratt, Francis Seely, Maj.J.E.B.(Isleof Wight.
Condon, Thomas Joseph Leese, Sir Jos. F. (Accrington) Shackleton, David James
Corbett, A. Cameron (Glasgow) Leng, Sir John Shaw, Thomas (Hawick B.)
Craig, Robert Hunter(Lanark) Lewis, John Herbert Sheehan, Daniel Daniel
C'rombie, John William Lloyd-George, David Sheehy, David
Cullinan, J. Lough, Thomas Shipman, Dr. John G.
Davies, M. Vaughan (Cardigan) Lundon, W. Soames, Arthur Wellesley
Delany William Lyell, Charles Henry Spencer, Rt.Hn.C.R(Northants
Devlin, Chas. Ramsay (Galway Macnamara, Dr. Thomas J. Strachey, Sir Edward
Devlin, Joseph (Kilkenny, N.) MacVeagh, Jeremiah Sullivan, Donal
Dewar, John A. (Invemess-sh.) M'Arthur, William (Cornwall) Taylor, Theodore C. (Radcliffe)
Dilke, Rt. Hon. Sir Charles M'Crae, George Tennant, Harold John
Donelan, Captain A. M'Kenna, Reginald Thomas, D. Alfred (Merthyr)
Doogan, P. C. Markham, Arthur Basil Tomkinson, James
Doulgas, Charles M. (Lanark) Mooney, John J. Trevelyan, Charles Philips
Elibank, Master of Morley, Charles (Breconshire) Ure, Alexander
Ellice.Capt E.C(SAndrw'sBghs Morley, Rt.Hn.John (Montrose Wallace, Robert
Ellis, John Edward (Notts.) Moulton, John Fletcher Wason, Eugene (Clackmannan)
Farquharson, Dr. Robert Murphy, John White, Luke (York, E. R.)
Flynn, James Christopher Nannetti, Joseph P. Whitley, J. H. (Halifax)
Foster, Sir Walter (Derby Co.) Nolan,Col.John P.(Galway, N.) Wilson, J.W.(Worcestersh.,N.)
Fowler, Rt. Hon. Sir Henry Nolan, Joseph (Louth, South) Woodhouse.Sir J.T(Huddersf' d
Freeman-Thomas, Captain F. Norton, Capt. Cecil William Young, Samuel
Fuller, J. M. F. Nussey, Thomas Willans Yoxall, James Henry
Gilhooly James O'Brien, K. (Tipperary, Mid.)
Gladstone, Rt.Hn. Herbert Jn. O'Brien, Patrick (Kilkenny) TELLERS FOR THE AYES—Mr.
Grant, Come O'Brien, P. J. (Tipperary, N.) Dalziel and Mr. Soares.
Agg-Gardner, James Tynte Anson, Sir William Reynell Arnold-Forster,Rt.Hn.Hugh O.
Agnew, Sir Andrew Noel Arkwright, John Stanhope Atkinson, Rt. Hon. John
Bain Colonel James Robert Halsey, Rt. Hon. Thomas F. Plummer, Walter R.
Balearres, Lord Hare, Thomas Leigh Powell, Sir Francis Sharp
Baldwin, Alfred Haslett, Sir James Horner Pretyman, Ernest George
Balfour, Rt.Hon. A.J.(Manch'r Hay, Hon. Claude George Pryce-Jones, Lt.-Col. Edward
Balfour, Capt. C. B. (Hornsey) Heath, James (Staffords., N.W. Purvis, Robert
Balfour, Rt. Hon. G. W. (Leeds Heaton, John Henniker Quilter, Sir Cuthbert
Banbury, Sir Frederick George Hermon-Hodge, Sir Robert T. Randles, John S.
Bartley, Sir George C. T. Hoare, Sir Samuel Rankin, Sir James
Bentinck, Lord Henry C. Hogg, Lindsay Rasch, Sir Frederic Carne
Bhownaggree, Sir M. M. Hope, J.F.(Sheffield,Brightside Ratcliff, R. F.
Bignold, Arthur Hornby, Sir William Henry Reid, James (Greenock)
Bill, Charles Houldsworth, Sir Wm. Henry Renshaw, Sir Charles Bine
Blundell, Colonel Henry Howard, Jn. (Kent.Faversham Richards, Henry Charles
Bowles, Lt.-Col.H.F(Middlesex Hozier, Hn. James Henry Cecil Ridley, Hon. M.W.(Stalybridge
Bowles, T.Gibson(King's Lynn Hudson, George Bickersteth Ridley, S.Forde (Bethnal Green
Brodrick, Rt. Hon. St. John Hunt, Rowland Ritchie, Rt.Hn.Chas. Thomson
Butcher, John George Hutton, John (Yorks., N. R.) Ropner, Colonel Sir Robert
Campbell, Rt.Hn.J.A.(Glasgow Jebb, Sir Richard Claverhouse Rothschild, Hon.Lionel Walter
Carlile, William Walter Jeffreys, Rt. Hon. Arthur Fred. Royds, Clement Molyneux
Carson, Rt. Hon. Sir Edw. H. Jessel, Captain Herbert Merton Rutherford, John (Lancashire)
Cavendish, V.C.W. (Derbyshire Johnstone, Heywood (Sussex) Sackville, Col. S. G. Stopford
Cecil, Evelyn (Aston Manor) Kennaway, Rt.Hn.Sir John H. Samuel, Sir H. S. (Limehouse)
Chamberlain,Rt Hn.J.A(Worc. Kenyon, Hn. Geo. T.(Denbigh) Sassoon, Sir Edward Albert
Chapman, Edward Kenyon-Slaney, Col.W.(Salop.) Scott, Sir S. (Marylebone, W.)
Coates, Edward Feetham Kimber, Henry Seely, Charles Hilton (Lincoln)
Cochrane, Hon. Thos. H. A. E. Knowles, Sir Lees Shaw-Stewart, Sir H.(Renfrew)
Cohen, Benjamin Louis Lambton, Hn. Frederick Wm. Simeon, Sir Barrington
Colston, Chas. Edw. H. Athole Laurie, Lieut.-General Sloan, Thomas Henry
Corbett, T. L. (Down, North) Law, Andrew Bonar (Glasgow) Smith, Hon. W. F. D. (Strand)
Craig, Charles Curtis(Antrim,S. Lawson, J. Grant (Yorks., N.R. Spear, John Ward
Cross, Herb. Shepherd (Bolton) Lee, A. H. (Hants., Fareham) Stanley, Hn. Arthur (Ormskirk
Crossley, Rt. Hon. Sir Savile Legge, Col. Hon. Heneage Stanley, Edward Jas.(Somerset
Dalkeith, Earl el Leveson-Gower, Frederick N.S. Stanley, Rt, Hon. Lord(Lancs.)
Davenport, William Bromley Lockwood, Lieut.-Col. A. R. Stirling-Maxwell, Sir John M.
Dewar, Sir T.R.(TowerHamlets Loder, Gerald Walter Erskine Strutt, Hon. Charles Hedley
Dickson, Charles Scott Long, Col. CharlesW.(Evesham Talbot, Lord E. (Chichester)
Douglas, Rt. Hon. A. Akers Long, Rt.Hn.Walter(Bristol,S. Talbot, Rt.Hn.J.G.(Oxf'dUniv
Durning-Lawrence, Sir Edwin Lonsdale, John Brownlee Taylor, Austin (East Toxteth)
Dyke, Rt,Hn.Sir William Hart Loyd, Archie Kirkman Thorburn, Sir Walter
Egerton, Hon. A. de Tatton Lucas, Reginald J.(Portsmouth Tollemache, Henry James
Elliot, Hon. A. Ralph Douglas Lyttelton, Rt. Hon. Alfred Tomlinson, Sir Wm. Edw. M.
Fardell, Sir T. George Macdona, John Gumming Tritton, Charles Ernest
Fergusson,Rt.Hn.Sir J.(Manc'r Maconochie, A. W. Tuff, Charles
Fielden, Edward Brocklehurst M'Arthur, Charles (Liverpool) Tufnell, Lieut.-Col. Edward
Finch, Rt. Hon. George H. M'Iver.Sir Lewis(Edinburgh,W Valentia, Viscount
Finlay, Sir Robert Bannatyne Malcolm, Ian Vincent, Sir Edgar (Exeter)
Fisher, William Hayes Manners, Lord Cecil Walrond, Rt.Hn.Sir William H
Fison, Frederick William Martin, Richard Biddulph Warde, Colonel C. E.
FitzGerald,Sir Robert Penrose Massey-Mainwaring, Hn. W. F. Webb, Colonel William George
Fitzroy, Hn. Edward Algernon Melville, Beresford Valentine Welby, Lt.-Col. A.C.E(Taunton
Flower, Sir Ernest Meysey-Thompson, Sir H. M. Whiteley, H.(Ashton and Lyne
Forster, Henry William Middlemore, Jn. Throgmorton Willoughby de Eresby, Lord
Foster, P. S. (Warwick, S.W.) Mitchell, William (Burnley) Willox, Sir John Archibald
Galloway, William Johnson Molesworth, Sir Lewis Wills, Sir Frederick
Gardner, Ernest Morpeth, Viscount Wilson, A. Stanley (York, E.R.
Garfit, William Morton, Arthur H. Aylmer Wilson, John (Glasgow)
Gordon, J. (Londonderry, S.) Mount, William Arthur Wilson-Todd, Sir W.H.(Yorks)
Gordon, Maj. E.-(T'r Hamlets) Muntz, Sir Philip A. Wodehouse, Rt Hn. E.R.(Bath
Gore.Hn G.R.C.Ormsby-(Salop Murray, Rt, Hon. A. G. (Bute) Worsley-Taylor, Henry Wilson
Gore, Hon. S.F.Ormsby-(Linc) Murray, Charles J. (Coventry) Wortley, Rt. Hon. C. B. Stuart
Gorst, Rt, Hon. Sir John Eldon Murray, Col. Wyndham (Bath) Wyndham, Rt. Hon. George
Gosohen, Hon. George Joachim Myers, William Henry Wyndham-Quin, Col. W. H.
Goulding, Edward Alfred Nicholson, William Graham Younger, William
Graham, Henry Robert Palmer, Walter (Salisbury)
Gray, Ernest (West Ham) Parker, Sir Gilbert TELLERS FOR THE NOES—Sir
Greene,Sir E.W(B'rySEdm'nds Peel, Hn.Wm. Robert Wellesley Alexander Acland - Hood
Greville, Hon. Ronald Pemberton, John S. G. and Mr. Ailwyn Fellowes.
Gunter, Sir Robert Pilkington, Colonel Richard
Hain, Edward Platt-Higgns, Frederick
MR. J. H. LEWIS (Flint Boroughs)

moved an Amendment to reduce the tea duty. He said the Amendment was to bring the from of the clause back to the form in which it was presented to the Committee in former years, and, read with other Amendments of which notice had been given, the exact effect would be that the tea duty for the coming year instead of being 8d. would be 6d. per pound. He thought the Committee must agree, at all events, that this was an extremely moderate and reasonable proposal. A few years ago the whole trend of public opinion was in favour of the absolute abolition of what were known as the breakfast table duties. The late Mr. John Bright devoted a very great amount of attention to this question. He wondered what Mr. Bright would say of this clause if he were alive to-day. They had receded very considerably from the standard set to them of policy and of consequent economy in those early days. He had no doubt that the desire of the public was still for the abolition of the breakfast table duties, but it must be admitted that the enormous growth of expenditure during the past few years made any proposal of that kind absolutely impracticable. He wished to draw the attention of the Committee to the fact that the duty proposed to be levied on tea now was higher than any duty which had been levied on that article during the last forty years. In the circumstances he thought they had a right to make the strongest possible protest in their power against the raising of the duty this year from 6d. to 8d. In 1865 the tax was reduced from 1s. to 6d., and in 1890from 6d. to 4d., and it remained at that figure until the war, when it was raised to 6d. When the war was over the reasonable expectation of the public was that war taxation would be taken off, or at the very least that the taxation imposed during the war would not be increased. But here was an increase amounting to 25 per cent. on a commodity which was of universal use, and which was largely used by the poorest of the poor. It was a commodity which was already taxed to the extent of about 100 per cent, of its value. He thought they had a right to protest against leaving on war taxes in time of peace, and they had a still stronger right to protest against any increase of war taxation in time of peace.

