HC Deb 29 September 1915 vol 74 cc874-84

Resolution reported,

11. "That in addition to the duties of Excise now payable on tobacco grown in Great Britain or Ireland there shall, on and after the twenty-second day of September, nineteen hundred and fifteen, until the first day of August, nineteen hundred and sixteen, be charged the following additional duties, that is to say:—

£ s. d.
Upon tobacco unmanufactured, namely:—
Tobacco containing 10 lbs. Or more of moisture in every 100 lbs. weight thereof, the lb. 0 1 10
Tobacco containing less than 10 lbs. of moisture in every 100 lbs. weight thereof, the lb. 0 2
Upon tobacco manufactured, namely:—
Cavendish or Negrohead manufactured in bond, the lb. 0 2 4
and so in proportion for any less quantity.

And it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

5.0 P.M.


I desire to draw the attention of the Chancellor to the probable result of the proposed Excise tax on the tobacco industry in Ireland. The tobacco industry in the three countries is, for many reasons, of great importance. One reason is that there is above 100,000 acres of derelict land which, if cultivated, would afterwards grow good crops. The matter is of such importance that the Development Commissioners have appointed a special committee to deal with it. The second reason is that the industry gives employment, more than any other, to women and children. While the men are at war, as they are from many of the country districts, it is of great importance, and I consider the duty of the Government, to provide employment for the women and children, instead of hindering them. At the present moment the Government are giving a consideration to home-grown tobacco to the extent of 2d. in the lb. That 2d. in the lb. leaves a preference of 4 per cent, over the imported article. If you put on the proposed Excise Duty without any corresponding allowance you reduce that 4 per cent to about 2½ or 2¾ per cent. That will be a serious hampering of the trade. I appeal to the Chancellor of the Exchequer for consideration for this important infant industry. Some capitalists have been induced to put their money into it. They have informed me—many have written to me to the effect—that if this high Excise Duty is imposed upon the industry their money will be all lost. I ask the Chancellor to give consideration to this matter, and not to crush this industry. Perhaps, when the revenue duty come on, he will be able to give effect to some reasonable proposal that will prevent this industry being wiped out. I ask him not to reduce the preference that it already has over imported tobacco. I trust I shall find the right hon. Gentleman a sympathetic Chancellor. This industry has taken root largely in Ireland. A considerable quantity of tobacco is grown in the country districts, and in those districts where tobacco is grown there has been no emigration for a number of years. I believe money is being kept in the country, and thus giving home employment. I should suggest to the Chancellor that, if necessary, a similar arrangement to that of the Import Duty on sugar; even a 20 per cent, consideration would be preferable to the present proposal.


I should like to support the views which have been put forward by the last speaker. I hope the House will remember that we should do something for Ireland in reparation for the treatment Ireland received in former days in respect of tobacco. It has been said, though it may not be within the memory of everyone, that at one time there was a substantial and valuable tobacco-growing industry in Ireland. That was some 200 years ago. Irish memories are sometimes long, but I do not think the House will refuse to put matters right, even when the wrong has taken place long ago. At the time I speak of Ireland really had produced a large amount of tobacco. The British Parliament—I think in 1660—decided that they must absolutely kill this Irish industry. The reason put forward then was the somewhat strange one that it was in order to encourage the new possessions, or plantations, in Virginia. With that object they put not merely a duty on Irish tobacco, but an absolute prohibition on the growth of it. The first Act of Parliament was ineffective. The industry was strong, and it went on. The British Parliament passed a further series of Acts, and finally, by a stringent prohibition, killed the Irish industry.

Some patriotic Irishmen in recent years have endeavoured to revive an industry for which the soil and climate of Ireland are certainly favourable. Experiments have been carried on for some time. They have now got past the experimental stage, and a good article is being produced which is now upon the market in both Ireland and England. I have no doubt the tobacco growers of Ireland would be glad to place a sample of their products at the disposal of the Chancellor of the Exchequer. [An HON. MEMBER: "That has been done!"] That might win his sympathy, or possibly, if it has been done, as the hon. Member says, possibly a further generous present would be gladly given. The fact is that at the present you have this industry not merely started but actually existing as a commercial enterprise, giving a very considerable amount of employment, as the hon. Member behind me says, not to the men, but to the women and children in Meath and other counties in Ireland. It must be owned—and no one knows it better than the Chancellor—that it is very difficult to get a new tobacco upon the market in England. For some reason or another, which it is not necessary to go into now, Irish tobacco has had a great struggle in order to get a place upon the English and Irish markets. It has got that place. It is increasing its hold upon these markets.

