§ There are three other possible sources—beer, spirits, and tobacco. An increase in the beer duty, sufficiently great to justify an addition to the retail price, would produce a very large sum—larger, indeed, than I require for my present purposes—and would have, besides, in all probability, the effect of diverting the consumption of alcohol from beer to spirits—a change 544 which would certainly not conduce to the social health of the country. The incidence of a small duty, on the other hand, would, to a large extent, at any rate in the first instance, be upon the liquor trade rather than upon the consumer; and I should not feel justified in imposing such a burden in a year when so considerable an additional contribution is being called for from that trade under the head of licence duties.
§ The case of spirits is, however, somewhat different. I am aware that the small increases in the spirit duties which were made by Lord St. Aldwyn during the South African war were disappointing in their financial results, and that any further increase would undoubtedly result in a considerably diminished consumption, which would to a very large extent at any rate nullify the benefit to the revenue which might otherwise be expected to accrue from it. It does not, however, follow from the result of this small experiment that we have reached the absolute limit of the profitable taxation of spirits, or that a substantial increase in the rates of duty would not, in spite of its effects upon consumption, produce an appreciable amount of revenue. I am disposed, at any rate, to try the experiment, which, even, if it ends—to take the most pessimistic view—in no larger revenue being raised from the higher rate upon a diminished consumption, than by the existing rate upon the present consumption, will still, in my view, be conducive to the best interests of the nation. It is perfectly true that the small duties imposed up to the present have not been productive. The reason for that was that the publican, or the retailer, found that, probably by changes in the character of the whisky, or by other means, he was able to get his money in another way, and the consumption decreased by a considerable amount. It is idle, therefore, to put on anything except a fairly heavy tax, and I impose a duty which the publican will find it to his interest to charge. I propose to raise the present duties (Customs and Excise) on spirits by 3s. 9d. per gallon, an amount which will, on the one hand justify an increase in retail prices, and on the other hand, assuming such an increase to be at the rate of a halfpenny per glass, will leave a margin to the publican to recoup himself for loss of profits arising from decreased consumption, and have something over towards mitigating the pressure of the new licence duty. The mere paper increase of a duty 545 of that sort would be very considerable, but I do not expect to get anything approximating to that. The right hon. Gentleman knows perfectly well the possibilities of getting more out of spirits. This year there are exceptional circumstances. First of all, the forestalments are very heavy. It is not merely forestalments up to the end of the last financial year, but they have been going on since, so that the wholesale people have got in hand sufficient stock to carry them on comfortably for a good many weeks at any rate. Therefore, we do not get the increase for some weeks, possibly for some months. That will make a very considerable hole in the estimate which I should otherwise have made of the yield of those taxes. Not only that, but I have not the faintest doubt that it will have the effect of decreasing consumption; that will be the inevitable effect. It may drive a good many from spirits to try beer and to expedients of that sort. It will involve a very considerable increase in the price of the commodity, and therefore, I think, must have a very considerable effect in diminishing the actual consumption. Taking all these influences into consideration, I do not feel safe in counting upon receiving more than £1,600,000 additional revenue as the result of the change in 1909–10.