He was afraid that one effect of this increased duty would be that to some extent the increased taxation would defeat its own ends, because it would restrict the purchasing power of the working class and diminish the amount of tea imported into this country. He thought that experience proved pretty conclusively that that would be the case. In 1896 the consumption of tea in America was-93,000,000lbs.; in 1898, during the war a war tax was imposed on tea, and the-result was that in 1899 the consumption, of tea in America had fallen from 93,000,000lbs. to 72,000,000lbs. That-showed the effect an increased tax upon tea had upon consumption of tea, and indicated the sort of danger which threatened the tea industry in India and Ceylon from whence we had obtained nine-tenths of our tea imports. For years previous to 1900 the average annual increase in the amount of tea on which duty was paid was 5,000,000 lbs.; but since the duty was raised in 1900 there had been no increase, and that showed that the additional tax imposed had prevented any increase of the amount of tea on which duty was paid. Perhaps, in order to strengthen his position, his hon. friend the Member for Islington would allow him to quote some figures that that hon. Gentleman had given to the public outside this House. In 1901, duty was paid on 238.3 million lbs.; and in 1903, 229.2 million lbs.; or a falling off of 9 million lbs. At the same time the amount of tea imported from foreign countries had risen from 9.08 million lbs. in 1901 to 14.9 million lbs. in 1903. The direct effect, apparently, of the increase of the tea duty had been to stimulate the consumption of foreign products and discourage the consumption of British products—a rather curious reverse of the kind of fiscal policy now entertained by the Government. In 1901 the consumption of tea was 6.16 lbs. per head of the population; but in 1903 it had fallen to 6.03 lbs. per head.

The imposition of the new tax must necessarily check the consumption of tea and affect very greatly the great tea industry founded in Assam and Ceylon. There were £30,000,000 sterling of British capital invested in India and Ceylon. India was one of the very poorest countries in the world. He remembered that during a debate on India there was a dispute as to whether the average income per day of the people in India was ¾d. or 1½d. That showed how miserably poor that country was. The tea industry served a double purpose. It relieved the congestion of the population in some parts by drawing labour from the plains to the hills, and it provided employment for large numbers of people. Within the List few years India had suffered from pestilence and famine and the country had been drained of its slender resources, and he considered that the British Parliament ought to do nothing to discourage a great industry. He hoped the Chancellor of the Exchequer would not for a moment suppose that he imagined that the tax would be more prolific because it was increased 25 per cent. His argument was that it would restrict consumption, that that would in turn restrict production, and so the great tea industry would be adversely affected. The tax would also be extremely discouraging to the tea planters in Ceylon. The history of the tea industry in that colony was very interesting. He remembered when be was there twenty years ago the whole island was practically in the Bankruptcy Court. A fungus had destroyed the coffee plants just as the phylloxera destroyed the vines in France. The planters faced the position with courage and cheerfulness. They did not come whining to the British Parliament for help, but decided to start the tea industry; and although they paid twice as much for Cingalese labour as the planters in the North of India paid for coolie labour, they had developed the industry to an enormous extent, although within the last year or two it had not been so prosperous as before. By putting an additional tax on tea the Government would strike a very heavy blow at what was now the staple industry of Ceylon. He believed there was no more loyal part of the King's dominions than Cevlon, It was said that it had been held by a brass band, and the planters during the South African war equipped a force themselves. Both natives and planters engaged in this industry deserved more consideration at the hands of the House than they were receiving at present under this clause.

He should like to ask the Chancellor of the Exchequer why tea had been selected for this great increase in taxation. At the present time a duty of three-halfpence was levied on coffee, and 1d. on cocoa. 28,500,000 lbs. of coffee and 45,000,000 lbs. of cocoa were imported into this country, chiefly from foreign countries, whereas the tea that we drank came largely from British possessions. He was not suggesting that the Chancellor of the Exchequer should have put a tax on coffee and cocoa; but he had a right to ask why the right hon. Gentleman had selected tea for the whole increase of the duty? While this House properly took an interest in the industries of India and Ceylon, its main concern must be with the consumer at home. How could the right hon. Gentlemen the Chancellor of the Exchequer, in a time of peace, justify to the House the addition of so large an amount of taxation upon the working classes of the country? There was a much greater claim for remission of indirect taxation than of the income-tax. He wished it were possible for the working classes to realise what they did pay in indirect taxation. These taxes were easily collected, because people did not realise equally how much they paid through them, as they realised an increase of 1d. in the £1 on the rates. When these poor people were told how much they paid through indirect taxation they did not believe it; and he contended that if they did realise it there would be a revolution in the country. So long as they did not realise it, the boundless extravagance which had characterised the expenditure of the present Government would be continued. Then, he held that this tax was a direct discouragement to temperance in the country. After all, whatever might be said against tea, the drinking of it did not ruin homes, produce beggary, send people to the workhouse, or lead to crime. We did not find paupers who attributed the loss of their property to drinking tea. Therefore he thought they might have had some better proposals than those which encouraged the undue consumption of intoxicating liquors and discouraged the consumption of harmless beverages. Above all, why should an article of consumption found in the homes of the poorest of the poor all over the United Kingdom, and especially in Ireland, have been selected for increased taxation? He was certain that if hon. Members were free to vote without fear of consequences the sense of the Committee generally would be in favour of his Amendment.

Amendment proposed— In page 1, line 16, to leave out the words In lieu of.'"—(Mr. J. H. Lewis.) Question proposed, "That the words 'In lieu of stand part of the clause."

MR. HERBERT SAMUEL (Yorkshire, Cleveland)

said he would not repeat the arguments of his hon. friend but would confine himself to the question. What was the burden of taxation which was now laid on the working classes of this country? In the earlier stages of the discussion on the Budget, his right hon. friend the Member for Haddingtonshire appealed to the Chancellor of the Exchequer to appoint an expert Committee to investigate the question of the real incidence of taxation on the various classes of the community; and he very much regretted that the right hon. Gentleman had refused to appoint such a Committee. Under these circumstances, they had to depend on their own researches. They were like doctors who were dealing with a malady without having diagnosed it. That necessary investigation which was required in order to enable the Committee to deal adequately and scientifically with the problem of taxation had not been undertaken. It was often assumed that as long as the State raised its revenue, half by direct and half by indirect taxation, a certain measure of justice was done as between the wealthier and the poorer classes. That was elevated to the rank of a principle of national finance. The Chancellor of the Exchequer, however, whose mind was always lucid, clearly stated that as far as he, at all events, was concerned, he recognised that there was no such principle whatever; and that the fact that direct and indirect taxation were about equal in volume was merely a coincidence, or very little more. There were many, however, who assumed that because this equality existed between direct and indirect taxation the burden on the average poor man was therefore the same as the burden on the average rich man. He thought the Committee ought to divest their mind of that idea. They should aim not at an equality at amount of revenue of the Exchequer, but an equality of burden on the individual taxpayer. There was one principle, apart from land taxation, which stood to some extent on a separate basis, which commended itself to political economists and students of public finance in the allocation of taxation; and that was that each class and individual should, as far as was possible, be made to contribute to the revenue in proportion to its or his ability to pay. The present system of taxation of the country was very far indeed from conforming to that rule. They were left to their own researches; and he, for one, had spent many long days in investigating this problem.

The results at which one arrived were somewhat surprising. Taking an average working-class family receiving average wages, and consuming an average amount of taxable commodities, he found that they would pay, not an income-tax of 8d. in the £, as the income-tax on other classes used to be a few years ago, nor of 1s. as it now was, nor even of 1s. 4d. as it was during the war, but of no less than 1s. 7d. in the £ on their wages. In order to arrive at that conclusion it was necessary that two assumptions should be made. One was that it was the consumer who paid indirect taxation. It was universally admitted by political economists, so far as the long run was concerned, that, if a tax were not imposed, prices would be lower or the quality of the articles supplied would be better. The second assumption was that an average working-class family consumed an average amount of taxed commodities. Probably of spirits they would consume rather less; of beer rather more; of tea probably more; wine must, of course, be excluded from the calculaton and coffee also since the working-classes consumed but little. The extra duty on coal would also, not enter into the category at all. The assumption that an average working-class family consumed an average amount of taxed commodities was borne out by the budgets of expenditure which had been collected by the Board of Trade and by political economists. It was also supported by Lord Welby, than whom few men knew more about questions of indirect taxation. He said in 1901 that four-fifths of the taxation on articles of consumption was paid by the working classes. Sir Robert Giffen, in his evidence before the Labour Commission, said that four-fifths of the population belonged to the working classes; and if four-fifths of the population paid four-fifths of the indirect taxation, it was obvious that an average working man's family did consume an average amount of taxed commodities. If that were accepted, they reached the fact that such a family paid in indirect taxation £7 5s. a year.

The Chancellor of the Exchequer, in answer to a Question which he put, stated that the taxes on tea, sugar, dried fruits, tobacco, beer and spirits would amount in 1904–5 to £65,100,000. According to the census there were just under 9,000,000 families in the United Kingdom; and dividing the amount of taxation by the number of families that gave a sum of £7 5s. per family paid by indirect taxation, which was equivalent to 1s. 7d. in the £ of the average wages of such families. He would not take any extreme case such as a farm labourer or any specially poor class of the population. He would take the average wages of a working-class family; and for that he went to the Labour Department of the Board of Trade. The President of the Board of Trade had stated, in answer to another Question, that the average annual earnings of the adult male wage-earners employed in the principal industrial and agricultural occupations in the United Kingdom in a year of average employment might be approximately estimated at £70 per head. Sir Robert Giffen said that the average family wages of a working-class family were rather more than £80. He would put it at £90 in order to be on the right side. The amount paid in indirect taxation was on that sum equivalent to 1s. 7d. in the £. It was quite true that rather more than half the indirect taxation was paid on beer and spirits, which were to the working classes more or less luxuries. Some hon. Gentlemen argued that because much taxation was raised by duties on beer and spirits and tobacco that, therefore, it was no taxation at all; and that the working man need not pay it if he did not choose to consume beer and spirits and tobacco. But they were dealing, not with an ideal population consisting of teetotalers and non-smokers, they were dealing with the British nation as it was, which, as a matter of fact, did smoke a great deal and did drink a great deal, being not yet converted to the principles of his hon. friend the Member for the Camborne Division, or, as regarded smoking, to the principles of his hon. friend the Member for Appleby. That being so, the fact remained that the working classes did pay the taxes on beer and spirits; and that they were consequently so much the poorer because of those taxes having been imposed. His hon. friend had truly said that there was little resentment against this taxation because it was not generally known. If a tax collector were to visit each year every working-class household and demand £7 5s., or if there was a deduction of 1s. 7d. from every £1 earned in wages, then, undoubtedly, there would be very fierce and bitter resentment; and there would soon be more economy in our administration and a rapid and sweeping reform in the financial system of the country.

