FINANCE BILL. (Hansard, 26 November 1914)

§ Mr. CHAMBERLAIN
I desire to renew with all the earnestness I can command an appeal which I addressed to the Government towards the end of last Session, and which have been repeated by hon. Friends of mine during the present Session. It is too late to do anything in the matter at this moment and in this Bill, but it will not be too late to redress the injustice if the Government can be persuaded to deal with the matter in their next Finance Bill, and to give the provision which they might then introduce retrospective effect. The point to which I want to draw the attention of the House is the treatment of collaterals who succeed to property owing to the death of relatives at the War. Where the succession is to lineals the Government have made, I think, very just provision to meet the exceptionally hard cases which such a struggle as the present, with such an Army as that, which we are recruiting, entails. They have gone, I gladly recognise, much beyond anything that has been done hitherto. But the circumstances of this War are wholly different from even the greatest struggles of the past, and, I must add, the Death Duties to-day are a burden incomparably greater than they were even at the time of the South African war. What we have asked is that in the case of succession by collaterals there should be 1458 the same alleviation of the burden of the duty as has already been accorded to lineals.
The answer of the Government, if I understand it rightly, and I have heard it twice from different Ministers, is that when a collateral succeeds he is a very fortunate fellow, who has come into an estate or fortune which in the ordinary course he could never have expected to enjoy, and that there is no special reason for showing indulgence to him. I do not think you can treat the case fairly if you look only at the individual and at the effect upon him. In regard, at any rate, to landed estates, you must surely think of the family and of the estate as well as of the individual. There have already been cases, and there will be more, of grave hardship to the individual who succeeds unless you make the concession for which I ask. The hardship is not confined to the individual, for an impoverished estate is not only a source of little satisfaction to its possessor, but a source of great misery to the countryside. There probably never was a time in our history when the non-legal obligations so generously recognised by our landowners as a whole were more needed in the management of estates than they are now. An impoverished landlord cannot give that conideration to his tenants or to his estate. I do not believe that the total sum involved to the Treasury can be a serious matter, and I feel certain that the Government would meet a general public sentiment amongst all those who are acquainted with the situation if they would make this small extension of the concession they have already granted. I beg the Financial Secretary to the Treasury to convey to the Chancellor of the Exchequer—whose absence I perfectly understand—the very earnest appeal which, as well for my Friends as on my own behalf I make to him, to reconsider his decision, and to see whether he cannot give us this further concession in his next Finance Bill.
There is one other matter, not of the same consequence, to which I want to call the hon. Gentleman's attention. The Chancellor of the Exchequer, in the early days of the War, called to his assistance a distinguished gentleman who had previously occupied a position on the Press, and whose position at this moment I cannot undertake exactly to describe. I think the Financial Secretary knows whom I mean. I understand him now to have severed all 1459 connection with the Press, and to be a Civil servant in the employment of the Crown. I read to-night in the evening papers an account of an interview accorded by him, or reported to have been accorded by him, to Pressmen on the other side of the Atlantic, which, I think, is not quite in accordance with the traditions of our Civil Service. I venture to suggest that when he returns home he should be reminded of the restraint which his new position necessarily imposes upon him, and warned against too great an expansiveness to his old professional colleagues.

