§ Last year I gave relief, and substantial relief, to a large class of income-tax payers. This year, therefore, assuming that relief by way of remission of taxation is to be given, it would be the natural course for the indirect taxpayer to be relieved. There is one impost in particular to which, as my declarations in the past will have prepared the Committee to believe, my colleagues and myself have felt compelled to give special attention. I refer to the sugar duty. The sugar duty is one of those experiments in indirect taxation which were introduced by Sir Michael Hicks Beach, primarily, no doubt, to meet the expenses of the war, but which were regarded by him as permanent additions to our fiscal system. That was in the pretariff reform days, and that was the way in which he sought to broaden the basis of taxation. When we look back upon 477 those experiments however, we find that neither the corn tax nor the coal tax survived for long, and the sugar tax was, I think, almost universally regarded—quite as much, I believe, by the occupants of the benches opposite as by anyone else, judging from their public declarations—as sooner or later doomed to the same fate. The truth is that a sugar duty is one of the most objectionable of all our indirect taxes, because it is at one and the same time a tax upon food and a tax upon raw material. Unfortunately, it is very productive. Last year it brought in £6,700,000. You will see in a moment that the resources at my disposal do not enable me to propose its immediate and total abolition. I am compelled to stand in a white sheet, but I do not think I am quite such a bad offender as some hon. Gentlemen may think. Undoubtedly I have on previous occasions expressed doubts whether a partial remission of the sugar tax, although I have always said it would be a great boon to manufacturers who use sugar as a raw material, would reach the ordinary consumer in the shape of a measurable reduction in the retail price. I also expressed a doubt, that subsequent investigation showed to be ill-founded, as to whether a reduction of a farthing would have any effect upon retail prices. I am satisfied that it would. I do not think it would in the case of tea, but in the case of sugar I think it would. Every Chancellor of the Exchequer has to learn something. Although I was wrong in saying that a partial remission of the sugar tax, although it would benefit the manufacturer, would not be brought home to the consumer, the difficulties are very considerable, and they ought to be explained to and realised by the Committee before I come to the proposal I am about to make. This customs duty upon imported sugar is 4s. 2d. per cwt. The popular idea is that the rate of duty is a halfpenny per lb. In point of fact it is 100 halfpennies upon 112 lbs. of sugar. The figure is not a halfpenny per lb., but 893 or, in round figures, nine-tenths of a halfpenny per lb. The rate was fixed for a good, or at any rate plausible, reason. When Sir Michael Hicks Beach imposed the duty in 1901 it was extremely important 478 for him to conciliate the trade, and in order to make the thing work smoothly, and also, no doubt, to compensate the trade for the new restrictions which it had to undergo, he said that while the burden to the consumer would no doubt be at the rate of a full halfpenny in the pound, he would charge the importer, not 4s. 8d., but only 4s. 2d. per cwt., leaving him 6d. to compensate him for all the incidental drawbacks and disadvantages of the new state of things. The Committee will see that the moment you realise that the rate is not a full two farthings but only one farthing and a fraction of another, the practical problem not of abolishing altogether but reducing the tax is one of considerable complexity. There are three ways in which it can be done. The first is to halve the duty a it stands. That, I think, is an objectionable way, and I have very great doubt whether, if you adopted that course, the half would actually go to the consumer. A considerable amount would go to him in time, but I think there would be considerable delay before he got the full benefit. Another way of dealing with the matter would be to reduce the duty to one farthing per lb., giving the consumer the benefit of the four-fifths of the farthing, which represents the difference between one farthing and the total duty now. That would be much the cheapest way. There again, I very much doubt whether the consumer would reap the real benefit. The third course, the course the Government proposes to adopt, is this—the most expensive but the most effective—to reduce the duty by one farthing, not to one farthing, so that the Exchequer would retain only the benefit of the odd four-fifths of a farthing which remains. If you do that you give the consumer an irresistible claim to the benefit of the farthing on the retail price; it is the only way in which I believe that that result can be absolutely attained. We propose to reduce the duty of 4s. 2d. per cwt. to 1s. 10d. We propose that that reduction, as far as raw and refined sugar is concerned, should take effect as from May 18th, and on drawbacks at the same date. On articles manufactured, of which there is, no doubt, a considerable quantity in stock, it is only fair to give the persons 479 concerned longer notice; and we, therefore, propose that the reduction, as far as they are concerned, shall not take effect till July 1st. There is a further point to be remembered as to the financial effect for the current year of this reduction. We shall still have nearly six weeks of imports at the old rate of duty. The total loss to the revenue for the year I estimate at £3,400,000.