It had been said by Colbert that the art of taxation consisted in so plucking the goose as to get the maximum quantity of feathers with the least possible amount of hissing; and that was a principle which had evidently to some extent animated the financiers of the country in the past. That was, however, very far short of the ideal at which public financiers should aim and very different from the maxims by which statesmen should be guided. Since 1899 the present Government had added£15,000,000 to the amount raised by indirect taxation. They had added 2.7 millions sterling to beer and spirits; £2,000,000 to tobacco; and no less than £10,000,000 to sugar and tea. That increase in indirect taxation was equal to 32s. 8d. per family per annum, and from tea and sugar alone it was equal to 22s. 2d. In other words, the right hon. Gentleman had taken for the purposes of the Government one week's wages from every working class family more than was taken five years ago. He would now turn to the taxation paid by the middle and wealthier classes. They paid indirect taxation the same as the poorer classes. They paid, in addition, the duties on wine and coffee and they paid the income-tax. Putting all those taxes together, and allowing for the abatements in the income-tax, one found that an income of £200 paid 1s. in the £; that an income of £500 also paid 1s, that an income of £1,000 paid 1s. 2d.; that an income of £5,000 paid 1s. ½d., while the workman's income of £90 paid 1s. 7d. Those figures were, of course, only approximate; and on the assumptions that the consumer paid the indirect taxes and that the average working-class family consumed an average amount of taxed articles. No one would assert for a moment that the working classes should not pay their fair portion towards the revenue of the State, but they would all admit that it was not fair to tax a man whose earnings were £90 a year 1s. in the £, if a man whose income was £5,000 a year was also taxed only 1s. It was still less fair to tax a man who earned £90 a year 1s. 7d. in the £, if the man with £5,000 a year only paid Is. In our taxation there was a system of graduation, but it was graduation the wrong way. He submitted that the facts he had put before the Committee were sufficient to justify their asking for an inquiry into the incidence of our taxation. Such an inquiry would, he believed, show the urgent necessity for the revision of our whole system. In the meantime it was their duty to oppose this increase in the duty on tea, which would worsen the inequality already existing. It was evident that the whole of the social legislation of this House was largely nullified by the great progressive increase of taxation which was placed on the shoulders of the working-class population. With one hand we tried by our laws dealing with housing, with education, with temperance to raise them out of the swamp of poverty; with the other we imposed fresh burdens of taxation upon them which pushed them down still further into the slough. So long as this heavy taxation continued and increased, so long would they do much to stultify their efforts in the cause of social reform.

SIR CARNE RASCH (Essex, Chelmsford)

said the speech of the hon. Member who moved the Amendment reminded him of the lady, introduced into the speech of the right hon. Member for West Monmouth, in his 1894 Budget Bill, who paid income-tax all her life without knowing it. He never saw the monstrousness of this extra duty on tea. It only amounted to about 1s. a year per head of the population which was not an enormous tax. After all, the working classes were the masters in this matter; they sent the Government to power in 1900; they voted for the war. Nobody could deny that it was popular with them. It was all very well to say— Men laugh and jest until the feast is o'er; Then comes the reckoning, and they laugh no-more. But it was not a very brave thing upon the part of the working classes or their representatives in this House to vote for a war and then when it came to paying the expense of it, try to evade their liability.

MR. LOUGH (Islington W.)

said as the hon. Member had said, the working classes had returned the Party opposite to power in 1900, but it was to be hoped they would soon have an opportunity of reconsidering that decision, and, when they had, they would no doubt take these tea duties into account. His hon. friend had spoken in the interest of the poor consumers of this country, and as many others would no doubt speak from the same point of view, he would not traverse the ground. Then there was the question of the distributors. He had introduced two deputations of distributors to the right hon. Gentleman the Chancellor of the Exchequer. One was a deputation from the distributors of dry tea—a business with which he himself was connected, and the other represented that great new trade which had grown up in providing cheap food for the working and lower middle classes, which supplied liquid tea in cups. As tea was sold at a halfpenny or a penny a cup in many of these new coffee taverns, it was impossible to re-adjust prices so that the tax should be passed on to the consumer. Therefore, these tradesmen had a very serious grievance. However, the Chancellor of the Exchequer gave the utmost attention to the representations of both, and if he could do anything to readjust the burden of this duty he would do so. He would say nothing further upon that. The most serious things in this matter was the interest of the growers of tea throghout the Empire. That point, no doubt, had been touched upon by the mover of the Amendment, but he had not said anything that would at all allay the dismay and alarm with which that great class, the growers, viewed this tax. There should be with regard to the duty on any commodity in the mind of every Chancellor of the Exchequer a figure beyond which taxation could not go without endangering the revenue received therefrom. In the opinion of the growers the tax of 6d. stood in that relation to tea; any increase upon it would result in disaster and would not be profitable to the Empire. In support of this view he would ask the House to consider the history of the 6d, duty on tea. For forty years this tax had never been more than 6d., and it was interesting to see how this House dealt with this matter in 1863, in the days of perhaps the greatest Chancellor of the Exchequer of modern times, Mr. Gladstone. At that time tea was already a great article of consumption in this country. We used 90,000,000 lbs. at a duty of 1s. 5d. per lb., and the revenue from that was just over £6,000,000, the same revenue which the right hon. Gentleman received I today. All this tea came from foreign countries except 2,000,000 lbs. which came from India where tea growing was an infant industry. This industry was then passing through a great crisis and seemed to be passing away altogether. It looked as if it would have to be abandoned. Mr. Gladstone's eye fell upon this industry, and he was no doubt supported by Mr. Cobden in the drastic ways in which he dealt with the tea duty. In the first year it was reduced by 5d., and in the next by 6d., leaving the duty at what it was before this tax was proposed. This sweeping reduction of the tea duty by 11d. a 1b. might be contrasted with the niggling policy of recent years. It was a beautiful illustration of the system of taxation which had built up the wealth of this country. Mr. Gladstone was a true Imperialist, who had his eye on the real methods by which the interests of the Empire might be developed and consolidated and the investments of merchants and producers protected. The result of all this was perhaps the most romantic chapter in the annals of English trade. In 1863 India produced 2,000,000 lbs., in 1873 21,000,000; in 1883, when Ceylon had commenced to contribute, 62,000,000 in 1893 240,000,000; and in 1903 355,000,000, surely a most remarkable development of commerce. At the present time, the tea industry of India I and Ceylon was not languishing. It passed through bad times like other businesses, but nobody thought of abandoning it. He hoped the Committee would not forget the figures which had been brought forward by the mover of the Amendment to show the result of the present duty, and what the effect of raising it to 8d would be. His hon. friend had shown that the raising of the duty to 6d. had checked the supply of tea from these countries; that it went down some millions of pounds. Before then it was increasing by 5,000,000 lbs. a year.

With these figures in their mind he would ask the Committee to contrast the action of the two Chancellors. In 1864 Mr. Gladstone made a proposal which had the result of inducing our own Empire to begin producing an article which had hitherto come from foreign parts, and now the present Chancellor of the Exchequer was making a proposal which had the opposite effect of driving trade from our own Empire, and inflicting a heavy blow upon an industry in which a huge amount of capital had been invested. The right hon. Gentleman had given expression to certain ideas which were very ominous to the producers of tea. He had stated that the people were "saturated" with tea, and that the same development could not be expected in the future as had taken place in the past. But that was the argument of all Chancellors of the Exchequer, whenever through their greed or folly they injured a trade, they laid the blame on Nature instead of on their own actions. There were many parts of the country in which greater development was possible. Ireland consumed more tea in proportion to population than any other part of the Kingdom. Every year 50.000 or 60,000 people were driven out of the country; but he looked forward to the time when under proper conditions the population of Ireland would be allowed to increase. Every million by which the population increased would mean an additional consumption of 8,000,000 lbs. of tea. But the population of Great Britain was also increasing every year, and the consumption of tea had not nearly reached its maximum, so that it was quite easy to imagine an increase of 50,000,000 or 60,000,000 lbs. of tea in ten years. In any case, it was not the business of the Chancellor of the Exchequer to give a blow to an industry and then say the consequent decline was not his fault. When they came to consider why this particular tax had been selected the reason was obvious. It was because the advisers of the Chancellor had told him that every additional penny on tea brought in £1,000,000 to the Exchequer. The same used to be said of the income-tax, but tea was a much more delicate and subtle subject of taxation, and the marvellous way in which the industry had grown suggested that it might with equal ease be damaged, and if this took place each penny would not produce the expected return. How far was this policy to be carried? Would the tax be raised to 10d. or 1s. or even 1s. 5d.? The Committee ought not to pass from the subject without obtaining from the Chancellor of the Exchequer a statement that would console the minds of the people engaged in the industry. The least the right hon. Gentleman could do was to promise that the tax should be of a purely temporary character.

MR. MARTIN (Worcestershire, Droitwich)

said there was another point more interesting than any yet dealt with in connection with this examination as to whether the tax was really oppressive, and as to who should bear it. It seemed to him that the real people who were grinding down the poor were the wealthy wholesale tea dealers who were charging exorbitant prices for their wares. He once asked a friend of his who was a wholesale tea dealer what was the highest price he had ever paid for tea, and his answer was that it was one of the secrets of the trade which he would rather not divulge, and, when he asked him if he had ever paid 8d. he made the same reply. As a matter of fact, he (the hon. Member) believed ordinary good tea was about 4d. or 6d., and, allowing a margin of 1d. and adding a tax of 6d., they brought the prices to 1s. 1d., leaving, at the 2s. which was charged to the public, a profit of 11d. or over 45 per cent. If the tea were put up to 8d. the cost would then be 1s. 3d., which would leave a profit of 9d., or about 32 per cent. There was thus, as far as they knew, a very I large profit to the wholesale distributors of tea, and he thought the trade could I quite well afford an extra 1d. or so, and that there was no reason why they: should grumble over it. Even if they paid the full increase of 2d. per lb. their profit would still be something like 25½ per cent., which ought to be enough to pay to the wholesale and retail dealers. He therefore maintained that there was a large profit; and unless there was some attempt on the part of the wholesale dealers to reduce the price to the consumer, they had no right to cry out. No doubt it would be hard on the poorer people, to whom an extra 2d. was a great consideration, but he did not think the wholesale dealers had made out any case why they could not pay the additional 2d. or at all events some part of it. He considered the Committee would devote their time more usefully to the consideration of this point than to the question of the general incidence of taxation, and as to how far direct and indirect taxation ought to be borne by the same individual. He had often suggested—but he had never found anyone willing to undertake the task—that a Return should be made showing the percentage of taxation borne by persons spending £2 a week and £1,000 or £10,000 a year; and he considered such a Return would be most useful.