§ Sir J. D. REES
I should like to join with my right hon. Friend in pressing upon the Government what he has said with regard to the succession of collaterals. My purpose in rising, however, is to give expression to the feeling of great disappointment which exists on the part of those interested in the tea trade that the heavy increase in the Tea Duty, which they most I loyally accept, and to which I have not risen to take any exception, is not accompanied by a corresponding increase in the duties upon coffee and cocoa. There is a very strong opinion upon that subject. The new duty represents an increase of something like 60 per cent. upon what is already almost the highest duty levied in this country. The duty amounts to 85 per cent. of the value in the case of the better teas, and actually to 100 per cent. of the value of teas produced at something like 8d. a lb. I am anxious not to go into detail, as the subject has been very fully discussed on many other occasions, but I must be allowed, briefy, to raise a matter of such importance to those concerned. Whilst these duties of 85 per cent. and 100 per cent. are levied on the dearer and cheaper teas, the rate upon coffee is only 20 per cent., coffee being a foreign product, the rate upon cocoa is only 14½ per cent., and the rate on manufactured cocoa 12½ per cent., these being to the extent of at least half their volume foreign-grown products, whereas in the case of tea it is to the extent of 93 per cent. British grown, grown with British capital, by British labour, and in British territory. I do not say this in order to urge that the tea industry, or any other industry, should now escape that taxation which it is readily prepared to bear in this great emergency, but to point out that there is a disproportion in the manner in which this extra taxation has been brought to bear, and 1460 that at any rate in laying this exceedingly—I will not say excessively—heavy burden upon tea, something of a corresponding character ought to have been laid upon coffee and cocoa. The Chancellor of the Exchequer said that the results would be very small had the action which I suggest been taken. But the figures produced show that if cocoa were taxed at 85 per cent. like tea, a very large sum would be got into the Exchequer. I confess I do not know why no effort is made to bring it in, because I presume the Government are not prepared to allow that the reason so frequently put forward is really the real reason that actuated the Government in regard to this matter. In his speech upon this subject the Chancellor of the Exchequer really made hardly a serious contribution to the Debate in suggesting that the taxation of mineral waters would only hit those who were in the habit of mixing such waters with whisky.
I do not think that anything more unworthy of the situation has ever been said since the case of the old lady who declared that her son could not have drunk too much at night because he was so thirsty in the morning. The two arguments are almost upon a par. One cannot be regarded as much more serious than the other. It entirely leaves out of account the whole case of ginger beer, and drinks of that character, which would, if taxed, bring a fair amount of revenue to the Exchequer. Now the drinker of tea will be able to transfer his attention and his taste either to coffee or cocoa, which will not be taxed. There is another particular reason, and a good and important one, which I must just briefly refer to—that is, the margin between the cost and selling price of tea. It is a fair illustration, and obtains in the case of the other drinks which I have mentioned. For instance, tea is sold at from 1s. 4d. to 1s. 6d. a pound. This gives a profit of 1½d. to 2½d. per pound, whereas in the case of coffee, the wholesale price is 7½d. per pound, and the profit is about 6d. a pound. Similarly, or rather more strikingly in the case of cocoa, what you pay 7d. per pound wholesale for is actually sold by Cadbury's in a packet of one pound for 2s. 2d. You have thus a case of enormous profit compared with a very small profit, and you have a drink which yields a small profit taxed to an enormous extent, and the drink which yields a very large profit actually, with no increase in taxation, at a time of great crisis like this, when 1461 everything which can be properly taxed should be taxed to bring in such revenue as it can to the Exchequer.
There has not been any explanation of this or I should not have ventured to trouble the House. What the Chancellor said cannot be seriously regarded. It was no serious contribution to the Debate, and I hope that the Financial Secretary to the Treasury is prepared to-night in that respect to improve upon his chief, and to explain why it is that in a time of emergency the one product is taxed under circumstances which I have briefly recounted, and the other, which is ready for corresponding taxation, has entirely escaped the attention of the Chancellor of the Exchequer. Not only that, but the extra taxation that if placed upon tea is of such an amount that it makes it extremely difficult for the trade to distribute it, and to collect it from the retail purchaser. The grocer does not deal in facthings like the draper, and, as he cannot easily pass on three farthings in the pound, he charges a penny. Consequently the poorer people, who are less able to bear this taxation, are those who are going to suffer most from it. The Financial Secretary is probably aware—if not, I should like to tell him—that amongst the poor it is quite a usual thing to buy tea in halfpenny packets, and therefore this question is one of the utmost importance to these folk in their domestic arrangements.
Then I wish to refer to the cost to the grower and the tea planter, a man who is never mentioned, but who is one of the most loyal, enterprising, law-abiding citizens this country or any other ever had. He is a man who does not complain about this tax, yet he is grievously hit. Why is he taxed, while Brazil and Bolivia escapes? Why should the Indian tea planter have to pay a tax of £13 per acre for his product, while the foreigner has only to pay something like a tax of £2 upon the produce of an acre of cocoa and coffee? What aggravates the situation is this, that the cocoa and chocolate people are enjoying exceedingly great prosperity, owing to the fact that manufactured cocoa and chocolate are no longer imported from Germany. While they complain of the hardship owing to the high price of sugar, they conceal the fact that they are making great profits from the increased sale of their products. They are making money hand over fist when tea is subject to this, I will not say oppressive, but exceeding heavy and onerous taxation. What makes 1462 this and every other tax so extremely hard now is that it comes upon taxation in times of peace, already raised to war rates, for partisan and party purposes, and for what is called social, but what I call socialistic, legislation. It is piling Pelion upon Ossa. It is so exceedingly onerous that even at this eleventh hour, or a quarter to twelve, I beg the Government to take this matter into consideration and see if they cannot even now make some semblance of fairness by imposing some proper taxation upon those other temperance drinks. Then again I have, had the strongest representations made to me of the injustice done to the beer trade by the exceedingly high taxation put upon it, and I ask the Government to consider whether at this moment they are not laying themselves open to the suspicion of partisan administration in the finances of the country by piling everything on to one or two products and leaving exempt that class of products which for various reasons will provoke that suspicion. I think the Government would do well to explain why it is that they have allowed those articles to escape the extra taxation which they felt bound to impose upon the country in the present crisis.