Everyone who is interested in Irish tobacco will agree that if the duty is increased by 50 per cent, that the existing small allowance of 2d. in the lb. will be insufficient to enable that industry to retain its place. It is no question of Free Trade or Protection, or anything of that kind. It is a question of increasing that small allowance, which is quite a trumpery matter for the Treasury, from 2d. to 4d., which would enable this industry to go on for the benefit of Ireland. It is purely a commercial question. I think one may use arguments as to some reparation because of the injury done to Ireland in past times, and I hope the Chancellor will see his way—I do not ask him to do it today—to consider favourably the matters put before him, and, if possible, see his way to make this small concession, which is exceedingly small from the Treasury point of view, while it would be of great value to tobacco growing in Ireland. The cost to the Treasury would be insignificant. No principle really is involved. If the right hon. Gentleman can give this concession it will make a very great difference in the development of this industry.


So far as the arguments advanced by the hon. Member from Ireland, I wish, as a Scottish Member, to associate myself with them, and particularly in connection with the cultivation of tobacco in Scotland. Scotland suffers from the very same evils that have been mentioned by the hon. and learned Gentleman who has just spoken—that is, from Acts of Parliament passed here. In the county of Roxburghshire, which I represent, losses by a certain farmer sustained in 1874 have been remembered to this day, and recorded in every statistical account that has been since printed. This man had grown a good crop of 13 acres, when there came an edict from the Parliament of the United Kingdom, and he was compelled to hand over all his tobacco to the revenue officers to be destroyed. He only got compensation at the rate of 4d. or 5d. per lb. for it. That has lingered to this day in the minds of the people of the parish of Smailholm. Everybody who has dealt with this parish in literature has mentioned the fact. A few years ago, following the energetic example of the cultivators in Ireland, Scotsmen determined that they would grow tobacco in Scotland. A number of us took the matter up. We succeeded in passing an Act which made the growing of tobacco legal in that country, and required that certain revenue regulations should be made. That is the law now in existence. There has not been much time to develop the industry there, but it being a matter of Scotland, where the people are industrious, it soon will be developed. Therefore I would press for consideration for Scotland when consideration is given to this matter in relation to Ireland, because of the greater measure of loss sustained by the people of Scotland. I understand that my right hon. Friend the Chancellor coincides with the view I am putting forward.


was understood to indicate dissent.


I put forward these considerations in the hope that nothing the right hon. Gentleman does in the matter of this Budget will have the slightest hostile influence on the Irish or Scottish industry, particularly in the parish of Smailholm, or on any development that may be given to the industry in the Lowlands, and particularly in Roxburghshire. Some day or other it will be a very successful industry.


I desire to say a few words in support of the suggestions made by my hon. Friend (Mr. P. White). In doing so I desire to express my very great regret that my hon. and gallant Friend the Member for East Clare (Mr. W. Redmond) is not in his place to defend this child of his own creation. It was by his efforts that this industry got that very small encouragement from the Treasury that it at present enjoys. However, he is better employed in defending the high interests of the country by the performance of military service, and leaving to us, who are sadly left at home to-day, what he would have done very much better had he been here. The House has had the advantage of a historical survey of the position of Ireland in regard to this manufacture from the hon. and learned Gentleman the Member for York. It was largely to make restitution to Ireland that this concession was granted. It was felt, not only by the party in power when that concession was made, but by every party in this House, that, owing to the manner in which Irish industries bad been treated in the past, that it was due from this nation to Ireland to make some restitution for the wrongs that had been done in the past by crushing out Irish industries by what I might almost call wicked legislation.

Those concessions have been used in the very best manner by enterprising people in Ireland. Land has been taken into cultivation from pasturage and applied to the raising of tobacco. Capital has been invested, and the industry looks at the present moment in such a position as leads one to think that it may soon be on a firm basis. But what you gave with one hand a short time ago you are about to take away with the other. The tax which you are about to impose upon this industry, upon tobacco manufactured at home, will strike Ireland, and Ireland alone. In the other parts of the three Kingdoms time has not allowed the persons who would be so inclined to make a beginning. Therefore the tax will hurt Ireland alone, and hurt her infant industry which we desire to encourage.