MR. SOARES (Devonshire, Barnstaple)

said he did not pretend to know precisely the proportion of profits that were divided between the wholesale tea dealer and the planters; but he knew that the tax would increase the price of tea 2d. per lb. or more, and would be a heavy burden on the poor, and it was because of this that he opposed it. The previous Friday afternoon he walked over to the Park and he was struck, as he always was, with the wealth, luxury, and extravagance which one saw on all sides there; and he was perfectly certain that if one had asked any of the elegantly dressed ladies what the price of tea was and whether it had been increased in consequence of the tax, very few would have been able to tell them anything about it, unless they happened to be the wives of Members of Parliament. Even in this House, although they saw a general election was imminent, and were therefore compelled to be economical, none of them had curtailed their consumption of tea, and he had not heard that hospitality on the Terrace had in any way been curtailed. He was quite sure that during the season not one single cup of tea less would be consumed in London drawing-rooms because of the tax. It was, however, quite a different matter with the poor. The other day he was staying in the North of England, and he asked a poor woman what she thought of the Budget. She said the village grocer had put the price of tea up 2d. per lb., and she announced her intention of getting even with him by making three quarters of a pound go as far as one pound had hitherto done. This meant that the poor woman, her husband, and children, would consume less tea in the future than in the past. He therefore maintained that the tax was burdensome to the poor and did not press heavily on the rich. Then let them take another section of the people—those in receipt of outdoor relief. He was a guardian of the poor, and he knew perfectly well that not one penny more was being given in outdoor relief because of this tax, and yet £d. or 1d. per week to those people was of the very gravest importance. Many of them lived largely upon weak tea and bread and butter, and they would feel this tax very much indeed. It was really almost a farce when one remembered that it was this Government which promised them old-age pensions. Instead of giving them old-age pensions they taxed their tea. He knew, too, from experience that the tax would be a heavy burden upon the agricultural labourers. Most of them were in receipt of low wages and a penny per week made a lot of difference to them. They were large consumers of tea. They drank it in the morning, most of them took it with them in bottles and drank it with their mid-day meal in the fields; and then they drank it again when they arrived home at night. All these people would have to pay more for their tea. Then there was that large section of women who worked at home—sempstresses, and so forth. Those anæmic women had to take a certain amount of stimulant, and temperance people recommended them to take tea, and undoubtedly this class would feel the tea tax as a very severe burden. They were people without votes who were compelled to suffer in silence, and they would feel this burden very severely.

SIR JOHN GORST (Cambridge University)

said the hon. Member for Islington was quite right in saying that I this tax on tea would interfere with the tea industry. Any tax was injurious to those who produced the particular article taxed, and it lessened the consumption and the amount produced of that article. His sympathies were with those who consumed tea in this country, and there was no doubt that the tea duty pressed very heavily upon the workpeople of this country. He did not object to a tax of this kind being put on as a war tax, because it wa3 most important that every person in the country should be made acquainted with the cost of going to war. The hon. Member opposite had truly said that the South African War was a war which the people approved of and that its cost should be brought home to every working man in the country. That he did not complain of, but the war concluded more than two years ago, and this tea duty was not now being imposed as a war tax but as a part of the ordinary taxation of the country. The Chancellor of the Exchequer with very great courage said on the debate on this Bill that he did not see his way to any possibility of retrenchment, and he expressed similar sentiments the other night when he said that so long as they were determined to keep up such an enormous Army so long would it be impossible for the Chancellor of the Exchequer to propose any remission of taxation. Although the poor and the rich alike had war taxation imposed upon them, yet when the war was over the remission was immediately given to the rich and withheld from the poor, although equal quantities of direct and indirect taxation were put upon the shoulders of the people. When the war was over direct taxation was remitted to a very much greater extent than indirect taxation. Consequently the rich people got the remission first although the poor expected it first. The pre ent system of taxation was a rough attempt to equalise the taxation upon rich and poor. In former days Chancellors of the Exchequer, both Liberal and Conservative, worked upon the principle that they ought to raise an equal amount of revenue from direct and indirect taxation. The late Lord Derby laid it down as a canon of finance that if the Government remitted a certain amount of direct taxation they ought to remit an equal amount of indirect taxation; and Lord Derby further said that when they remitted indirect taxation they never put it on again. Now they were constantly increasing indirect taxation. Working men with small incomes paid a very much larger proportion to the Chancellor of the Exchequer than a man with £5,000 or £6,000 a year or a man with £500 or £600 a year. As a matter of fact, the present system of taxation pressed more heavily upon the poor than the rich. The principle which was accepted by most statesmen was that a man ought to be taxed according to his ability to pay, and a perfectly fair system was that every man should pay the same proportion in taxation to the State. Some people held the doctrine that every man should be secured the bare means of subsistence free from taxation and that taxes should be imposed only upon superfluities. That was called Socialism by some people, but the responsible Minister in this House worked upon the principle that the ideal system of taxation was that in which everybody paid the same proportion of the money over which he had command.

The hon. Member for Essex said very truly that the people did not object to this tea duty, and that they had the remedy in their own hands but they did not apply it. To some extent that was true, but if the mass of the people of this country were sufficiently enlightened and instructed and made aware that they paid a greater proportion of taxation than the rich, he was not quite so sure that they would stand it. The people did not know this fact, and their leaders did not tell them. Where were the representatives of the working classes during this debate? He saw one of them present, and he hoped the hon. Member for Clitheroe would give them his views upon this question. The hon. Member behind him had spoken of the profits made by the wholesale dealers in tea, and he seemed to think that a great part of this tax would be paid by the wholesale dealers. That might be perfectly true in regard to the tea sold to the richer classes, but it was not true of the tea consumed by the poor. The poor people got their tea mostly from co-operative societies and they bought their tea mostly from the Co-operative Wholesale Society, which was the biggest importer of tea in Great Britain. This large wholesale society distributed tea in the Midlands and in the North of England amongst the poor, and the consumer could not by any possibility escape paying his full share of the tax. The Co-operative Wholesale Society was bound to charge the extra price, and the Committee might take it that the great mass of the working population did pay directly the tax which was imposed upon tea. The question the Committee had to decide was whether the poor were paying too much or not enough of the taxation of this country. He earnestly recommended to the Chancellor of the Exchequer that if they had to continue raising this enormous revenue he ought to make some official inquiry in regard to the proportion to be borne by working men who had very small means and who often had great difficulty in making both ends meet, and the proportion to be borne by the richer classes of the community. There was one reason why he was especially suspicious in regard to this tax, and it was because they had been told that under certain conditions in the future the tea duty was to be done away with. That was why they were a little suspicious that an increase in the tea duty was now being made with that object. The time might come when the Unionist Party, after being purged of men like himself, would become a united Party and would do away with the tea duty. If the Chancellor of the Exchequer would assure them that this was a perfectly genuine business and that this tax was being put on solely for revenue purposes, the Committee would much more readily be likely to accept his proposals. Although the House might this year allow this additional burden on the poor, he hoped that before next year, and before any proposal was made to further increase indirect taxation which was already so high, some inquiry would be made to see whether or not the working classes of this country did not pay a wholly undue proportion of public burdens.

SIR WILLIAM HARCOURT (Monmouthshire, W.)

said he wanted to state in a few words why he would vote against the increase in the tea duty. In dealing with the question of taxation both in and out of this House he had consistently maintained that indirect taxation fell much more heavily on the class least able to bear it than any other form of taxation. They were face to face with declarations made in various quarters that there was a disposition now to reverse the policy by which the indirect taxation of this country had been consistently reduced by the Chancellors of the Exchequer one after another; reduced so that the comparative burden of indirect taxation should be less and not greater than it was. They had recently a declaration of the most formidable character by the Chancellor of the Exchequer, namely, that he saw no prospect of the reduction of the expenditure of this country. The expenditure of this country, he believed, at this moment was more than the country was able or ought to be called upon to bear. If that were true, it was quite certain that when the Chancellor of the Exchequer admitted that the expenditure would not be reduced they might conclude that it; would be increased. There was and must always be a normal moderate increase in the expenditure of this country consequent on the growth of its population, and the expansion of its resources. But the expenditure of this country had far exceeded any reasonable amount due to either of these causes. If that were so, it was quite plain that the most serious question for everybody in this country was how it was going to be met. The hon. and gallant Member for Essex had said that this proposal was the result of the Khaki war. That was quite true. The hon. and gallant Member said that the people of this country liked the Khaki war. He himself was one of those who did not like it. The hon. and gallant Member said that the people of this country had the matter in their own hands if they did not like the consequences of the Khaki war. Well, had they it in their own hands? That was the point he was going to deal with. As far as he could see the people were going to take it into their own hands, and there were symptoms that they did not like the consequences which had come upon them from the cost of the war.

They were told that there were to be large contributions from the Transvaal. The large contributions were not to be found. He never believed in these contributions. He had always maintained in this House that we never would get them, and he was sorry to say that it seemed to him that there were very sound grounds for the prediction he made on that subject. That being the case what was to be the direction of the future policy of taxation in this country? It was adumbrated that it was to be in the direction of increased indirect taxation. He could recollect the day when Mr. Gladstone took off the tea duty. He recollected the popular feeling that was created among the humbler classes of this country by the greater cheapness of the commodity of tea. It was one of the greatest blessings that ever was bestowed upon the people of this country next to the abolition of the duty upon corn which was so much felt by the working classes. War always meant the imposition of taxes, but they always expected when the war was over that there would be a remission of taxation. There was a remission of taxation in the year after the war. But what was the character of that remission? The remission of direct taxation was largely out of proportion to the remission of indirect taxation. That was the first indication of the policy that was going to be pursued. Now they had this proposal to increase the tea duty in the second year after the war. He protested against that policy and he would vote against it. That policy was called scientific taxation. It meant a general increase in indirect taxation. Put in plain words that was what scientific taxation meant. They were now in the second year after the war, when people had a right to believe that they would have a further remission of war taxation. Instead of there being a further remission there was an increase in taxation. He thought they ought to take every opportunity of protesting against such a policy as that. Nobody pretended that the tea duty did not fall on the consumer. He was sure the Chancellor of the Exchequer would not maintain that for a moment. From that point of view, and believing it to be unjust that after the close of the war there should be a great increase of indirect taxation, he would certainly vote against this increase of the tea duty. It was a great injustice to the growers of tea in India, and from that point of view it required serious consideration. He objected to the increase of the duty because tea was largely consumed by the humbler classes of the country. The hon. Member for Islington had said truly that there was no part of the United Kingdom where it would be more felt than in Ireland.


said he would not vie with the right hon. Gentleman as a prophet. The right hon. Gentleman had truely said that from the beginning he had expressed his disbelief in the receipt by this country of any contribution from the Transvaal towards the expenses of the late war. The Government regretted that it had not been possible to obtain that contribution as early as they had hoped and expected, but for his part he saw no reason to abandon the expectation because it had been delayed, and he still expected that they would receive the contribution that was originally anticipated though at a later date. The right hon. Gentleman alluded to a speech he made the other night at the Mansion House, and said that this tax had assumed a certain added gravity because of the nature of the observations he then made. The right hon. Gentleman quoted him as having said that there was no prospect of any reduction in our taxation.


