§ The distinction made by the existing law between hotels and ordinary public-houses works in a very unsatisfactory and arbitrary manner, both from the point of view of the revenue and from the point of view of hotel-keepers. The charge for the hotel licence, properly so-called, is, on the one hand, an extremely low one; but, on the other hand, it is so difficult for the average keeper of a bonâ fide hotel to comply with the conditions laid down for the grant of this licence that the great majority of such hotel-keepers in fact find it necessary to take out the full publican's licence.
§ This latter licence, even at the rates at present charged, constitutes in the case of small hotels, at any rate, whose receipts from the sale of liquor are sometimes insignificant compared with the total business done, an undue burden, and it would 527 clearly be inequitable to apply the new scale without qualification to this class of house. I therefore propose to make special concessions to bonâ-fide hotels, inns, and restaurants. I am anxious to draw a deep and clear line for purposes of taxation between the house which supplies all the best traditional objects of the inn and the mere drinking establishment which lives and thrives on "swilling" and "tippling." Under the new system, therefore, a distinction will be drawn between houses whose receipts from the sale of stimulants do not exceed one-third of their total receipts from all sources, and those in the case of which that proportion is exceeded. I have made careful inquiries, as a result of which I am satisfied that the proportion of one-third, at which I suggest the line should be drawn, will cover the case of practically all establishments whose business primarily consists in supplying food and lodging, facilities for recreation, or other services only incidentally connected with the consumption of alcohol. Hotels end restaurants which are mainly drinking places will thus be, as they ought to be, chargeable with the full publican's licence duty, but where the bulk of the business consists in the satisfaction of public requirements in directions other than the supply of stimulants, the rate of duty applicable to the publican's licence will be reduced in proportion as the receipts from the sale of intoxicating liquor diminish. It must, of course, be remembered in this connection that the possession of a licence gives an advantage not only as respects the sale of liquor, but also as respects the other business of a hotel, higher price being obtainable both for food and lodging in licensed premises than in premises not enjoying a licence. This value, no less than the profit directly derived from the sale of liquor itself, is part of the monopoly value of the premises and ought to be taken into account in assessing the duty. I propose to recognise this principle by making the reduction dependent on the proportion which the receipts from intoxicants bear, not to the whole, but to one-half of the total receipts from all classes of business. Thus, a house whose receipts from the sale of liquor amount to one-quarter of its total receipts will pay only one-half, and one whose liquor receipts amount to one-sixth only one-third of the full rate. The effect of this reform will be to tax hotels on a logical basis and to put large hotels for the first time into their proper place as 528 contributors to the revenue. A provision is inserted in the Bill under which the increase in duty will not, in the case of tied houses, fall on the publican. Payments in respect of monopoly value of new licences under the Licensing Act of 1904 will, in future, be taken for the Exchequer, thus removing the temptation to local justices to grant such licences for the sake of the profit accruing to the local authority, which, in some parts of the country at any rate, has resulted in the grant of licences in excess of legitimate public requirements.