Mr. DUNCAN
I have listened to the speech of the hon. Gentleman who has just sat down and I must say that I think on some points he has a case. But it always seems to me very strange why, when a man has got a good case upon one point, he drags in other matters which only indicates a bias and destroys his good case. I think, further, this ought to be said, that if there is any matter upon which this House could take very great credit to itself indeed since this War has broken out, it is the part played by, I believe, almost every Member of the Opposition, and, in my judgment, their conduct is worthy of the highest praise that can be given to them for the attitude they have displayed by speech and action in this House on every occasion. The speech we have just listened to seems to be the exception, and I am sorry it has been delivered. There is this point with regard to cocoa. I am not here as an apologist for the cocoa trade, and I have nothing to do with it, but I have been to Birmingham, Bristol, and York, and in each of these centres there are very large firms employing thousands upon thousands of people in the cocoa trade, producing chocolate and other things. It 1463 should be obvious to the hon. Member for East Nottingham that although the original price of cocoa may be 7½d. per lb., and may be sold for 2s. 2d. per lb., surely it should be evident to him that the reason for any difference there should be in the price will be indicated by the enormous number of people employed in this industry. I am sorry that the hon. Member saw fit, when he had a good case in regard to tea to spoil it by an exaggeration in regard to cocoa.

§ Sir J. D. REES
Does the hon. Member suppose that there is no labour employed in the bringing of tea to the market?

Mr. DUNCAN
So far as the employment of labour goes in regard to tea it is small as compared with the cocoa and chocolate trade. That is my own experience, and I am sorry that the hon. Member should so mix these two things up.

§ The FINANCIAL SECRETARY to the TREASURY (Mr. Montagu)
I will convey to my right hon. Friend, who asked me to apologise for his absence, the appeal which the right hon. Gentleman the Member for West Birmingham (Mr. Chamberlain) has made on behalf of collaterals. He was good enough to say that two of my colleagues had attempted to answer his case, and, therefore, it would be presumptuous on my part to attempt to add anything further. He quoted the argument upon which they relied and all his appeal amounted to was that the Chancellor of the Exchequer should consider again the case he and his Friends made before next March. With regard to the other matter which the right hon. Gentleman mentioned. I will also convey to the Chancellor of the Exchequer his observation, but I will observe that I have always understood that the American reporter is a gentleman peculiarly difficult to avoid, and the reports of interviews in newspapers are not always conspicuous for their accuracy. I will not now attempt to answer the case which the hon. Member for East Nottingham once more made, but I will point out several important facts. It has never been considered, when a tax has been put upon tea, that coffee and cocoa should also be taxed. That was not considered necessary when the tax on tea was raised upon the last occasion, and it is a mistake to assume that cocoa, coffee and tea are interchangeable beverages. The man who drinks tea is a man of different habits to the man who drinks 1464 cocoa and coffee. Although coffee is the same price as tea, I understand it requires twice as much to make it, and it needs a lot more milk, and in other ways is much more costly. With regard to cocoa, it is the raw material of an important industry, and in this case the bulk of the tax would not be paid on a drink, but on a valuable foodstuff which is now playing a valuable part in feeding the population of this country. I may add to this that taxes on coffee and cocoa would produce little or no revenue, and I think the Chancellor of the Exchequer is quite right in placing his tax upon a commodity which will raise revenue.