In our expenditure?


said that was not exactly the meaning he intended to convey. He was alluding to some remarks of a previous speaker's as to the high level at which many of our taxes now stood, and he said he saw no prospect of any such reduction of taxation as would bring these taxes down to such, figures as he had spoken of, in our present circumstances. He did not wish to be held as saying that no reductions in expenditure either in regard to the Army or Navy or of particular parts of the Civil Service were possible; but he did say that, having regard to the natural and inevitable growth to which the right hon. Gentleman had just alluded, no great reduction in expenditure could be expected as long as we had to maintain our defences and preparations upon the scale which was now required by the situation in the world. The discussion on this Amendment, which raised the question of whether there should be any increase in the tea tax or not, had travelled over a rather wide area. He would deal first with those critics who had said that the proportion of indirect taxation he was now imposing was unfair to the indirect taxpayer. Whilst it was, no doubt, true of certain indirect taxes, and of this tea duty amongst others, that they did press with greater severity on the poor than they did on the rich, he did not accept the view that that was true, or necessarily true, of all indirect taxation, He could conceive a tax upon an! article of luxury, which was also an indirect tax, that would fall almost wholly on the rich and not on the poor.? He quite admitted that that was not the: case with the tea duty, which fell with greater severity upon the poor than on the rich. In his proposal to raise the tea duty it was not fair to take it only by itself. He was raising as much by direct taxation as by indirect. It must be remembered that indirect taxation fell on the whole community, though with greater force on the poor, while direct taxation, such as the income-tax, fell only on a very small class of the community. The right hon. Gentleman and others complained that his right hon. friend who preceded him in the office of Chancellor of the Exchequer gave an undue proportion of relief to the direct taxpayer last year and an insufficient relief to indirect taxation. At any rate, the right hon. Member for Croydon was not open to the suspicion which the right hon. Member for Cambridge University cherished as to the motive which impelled him to increase the tea duty. That right hon. Gentleman was, he believed, a great admirer of the financier on the other side of the House, whose orthodoxy was beyond criticism. When that decrease was made the reason for it was that during the war the direct taxpayer had been called upon to pay more than his peace proportion of the increase that was necessary. There was a rule of finance that, at the first call of war, recourse must be had to the direct taxpayer, and during the course of the war the direct taxpayer would have his burdens increased out of proportion to those of the general taxpayer, and it was in recognition of the additional sacrifices he had to make that his right hon. friend gave a larger proportion of the relief which was at his disposal to the direct taxpayers. The right hon. Member for Cambridge University said that the remissions of, or additions to, direct and indirect taxation ought always to be in the same proportion; but that was impossible because indirect taxation must vary with the amount of dutiable goods consumed. Changes in the habits of the people might very seriously affect the produce of a particular tax and upset the balance so laboriously built up between direct and indirect taxation. He could, at any rate, say that the estimate of the revenue which had been framed—and which he still thought, with a little more experience than he had at the moment when he had been obliged to frame it—was a very fair estimate for the year, and that he had brought the proportions of direct and indirect taxation back to the point they occupied before the war, that was to say, to a point more favourable to the indirect taxpayer than at any preceding period when the right hon. Gentleman who criticised him was responsible for the finances of the country. Fortune was not always kind, and none of them knew whether the Government would be allowed to remain in office to carry out those schemes of reform which they had framed for the benefit of the country. He did not say that there were not good things in store for the benefit of the taxpayers—more death duties and such like—but he maintained that the proportions fixed between direct and indirect taxation, be they right or wrong, were the proportions which prevailed before the war, and were more favourable to the indirect taxpayer than in any previous year. That he believed was settled.

The right hon. Gentleman the Member for Cleveland raised a difficult question. The proportion of half-and-half of which the hon. Member had spoken was purely arbitrary, resting on no principle, and having no merit except that it was easy to remember. He agreed with the hon. Member that we must look further to the capacity with which the people could bear taxation, but he thought it was wise also to consider, as Colbert argued, in what manner the revenue which it was necessary to raise could be raised most easily. The mover of the Amendment said that if all the facts were known as to the present taxation, he believed that there would be a revolution. He differed from the hon. Gentleman; but, assuming that his statement was accurate, he was not certain that a system which produced a revolution was not to be preferred to one which enabled the revenue to be collected easily and without any sense of injustice in any section of the community. The hon. Member for Cleveland had taken a great deal of trouble to make a calculation as to the amount of taxation borne by the working classes and what proportion of their income they were obliged to pay to the Exchequer, That was a subject of great interest but also one of extreme difficulty. He himself was very anxious to obtain more accurate ideas on this subject than he had when he first went to the Treasury, and he had hoped that he would have been in a position to frame some estimate sufficiently trustworthy for him to give to the House as the basis for discussion on this matter. He had, however, been warned by every one of his responsible advisers—men who had had great experience and had devoted much study to this question—that they had no more difficult subject of inquiry and that there was no calculation that they were prepared to give him which would be at all trustworthy, or at all fit to be placed before the House or which it would be safe to give. He did not say that they had exhausted all means of arriving at the truth; but he did say that he could not accept the figures of the hon. Gentleman; nor did he think that the averages taken, as he had taken them, settled the question. The hon. Gentleman himself admitted that an average of what was paid by the whole taxpayers would be no measure in this matter. Amongst the working classes circumstances differed as widely as between the working classes and the class next above them, or between the middle classes and the higher classes. What they could calculate was the amount of taxation which was taken compulsorily, whether they would or not, from members of this class per head. He distinguished between those taxes from payment of which a man could not escape—taxes on articles of consumption, in which he would include tea and sugar, and taxes on alcohol and tobacco, which were also largely paid by the working classes. But surely, when they were considering what was the capacity of the people to pay and whether they were unduly burdened, the taxation taken on something in the nature of a comfort or luxury was a very material point. If they looked at what was taken from articles of necessity, including all except alcohol and tobacco, it amounted to no more than 7s. 3d. per head. He did not think that that was a demand too great to make considering the amount that had to be raised altogether to meet general expenditure. He confessed he found it difficult to reconcile the argument of the hon. Gentleman that there should be some material decrease in the taxation, with the desire that the burden of this great expenditure should be brought home to every voter in order that public opinion might be roused to check its growth. For his part, when regard was had to the enormous proportion of expenditure which now went specially to the benefit of the poorer classes in the community, when regard was had to the fact how vitally they were interested in the proper administration of the great spending Departments, and that they would suffer most by any failure on the part of this country to keep command of the sea, he was not afraid to appeal to his countrymen, to whatever class they belonged, that they should bear whatever expense was necessary. And he did not hold that any Member of this House need be afraid to appeal to his constituents on that basis.

The right hon. Gentleman opposite said that, of course, this tax would be borne by the consumer in this country. To that extent, however, it-lessened the complaint of the tea growers of other countries, of which they heard a. great deal. He did not say that the tea grower would be entirely unaffected because the tax would fall on the consumer in this country; as it was perfectly true that if there were a great reduction in the quantity consumed that would obviously affect him. But how would it affect him? Surely, by reducing the demand for his tea. He would then have a supply greater than his demand; the price would fall; and, to that extent, the consumer in this country would cease to pay the duty. He thought that that would not be contradicted by any of the statesmen whom his right hon. friend the Member for Cambridge University had yoked to his cart. He was not without sympathy for the tea growers in India and Ceylon.


said that if the demand decreased the tea growers would lose the capital they had expended.


said, although that was really no answer, he might make one observation upon it. He thought capital was liquid and that it could be removed from one industry to another.


said capital in a plantation could not be removed.


said that if the right hon. Gentleman would consult the manufacturers as to how much capital they could get out of their business if they ceased to be able to produce a profit he would alter his opinion. That, however, was not material to his point. The right hon. Gentleman said that if tea planters ceased to produce they would lose their capital. But they would have every stimulus not to lose that capital and not to cease to produce. What he was pointing out was that if that occurred the price in this country must fall, and the consumer would be relieved of the tax. He did not, however, think that that was going to happen. He did not think that the consumption of tea in this country was going to be changed so as to materially affect the imports of tea. Hon. Members had quoted the figures of the imports of tea for individual years. That was, he thought, a very misleading and dangerous way of treating the figures; because, necessarily, no account was taken of the stocks in the hands of dealers and grocers at the beginning of the year. It was much safer to take an average, say of a period of three years, and then to compare periods. He had had the figures taken out from as far back as 1859 right up to the close of 1903; and it would be seen from them that there was a steady growth in the consumption of tea in this country in spite of the increase of duty in 1900; and he believed that the increase in the imports would continue in spite of the increase which he was now obliged to impose. It was suggested by several hon. Gentlemen that the increase in the tea duty was peculiarly unfavourable to the growers in Ceylon. He thought the figures hardly bore that out. It was suggested that the effect of increasing the duty on tea was to cause a greater quantity of China tea to be imported, which would replace Ceylon-grown tea. If hon. Members would examine the figures more carefully they would find that, so far as Ceylon tea had been displaced in the home market, it had been displaced by Indian tea and not by China tea. There was no decrease in the importation of Ceylon tea in 1900; the decrease began in 1901, and continued in 1902 and in 1903; but that decrease was accompanied by a very marked rise in the importation of tea from British India. There was one other observation he would make which had been overlooked by hon. Gentlemen. There had been a falling off in the amount of tea brought into this country for re-export; and that had affected the figures. More tea was being shipped direct from Ceylon to other countries than was the case formerly. The re-exports of Ceylon tea from the United Kingdom to other countries fell between 1901 and 1903 by over 2,000,000 lbs. The import figures should, therefore, be corrected to that extent before they could judge as to what the rates of the whole consumption had been. He thought he had now dealt with all th points which had been raised.

He would not go into the question concerning distribution, to which allusion had been made by the hon. Gentleman the Member for West Islington, because the hon. Gentleman said that he proposed to raise it again. As regarded one observation of the hon. Gentleman, namely that the tax pressed very heavily on the sellers of liquid tea—cofiee-house owners and others—it was evident from the case they put before him that they were accustomed to make tea practically produce the whole profit of their business. They sold meat and bread at prices which left them no profit, and which barely paid the expenses that were being incurred; they even supplied condiments—salt, pepper, and vinegar—to people who brought their own food; and the fact was that the ½d. cup of tea had to pay the whole cost of running the establishment, apart from the bare cost of the other materials, and they were getting out of tea all their profit. Of course, if that was the case, there were other ways in which they could redress the injury put upon them by the higher taxation of tea than by simply raising the price of the cup of tea; and it was unfair to argue that no Finance Minister should ever touch tea because it would cut out all source of profit in a business in which all the profit was taken out of tea. He did not propose an increase in the tea tax with any pleasure. Ho did not consider it as being in itself an admirable or desirable thing. He came to it rather by a process of exclusion; but having to raise revenue, and under the conditions with which they were confronted, he did not think there was any fairer method of distribution than a proposal to increase the duty on tea, coupled with an increase of 1d. in the £ on income-tax. He thought he had now said all that need be said in connection with the speeches which had been delivered. He had been obliged to repeat himself to some extent; but he hoped the Committee would forgive that, because, after all, this was not the only time they had discussed the question, and ho had had to reply previously to many of the arguments which had been advanced.

SIR HENRY FOWLER (Wolverhampton, E.)

said that the Chancellor of the Exchequer in commencing his speech referred to a remark which had fallen from the right hon. Gentleman the Member for West Monmouthshire with reference to a report which appeared in the newspapers of a statement made by the right hon. Gentleman at the Mansion House. He did not think that the Chancellor of the Exchequer really qualified the character of that announcement or in any way altered its meaning. The right hon. Gentleman at the Mansion House said that the scale of taxation required by the present condition of the world did not admit of any material reduction from its present standpoint. That was exactly the point on which he wished to join issue with the right hon. Gentleman, because, in his opinion, the present scale of expenditure was not required by the present condition of the world, but was required by the present policy of His Majesty's Ministers. That was a very different thing from the present condition of the world. Later in his speech the right hon. Gentleman brought up again the old story of the Navy; and he said he was quite sure that the constituencies would not respond to any reduction in necessary Navy expenditure. That was not the question at issue.


said he was very glad to hear it, because the proposition was made by several speakers on the other side of the House.


said he did not quite agree. The question was a question of principle; not the application of the principle; and there was no controversy between the two sides of the House with regard to the country not grudging any necessary expenditure on the Navy for the proper protection of the country and of its vast trade. The controversy was as to extravagant and unnecessary expenditure on the Army; and, in discussing that, they should always remember that the Chancellor of the Exchequer was not only maintaining but increasing taxation. This was not war taxation. This was a peace Budget; it was peace taxation intended to form a permanent part of the ordinary revenue. No doubt the war led to expenditure, because it called the attention of the country to certain de-ficiences in its military administration. But that in no way justified this exceptional taxation, which was to be a permanent increase; nor could it be justified on the ground that all classes of the community had to pay their share. He agreed with the Chancellor of the Exchequer that no question of principle was settled by the classification into direct and indirect taxation. Direct taxation did not mean taxation affecting a certain specific class, but taxes collected at the least possible cost in a direct manner with no deductions in consequence of their imposition. Indirect taxation was an attempt to delude people into the payment of taxes of which they were not conscious, and involved a larger expenditure upon collection and on various details of trace arising from that mode of collecting revenue. A statement of so much per cent, on this side and on that, and that there was a perfectly fair balance between the two did, not touch the issue set out in the remarks of the hon. Member for Cleveland. It was the equality of burden and the class of person on whom the burden fell that was the question raised. No doubt a poll-tax would be the most direct form of taxation if it could be levied; but, of course, that was out of the bounds of possibility; but if you take from a man's income a certain amount and take from a person of larger means a like amount, the burden is not equalised when you apply a rule of three sum to the large and small incomes; the burden is the capacity of the man to pay that amount. Taxation on the poor was not harsh because it was indirect; but because the burden on the poor man was greater, and it was harsh when the tax was imposed upon a necessity of life. The present Government had imposed taxation on necessities of life; first there was the tax upon corn and now the right hon. Gentleman had increased the tax on tea by 50 per cent. Nobody knew whether the corn tax was meant to be permanent or temporary until, through the attitude adopted by the right hon. Member for Croydon, it was treated as a temporary tax and got rid of, but now the right hon. Gentleman dealt with another necessity of life second only to corn, and he proposed to make the tax permanent. The Chancellor of the Exchequer had laid down a distinction between necessaries and luxuries, and had lid that there were certain things that people could do without and if they were taxed you taxed luxuries, but in putting a tax on tea he taxed what was a necessity of life to the Irish peasant.


I expressly excluded tea.


Then why did the right hon. Gentleman increase the taxation? A duty on tobacco was a tax on a luxury, but the right hon. Gentleman dealt with tea, and an addition of 2d. was made on tea—2d. on 4d, an increase of 50 per cent, for war purposes, while the tobacco duties which had been reduced by 6d. a year before, a reduction from which the consumer got no proportionate advantage, were never raised to a war level. The real objection to this tax was that it was demanded for expenditure the country ought not to be called upon to bear, and when the country had the opportunity he did not doubt that in that sense a verdict would be pronounced. If such expenditure was necessary, then let taxation be levied on those best able to bear it. Had the Chancellor of the Exchequer proposed an equivalent increase in the income-tax his proposal would have met with the strongest if not successful opposition.


said the Chancellor of the Exchequer had justified his proposal to put half the amount required on direct and half on indirect taxation, by saying it was a convenient method, and easy to remember. Coining, as the proposal did, so soon after the reductions made by the right hon. Member for Croydon, when he took four times as much off direct as off indirect taxation, upon the ground that in the first instance the war taxes had been practically drawn from direct taxation, he was, he confessed, astonished at that statement of the Chancellor of the Exchequer. He had a very distinct recollection of the speech made by the right hon. Member for West Bristol, when Chancellor of the Exchequer, in introducing his Budget. The right hon. Gentleman then said— There is another thing; during the last four years the proportion in which our revenue has been derived from direct and indirect taxation has not varied. The portion of it derived from direct taxation is rather less—a slightly increasing proportion—than that derived from indirect taxation, but there has been no material variation. I think those proportions are fair. We shall endeavour as far as may be to see that this proportion shall not be materially varied. That was to say, in imposing fresh taxation for the war, the right hon. Gentleman put it equally on direct and indirect taxation; and he pursued the same system in 1901. When taxation which was taken off last year had to be re-imposed, surely it was only just that it should be re-imposed in the same proportions by which it had been reduced. It was absurd to say now that in time of war the direct taxpayer was the first resource of the Chancellor of the Exchequer, when, in fact, the direct taxpayer was not the first resource in 1900. Discussion on the tea duty was not a new thing in the House of Commons. There had been discussions every year, certainly, since Mr. Burke described tea as the most important article of our trade. He had not looked up the whole of the debates which had taken place upon tea, but ho had looked up some of the pregnant observations of some of the right hon. Gentleman's predecessors, which; the right hon. Gentleman might wisely: follow. Both the right hon. Gentleman the Member for West Monmouthshire and the right hon. Gentleman the Member for West Bristol had had observations to make during the last ten or twelve years on the subject of tea, and if the right hon. Gentleman the Chancellor of the Exchequer had taken their experience as a guide he would not have hastened with unwise speed to touch the tea duty at this moment. In 1894 the right hon. Gentleman the Member for West Monmouthshire had to face a situation of great difficulty; trade was very bad and he had to face a deficit. He found the tea duty at 4d., but he did not propose to raise it. The right hon. Gentleman said— Next as to tea. Here there has been an excess of £101,000 over the receipt in the preceding year, and an increase of 6,000,000 lbs. or 3 per cent, on the whole consumption. The conditions were so satisfactory as not to warrant him in interfering in any way with the tea duty, which then stood at only 4d. He would now turn to some observations made by the right hon. Member for West Bristol in 1896. He then found the tea duty still at 4d. and he showed there was an increase in that year over the preceding year of no less than £158,000 of revenue and that the consumption had increased by nearly 10,000,000 lbs.

In 1897 he had the same tale to tell of a large increase of consumption and a large increase of revenue. In 1898 and 1899 the story was the same, so that during the period between 1894 to the close of the century there was a continuous increase of revenue from tea and a large increase in the home consumption. That was while the duty stood at 4d. In 1900 there was the war. The duty was increased to 6d., and the receipts largely increased, but with regard to the increase the Chancellor of the Exchequer said that a part of it was doubtless due to premature withdrawals from bonds. In 1901 there was an increase of £1,000,000 on tea beyond the estimate, but that again was accounted for by forestalments. In that year the right hon. Gentleman the Member for West Bristol, having to find a new source of revenue, said— I turn to tea. Tea is already taxed up to 75 per cent, of its value. Tea is the produce mainly of India and Ceylon—a produce in which our fellow-subjects at home and abroad are deeply interested, and a trade which, owing largely, I think, to overproduction, is at present in a by no means satisfactory condition. I do not think we ought to increase the duty on tea. That was when the duty was 75 per cent, of the value, and when an estimated deficit of £55,000,000 had to be faced. To-day the proposed duty of 8d. was 100 per cent, on the average price of tea, and 120 per cent, on the price of the ordinary cheap tea. In the face of these facts was the present Chancellor of the Exchequer wise in departing from the advice and practice of so distinguished a predecessor, and in asking the House to disregard the fact that such an increase of duty was a great obstacle in the way of a trade now chiefly done with our own Colonies? In 1902 the Chancellor of the Exchequer, speaking as to the advisability of imposing any fresh duty on tea, said— Then, Sir, I come to tea. I have listened to the pitiful cry of our fellow-subjects, the tea producers in India and Ceylon, and bearing in mind that tea, which is almost a necessary of life, is already taxed to 75 per cent, of its average value, confess should be sorry to increase that tax. He asked the Committee to compare the treatment meted out to our Colonies by a free-trader who listened to the pitiful cry that came from India and Ceylon, and the treatment proposed to be meted out by an avowed protectionist and advocate of colonial preference. In 1903 the then Chancellor of the Exchequer, the right hon. Gentleman the Member for West Croydon, did not refer specially to tea, but he followed the wise policy of his predecessor and left it alone. The Chancellor of the Exchequer now said that there had been some confusion as to the consumption of tea, and had suggested that if a triennial period were taken it would be found that during the last three years there had been a substantial increase. But was it fair to take the total consumption of tea without having regard to the large increase in population? Surely the figure to be taken was the consumption per head of the population.


That is what was dealing with.


said that in that case he was afraid the right hon. Gentleman's figures were wrong. As he was informed, the consumption per head in the year 1900 was 6.07 lbs.; in 1901,6.16; in 1902, 6.06; and in 1903,6.03, so that in the two years after the imposition of the increased duty there was a considerable decline. Having regard to the fact that the duty was not at once felt, owing to the large stocks of tea in hand, he submitted that it was not fair to take the whole of the year 1901 as a taxed year. If allowance were made for that fact, it would be found that since the increase of the tax there had been an appreciable reduction in the consumption per head of the population. The right hon. Gentleman had also stated that, while it was true that the consumption of tea from Ceylon had largely declined during the last few years, the consumption from India had made an important increase. He was not certain whether the right hon. Gentleman meant that the total; consumption from India and Ceylon combined had not declined. It might be true that in tea from India there had been an increase, but it was certainly not so large as to make up for the decrease of 9,000,000 lbs. from Ceylon. Side by side with that diminution in the consumption of tea from our Colonies there was an increase in the importation of China teas, showing that the tendency of an increase of duty was to injure our colonial trade, to reduce the consumption of tea at home, to impair the revenue, and to give a benefit to China teas which the Committee was not in the least degree called upon to confer upon them.

MR. RITCHIE (Croydon)

said that the hon. Member had suggested that, in dealing with taxation last year, the Chancellor of the Exchequer was hardly justified in taking off so large an amount from the direct taxpayer as compared with the amount taken off the indirect taxpayer. Without going into the figures, his recollection was very clear that, so far from dealing unfairly with the payers of indirect taxation, the Budget provided for taking off only the amount of direct taxation to which the direct taxpayers were entitled, and that the amounts taken off the two classes of taxpayers were in direct relation the one to the other. The hon. Member had also said that the income-tax payer was always the first called upon to provide money for war purposes. Whether that was the case or not, the direct taxpayer was called upon during the progress of the war for a much larger proportion of the taxes that were required than the indirect taxpayer was called upon to pay. The best criterion for judging of the position of the direct and indirect taxpayer was to examine what was the proportion of taxation paid by each class before the war and after the Budget of last year. He had not the figures before him, but he was satisfied he was correct in saying that the indirect taxpayer was in a better position as compared with the direct taxpayer after the Budget of last year than he was at the commencement of the war. It was quite true that the amount taken off direct taxation was much larger than the amount taken off indirect taxation because the amount paid during the war by the direct taxpayer was far in excess of the amount paid by the indirect taxpayer.


said there was the coaltax.


said they were talking about the burden on the taxpayer, and if the coal tax had had any effect, at all on the taxpayers of the country, it had been rather to tend to a decrease in the price of that article than to increase it. It would therefore be an act of folly on the part of any financier to regard the coal tax as an element entering into a consideration of the burden falling on the direct and the indirect taxpayers. The Chancellor of the Exechequer had, in his view, pursued exactly the right course in putting practically an equal burden upon both classes of taxpayers. He had always contended after the remission of taxation last year that in any future remission of taxation the direct taxpayer had as strong a claim as the indirect taxpayer. With regard to what the right hon. Gentlemen had said as to the increase of 2d. in the tea duty not having decreased the consumption of that article, that was very easily understood. He had to look into the question of tea at the time of the preparation of the last Budget, and he found that, although there had been an additional duty of 2d. put upon tea, the wholesale price of tea had only gone up by one half-penny per pound. This was due to the fact that there had been an enormous development of the tea industry and an increase in the production, and consequently the prices obtained by the growers in India and Ceylon had fallen. It did not follow, however, that this additional burden now being imposed would not have the effect of decreasing the consumption of tea, and if it had that effect it would injure the growers both in China, India, and Ceylon. He regretted that his right hon. friend had felt bound to raise the additional sum required from indirect taxation by putting an increased duty on tea, but he was not disposed to find fault with him for so doing. He had no doubt his right hon. friend very carefully examined all the sources of taxation, and that it was only but that was after this careful examination that he rejected the idea of putting a considerable, additional amount of taxation on tobacco. Having regard to the way in which the tobacco duty was coming in, he thought it might have been better if the Chancellor of the Exchequer could have got all the money he wanted out of tobacco, but he was not at all sure that he could have done that without running the risk of losing revenue by a decreased consumption. No doubt his right hon. friend carefully investigated that matter before he came to the conclusion to adopt the taxation of tea, and he did not propose to find any fault with the course he had adopted.

MR. LLOYD-GEORGE (Carnarvon Boroughs)

said he did not want to enter into a controversy with the right hon. Gentleman as to the Budget of last year, but he would like to refer to what he had said about coal. Surely coal must be regarded as indirect taxation. The right hon. Gentleman the Member for Croydon contended that the foreign importer paid some portion of the coal tax, but the Opposition held that that was a perfectly absurd proposition. He contended that the miner as well as the coal-owner was paying a share of this tax, and it must be put amongst the indirect taxes. Their complaint was that the indirect taxpayers were, by this Budget, put in exactly the same position as they were in at the worst period of the war, and that this was differentiating against the poor in favour of the rich. The poor man was left in exactly the same position as he was during the war. He had not received any benefit from the war, but those who had paid income-tax had a chance of receiving something back from Chinese and cheap labour, and consequently they ought to bear their fair share. This was just the time to put up the income-tax, because shares in South Africa were going up in the market. This was just the time when the direct taxpayer ought to be taxed, but the working man, instead of being benefited by cheap labour, was just the man who was being hit very hard by it. In those very carefully worked out figures quoted by his hon. friend, he had shown that a working man contributed in indirect taxation a sum amounting to something like one week's wages a year more than he contributed five years ago. That was a very serious matter, and it was time they considered it; and instead of increasing this form of taxation they ought to be seriously considering: how they could decrease it. He remembered an hon. Member speaking from that Bench, from which all hopeless causes were pleaded, proposing to wipe off all taxation upon tea. Now they were considering a proposal to increase it to 8d., thus putting the tea tax at a figure at which it had not been for forty years. That fact ought to make the Committee-pause before proceeding with this Budget.

The increase in indirect taxation hit two very worthy classes who could very ill afford to bear increased taxation at this or any other time. It first of all hit the working classes of this country. The additional duty on tea would mean that the working classes would have to drink an inferior quality of tea, and, in order to get the most out of it, they would allow it to stew. This Budget, therefore, was a Budget to encourage the stewing of tea. The workman's wife would pay just the same price for tea as before, and the Ceylon and Indian planter would be-hit. The only result of this tax would be that the workman's wife would keep the tea stewing twice as long, and they would drink more tannin. That was what this Budget would do. It was a Budget to promote the consumption of tannin by the working men of this country, and therefore there would be more indigestion. There had recently been a meeting of Ceylon planters in the City, and at that meeting it was stated that one result of the increase in the tea duty would be a large increase in the consumption of a very cheap quality of China tea, A class that would be hit very hard were the Ceylon tea planters. They were a class who deserved a great deal of encouragement. It seemed to be assumed by hon. Members on the other side that they had a monopoly of sympathy with colonial trade. Not at all. On the Opposition side of the House they were in favour of encouraging colonial trade in every way legitimate, and they considered that this was one of them. Ceylon had made great efforts during the last few years in order to develop its tea industries. It had made an exceedingly plucky fight. What hid been done during the last three or four years? This Government by increasing the duty on tea had struck a very hard blow at the Ceylon tea planters. An hon. Member on the other side seemed to think that they were not involved in it. They had a great meeting the other day, and they began by saying that it was for the enlightenment of the Government. A perfectly hopeless task. They went on to say that during the last three or four years there had been no increase in their business. They said that the increase of the tea duty had practically put a stop to the development of Celyon tea planting. They said that during the war they raised no objection. Why? Because they believed that they were giving their contribution to what they considered a great Imperial cause. He believed they also contributed a large force to go out to South Africa. But they felt that when the war was over they were entitled to get their share of the remission of taxation which was their due as well as the due of every other man in the Empire, and they did not get it. On the contrary, instead of getting a remission the duty on tea was increased, and increased by a Government that believed in colonial preference. The Secretary to the Local Government Board, speaking on Saturday night said this was a Government of disappointments. He did not agree with the hon. Gentleman. Nobody who knew the Government could be disappointed at anything they did. The proposal to increase the tea duty was a thing that required a good deal of explanation. It was a proposal to increase the tax on a colonial product. It was increasing the duty on a very important colonial industry, and he ventured to say that while they were doing that they were hitting hard a very deserving class in this country.

The right hon. Gentleman said that this was a tax which everybody; ought to bear. He said that every class of the community ought to bear a share of the burden of taxation. Perfectly right, and if the working class encouraged war he was one of those who believed that they ought to bear a share of the burdens of that war. War ought not to be made easy for any class. But let them bear only a fair share. Contrast this with the indulgence shown to the gentlemen who really rushed the country into war—the mining magnates—in their financial transactions. When they were; hard pressed in South Africa the £10,000,000 were remitted. Their fair share of the burden was not imposed upon them. But when it came to the question of the working classes, not merely was their taxation not remitted, it was put up; and when there was a claim put forward on their behalf that they should receive their share of remission the Government said, "Oh, you! clamoured for the war, you, therefore, ought to pay your share of the burden," So did the others—and not only that, it was they who engineered it. The working classes went into it out of pure motives of patriotism, and that was more than could be said for the other gentlemen whose £10,000,000 had been remitted. He was not sure whether the Chancellor of the Exchequer's argument about the ease of the tax was one that ought to commend itself. It was the ease of that indirect taxation that had conduced to the enormous extravagance of the country, and a Chancellor of the Exchequer who really wanted to warn the people as to where they were rushing to would not want to seek out methods of easy taxation. The death duties had increased enormously the revenue of the country, and an extravagant Government, instead of using those duties for the purpose of promoting some beneficial reforms, used them to increase extravagance on military armaments and military expeditions. He would be perfectly ready, therefore, to increase the burden of direct taxation. Let every man know what he was doing. If he wanted war let him pay for it and know that he was paying for it, and he believed that the result would be to curtail the expenditure of the country and make the people of the country more interested in economy than they were at present.


said he was glad to hear the lion. Gentleman opposite state his opinion that every class that was responsible for a war ought to bear its contribution towards it. The hon. Member had compared the present Budget proposals with the revenue raised at the height of the war, and said the direct taxpayer had been relieved. But the only fair comparison was with the period before the war, and as compared with that period, if the figures given by the right hon. Gentleman the Member for Croydon were correct, the proportion had certainly not been altered in favour of the direct taxpayer. With the general criticism that if the expenditure of the Government were not extravagant this tax would not be necessary, he was largely in sympathy, but he noticed that right hon. Gentlemen opposite were anxious to dissociate themselves with criticism of expenditure on the Navy. Surely, necessary or not—and he believed it to be necessary—there was no Department where the increase of expenditure had been more rapid than in that of the Navy, and if it was thought that the whole scheme of national finance was on an extravagant scale, no chapter of the Budget ought to escape rigorous examination. The belief in the necessity of a paramount Navy was not inconsistent with the belief that we did not get full value for our money. Theoretically, the standard of our Navy was that it should be equal to the navies of any two Powers, but that standard had been very largely exceeded. Although he did not desire to prejudge the result, and although he was a fervent believer in the paramount necessity of maintaining an efficient Navy, he wanted the expenditure to be brought under rigorous examination. It appeared to him that the general expenditure of the country could not very well be criticised in this debate. It did not seem to be germane to the proposal before the Committee, nor did he think that the result of criticism of that kind on such an occasion a: the present was likely to be very productive of practical reductions. And if it were assumed for a moment that the expenditure which had been authorisedby this House and the country was necessary, then no criticism of the present proposal appeared to him to be valid unless some more efficient substitute could be suggested. He had listened to the speeches of hon. Gentlemen opposite, but there was no general consensus of opinion in favour of a tax to substitute for the tea tax. Hon. Gentlemen opposite would not have a general tax on raw materials, they were not in favour of a general tax on luxuries, there was no agreement as to an increased duty on tobacco instead of tea. Therefore he was not disposed to vote against the Government proposal, because he believed that the revenue already fell short of the requirements of the country. He had stated on previous occasions that the revenue should be adequate, not only to pay all expenditure—both charges on revenue and capital—but that further provision should be made for the Sinking Fund than in any one of the last three years. In the absence of any definite proposal to substitute another tax for that on tea, he adhered to the belief that this proposed increase of the tea duty was justifiable and that it was necessary.


said that the Chancellor of the Exchequer wanted money and was bound to get it, and the right hon. Gentleman thought he could get it with least trouble by planting taxes on those who were already in the habit of paying most into the Exchequer. The increased duty on tea they were now asked to pay was due to the increased expenditure of the country. It was said that the people of this country justified that expenditure. They, in that quarter of the House, had not been very heartily in favour of those military expeditions which had been undertaken by the Government. With his colleagues he was grateful to hear the statement made by the right hon. Member for West Monmouth, who had consistently opposed many of the expeditions which had rendered necessary this huge expenditure. The right hon. Gentleman had also said that this tax would tell very seriously against Ireland; and once again he had given an example of his friendship for Ireland. The hon. Member for Islington had likewise brought before the Committee how heavily this tax would bear upon Ireland; and the right hon. Member for Cambridge University had invited hon. Members below the Gangway and the Labour Members on that side of the House to protest against it. It should be remembered that the labouring classes in the country had already protested against the increased tax. Ireland was struck more by it than any other portion of the United Kingdom for two reasons. First, because she was unable to bear more taxation than at present, being overtaxed already to the extent of £3,000,000 a year more than she should be; and, second, because it would press more heavily on Ireland than on England and Scotland, inasmuch as more tea was consumed in Ireland than in England or Scotland in proportion to the population. The Prime Minister on more than one occasion had said that he was opposed to a tax on food. It might be alleged that tea was not a food, but in the West of Ireland it was looked upon as a food. In fact, with bread, it was almost all the food the peasantry had. To raise the duty from 6d. to 8d. was a very serious matter; how serious would only be known when they had the results at the end of the financial year. The Chancellor of the Exchequer that afternoon admitted that this tax was going to bear especially on the masses of the people. Just imagine the position when a man went into a shop to buy a pound of tea and found that he had to pay 8d. for the tea and 8d. duty for those military expeditions of which they had heard so much that afternoon! That was a serious thing for a man earning 1s. a day and whose children were denied all the little luxuries of life.

The Chancellor of the Exchequer said that the money would be expended amongst the people in the dockyards and those engaged on public works. But in Ireland they would not rejoice at that, because there was no such expenditure there. No warships were built in Ireland, although there was one small dockyard, and there was some expenditure on the salaries of officials who only oppressed and repressed the people. They were told that the people of this country wanted the South African War and that they must pay for it. It was possible that England wanted the war, but it could not be said that Ireland wanted it, and was it fair that the Irish people should be called upon to pay the expenditure incurred there? He admitted that the reason for the Irish Members opposing the South African expenditure was the still higher reason that they hated the destruction of the liberties of two free Republics. They had to realise the fact that this tax which the Irish peasants would have to pay was equivalent to an income-tax of 2s. in the £1. An appeal had been made to certain hon. Gentlemen and to others who happened to be engaged in the wholesale tea trade to reduce their profits. Why not first ask Ministers to reduce their salaries? Why should not the Attorney-General, who received £20,000 last year, be asked to reduce his income and save expenditure. The position for the representatives of Ireland was almost hopeless. They made their appeal in this House and it was not heard. The Irish people, were leaving their country year by year; the country was taxed to the extent of £3,000,000 more than it ought to be and there was no redress. Yet the Irish people were asked to bless the Union, because they were given a Friday afternoon on which to discuss two Irish subjects. He would not enter into the question as to the injury this tax would do Ceylon. His business was to enter a protest, as an Irish Member, against it, because tea, in his judgment, was an article which ought not to be taxed; and also because the tax fell very severely on his country; and further because he had no sympathy with the expeditions for which the money that would be derived from the tax was required.

MR. SHACKLETON (Lancashire, Clitheroe)

said that the inability of the Chancellor of the Exchequer to give to the House any figures showing the proportionate share of taxation paid by the working classes led him to think that another department of State was wanted, and that was an intelligence department. It was bewildering to think that a Government department could not get out figures which could easily be produced in any well-conducted business establishment. Surely that was a matter to which the Chancellor of the Exchequer might devote some attention. His hon. friend the Member for the Cleveland Division had estimated that the amount paid by the working classes was equivalent to 1s. 7d. in the £ of the wages earned. His hon. friend, however, fixed the average wages at 35s. What would happen when the wages were only 25s., 20s., 18s., or 16s.? The proportion would then increase in a terrible ratio, because all the wages would be spent on the necessaries of life. He thought the Chancellor of the Exchequer ought to pay attention to this matter: and that when another Budget was introduced they might be informed what was the proportion that each class was going to contribute. It appeared to him that the workman was the bottom dog all the time. Of course, direct taxation fell ultimately on the consumer. It could be proved that 20s. six years ago was only equivalent to 18s. at present. He had complaints coming directly to him; and he had inquired into the subject, and found that, taking an average co-operative society or private shopkeeper, there was 2s. in the £ increase in the price of commodities during the last five or six years. The Government seemed to have an idea that the South African War enabled them to do anything they liked. That was an entirely wrong impression. He happened to be in close connection with the working classes; and he declared that many of them did not know anything about the merits or demerits of the war. The fact that there were a number of acquaintances and relatives going to the war made them favour it; and when any ordinary man uttered a word against it "pro-Boer" was flung in his face. When the country voted for the present Government in 1900 did they give them power to impose this additional taxation? Under this tax the rich man who paid 4s. or 5s. per pound for his tea would only pay 2d., whereas the poor man who only paid 1s. or 1s 6d. per pound for his tea would also have to pay 2d. The proportion of taxation was altogether out of reason; and out of all proportion to the amount spent on the articles taxed. He had heard an hon. Gentleman opposite on another occasion criticise the expenditure on the Navy and say the Estimates this year were £9,000,000 more than what was required for a two-Power standard. It came to this, that the responsible Government of this country and its influential supporters differed as to the amount that was required to bring up the Navy to a two-Power standard and the country had to pay that £9,000,000 while the Government were figuring out whether it was wanted or not. As a working man he protested against this taxation and urged the Committee not to agree to the extra twopence on tea until they knew what money was actually required. If the Government insisted upon having the money, let them come forward with another tax that would not bear so harshly on the people.


appealed to the Committee, now that this Amendment had been under discussion for some hours, to come to an early decision upon it.


pointed out that the Amendment raised the whole question of direct and indirect taxation, and said that under the circumstances, and having regard to the importance of the discussion, he did not think the right hon. Gentleman ought to ask the Committee to come to a nasty conclusion.

MR. LABOUCHEEE (Northampton)

expressed his concurrence with the view of the hon. Member for Exeter that before taxation was raised up to this point the Committee ought to be certain that there was no wastage. The hon. Member regarded with some dread any reduction of naval expenditure, but looking at what had taken place with regard to the Army in recent years there could be little doubt but that there was considerable wastage in both services. The hon. Member for Exeter then went on to say he was prepared to vote against the tax upon tea being raised because he did not think tea was a desirable article to tax, if it could be pointed out to him in what manner the money could be raised by any other means. It was well known that when a tax was brought forward in a Finance Bill they could not in Committee introduce another tax in its place. He never could understand the ruling because Sir Erskine May, who was considered a very good authority on Parliamentary procedure, ruled the reverse. But if the Government had any difficulty in selecting a tax he would point out that there were many which were more fair to the poor than those in the present scheme. They might have a tax on licences, which were a monopoly. A tax could be raised in order to equalise the monopoly possessed by brewers, which would be no injustice to the brewers, and which would exceed in amount the revenue raised on tea. Then there was the progressive income-tax, which he would prefer. There was still another tax which either the Government or the locality might levy on land values, which would yield the £10,000,000 they got now from the people. Then there were the Transvaal magnates who owned so much and who had underwritten a large loan. Why did we not get that? Why should we tax the teapot of every wretched old woman in the country and let off these wealthy magnates of the Transvaal? The hon. Member for Droitwich had told the Committee that this was a fair tax because the wholesale vendor made such enormous profits that he was the proper person to pay this tax. But that was hardly so; he was told by a wholesale vendor that if he bought a tea at 6½d.or lb. he would add to that the duty of 8d. and he would add another half-penny to make it level, that that would bring the price up to 1s. 3d., and that he would sell it at 1s. 4d., and that a tea costing 1s. 8d. with the duty added he would sell for 2s. It was absurd to suppose that another tax of 2d. could be put on tea and that it would not be paid by the consumer. It was perfectly certain that when such a tax was put on it must be paid by the consumer. The right hon. Gentleman was a banker. How would he apply this doctrine to the banking business? A banker made a great deal more per cent, on his capital than the importer of tea. This opened a large vista of taxation if we were to tax people according to their capital, and bankers would find such a tax press very hardly on themselves.

The right hon. Gentleman the Member for West Birmingham, in the scheme which he had placed before the country, suggested that taxation would be equalised by taking the tax oil tea because it was necessary that a person must take a certain amount of bread and tea, and if he had tea cheaper he would eat less bread. No doubt every person had to take a certain amount of liquor to keep going. Those who drank a quantity of tea did not drink so much beer, and if they taxed tea very highly the tendency would be for people to drink more beer instead of tea. Therefore he was opposed altogether to this kind of taxation. He did not wish to exaggerate, but surely everybody knew that there were a number of poor old women whose only happiness in life was a cup of tea, and yet it was now proposed to raise the price of tea to these poor people with their miserable pittances. If all this money had to be raised they ought to see if it could not be raised in a more legitimate way. When this tax was put on it was said that it was only a war tax and that it would be taken off after the war was over, but instead of doing this the Government had doubled the tax. Therefore the Government had not carried out their pledge in regard to this tea duty. Possibly this tax would not be necessity at all, because he gathered from the Secretary of State for War that hi had got some scheme for the reorganisation of the Army which would effect a very great economy, and the Chancellor of the Exchequer had not taken account of that economy in his Budget. Consequently it was possible that they would not require this extra money from the tea duty. When the Government had agreed amongst themselves and really settled what the scheme was to be, he was perfectly certain that they would stand to the statement tint there must be a reduction in Army expenditure. That fact went to show that this tax was not necessary. Tin Government appeared to be levying this tax, overlooking the fact that a very great amount of tea came from India and Ceylon. Hon. Gentlemen opposite had been preaching the doctrine of retaliation. He wished to know how the Secretary of State for India was going to treat this matter? If the right hon. Gentleman did justice to India upon this question, he would tell his colleagues in the Cabinet that if they put an extra tax upon Indian tea he would have to advise the Indian Government to retaliate by placing a tax upon cotton goods. The Chancellor of the Exchequer had urged them to bring this debate to an end, but he thought hon. Members had every reason to look with the greatest suspicion in matters of finance to the proposals of the present Government, and they ought to examine exhaustively every Bill which they brought in. The Finance Bill was one of the most important Bills of the session, and it was practically the only one, unless they managed to get through their odious Licensing Bill. And yet, although they had only discussed briefly one of the most important proposals in this Bill, the Chancellor of the Exchequer said he thought the discussion had gone on long enough. He really believed that the right hon. Gentleman was capable of carrying things so far as to get up and move the closure. If he did, then the country would remember that this tax upon tea had been forced through the House of Commons by the closure.

MR. LAMBERT (Devonshire, South Molton)

said he welcomed the statement made by the Chancellor of the Exchequer that he had not shut the door on economy in the future. The country was now looking forward to a very great reduction in our present gigantic expenditure. He had been comparing the taxation on tea in various countries, and he found that in this country the tax was rapidly mounting up and would soon reach the sum imposed by the most highly protected State on the Continent. Denmark, instead of 8d. on tea was only charged 4d., the tax in Germany was only 5½d., and in Spain, it was equal to 6½d. in the lb. The United States was an enormous consumer of tea, with its population of 77,000,000, and there the commodity was admitted absolutely free from taxation, whilst our own people, who were probably the greatest tea producers in the world, were suggesting to other countries that tea was a proper article to levy taxation upon. This was what they had come to after nine years of this patriotic Government, whose object was to increase the production of the Colonies and bind them closer to the Empire. They were told that this tax was a legacy from the war, but for which it would not have been increased from 4d. to 8d, but he noticed that although one of the objects of the war was to consolidate the Empire, Canada was not taxed at all, and the burden was to fall on the poorest of the poor in this country. In Australia there was no tax on tea, whilst in New Zealand it was only 2d., and was it fair and reasonable that this country should bear the whole burden of taxation to maintain mighty armaments necessary to protect the Empire, whilst the tea drinkers of the Colonies were allowed to go scot free. The burdens of Empire ought to be distributed more reasonably all over the Empire. The Chancellor of the Exchequer had admitted that this was a tax upon a necessary of life, and he asked hon. Gentlemen opposite whether it was right, after nine years of the most perfect Unionist Government the country could be placed under, to double the tax upon one of the necessaries of life.

If our self-governing Colonies were producers of tea this tax would not have been imposed. The House would doubtless remember than when it was proposed to tax colonial wines there arose immediately a great outcry from our Colonies supplying them, and he was greatly surprised, having regard to the millions of capital invested in the tea plantations of India and Ceylon, that the Secretary for India was not present in his place to protest against the proposed additional taxation. The effect of the existing tax had been to bring into this country cheap, common China tea. Then the Chancellor of the Exchequer had told them that this tax would fall upon the consumer. The right hon. Gentleman might take a leaf out of his distinguished relative's book, and endeavour to place the tax upon the foreigner rather than the consumer. He protested against the taxation of the necessaries of life being increased in times of peace, and he thought some other sources of revenue should be found. He was in favour of taxing the foreigner if they could do it, but the right hon. Gentleman was proposing a tax which he admitted would fall upon the consumers, and upon the poorest class of the community. If his hon. friend pressed his Amendment to a division he should support him.

MR. TOMKINSON (Cheshire, Crewe)

said it had been asserted that this tax did not fall altogether upon the consumer, and that part of it fell upon the producer. He had no doubt that they would hear a great deal more about that argument before this question was settled. He could not see how it was possible to impose a tax of £2,000,000 upon an industry without hurting to some extent every person engaged in it. There would undoubtedly be a reduction in the consumption, and there would be a depreciation in the quality of the tea consumed. At the present time, but for this miserable Tibet expedition, they might have said that they were at peace with the world, and they could then have set their hands to reducing their great armaments, both military and naval, because he was of opinion that the standard set up for the Navy was too high.

And, it being half-past Seven of the clock, the Chairman left the Chair to make his Report to the House.

Committee report Progress; to sit again this evening.