I believe the argument of infant industries does still affect the mind even of Free Traders. It did affect the mind of that great teacher John Stuart Mill, and surely, if ever there were a case where that principle of general exemption might be applied, it is the case of Ireland. Now it may be said that a tax is about to be put upon the production of sugar at home. There is no analogy between sugar and this commodity of tobacco as raised in Ireland, because in this country, with regard to sugar, you have large factories where you have had established those industries in the past, where machinery is already in existence and plant laid down for the production of sugar, and if the industry be re-established by this duty—well, then you will reap some reward from it; but the only effect of this duty upon home-grown tobacco will be, not to reap any reward or any revenue to the Exchequer, but actually to crush an infant industry which is just trying to raise its head. Therefore I trust that the Chancellor of the Exchequer will take seriously to mind the suggestion made by my hon. and learned Friend and be good enough to refer to the Debates of the past two years on the subject—they were not many, but they were very earnest—and will also take into account the historical references of the hon. and learned Member. I am perfectly convinced that if he does investigate the subject from this point of view, he will find that, not only is this tax on this industry not warranted, but that it will bring absolutely nothing in, and, if I may say so, he will in the future have the mortification, the unhappy reflection of having killed an industry which had some little prospect of success.


The hon. and learned Member for North Kildare (Mr. J. O'Connor) seems to have given very good reasons why the duty on tobacco should not be increased, but when he suggests that the Excise Duty should be kept at a lower rate so that protection shall be given to an infant industry, I hope the Chancellor of the Exchequer will turn a deaf ear to his pleadings. I hope I shall not be regarded as an opponent of Irish industries. I should be delighted if Ireland had the whole management of this master herself, so that she could grow and smoke her own tobacco, if she liked, and levy taxation which, instead of going into the Irish Treasury, would be diverted into the pockets of the Irish landowners. That is the principle involved in this matter. The hon. and learned Member for York said there was no principle involved in this. There is a very big principle involved. We stand upon the principle that when you levy taxation the whole of that taxation shall go to the Treasury to be spent for the public benefit, but under the system of Protection a portion of the increased price paid by the consumer will go into the pockets of private individuals. If you purchase tobacco imported from America, the whole of the increased price due to the duty will go to the Treasury. In the case of Irish-grown tobacco the proportionately increased price will go into the pockets of the landowners, so that there is a very great principle in the question.


It is not making a profit at present.


What is the use of continuing an industry if it is not likely to make a profit? It is pleaded that it is an infant, but the tariff infant always remains an infant. The duty on steel in America was proposed for the purpose of encouraging the infant steel industry. The duty remains and has been increased since then. The hon. and learned Member opposite has mentioned a great Free Trader in the past, John Stuart Mill, as advocating the imposition of duties for the purpose of encouraging infant industries. I happen to know something about it because he did so in reply to a correspondent in the State of Victoria, Australia That letter was used for Protectionist propaganda in that State, but the infant industry exists today. The tariff started at 10 per cent, and has been soon raised to 20, 30, 50, and 100 per cent. The infant is still there to be protected, and, therefore, it is very necessary, having regard to the principle involved in such a proposal, to see that it does not get any initiation in our fiscal system.


The hon. and learned Member for York, and the hon. and learned Member for Kildare, who followed on the same lines, claimed that there was a case for special consideration on the ground of the injury done to Ireland in the past—that is to say, cruel penal legislation. I agree with the hon. and learned Members that the legislation was most unjust, directed as it was against Irish industries in order to kill them. I could not help thinking, when the hon. and learned Member for York was speaking, that there is a still more important industry, which still survives to some extent, I am glad to say, the woollen cloth in dustry, which by an Act of legislation in the eighteenth century was extinguished as near as possible in order to assist the industry in this country. If there is a case for helping an industry like tobacco, which is an industry of luxury, is there not at least as good a case for other industries, such as the production of woollen cloth, which at a later date than 1660 was practically killed in Ireland by legislation in this House for the benefit of England? It seems to me a very curious thing that these claims should be put up for tobacco and nothing said about wheat, which I only use for the purpose of illustration. Here we have an article of luxury, so pronounced that I think it is taxed more in proportion to its value than any other article in the list of things we do tax—possibly more than spirits.


Much more!


It has been thought proper by Chancellors of the Exchequer of all parties to tax it higher than any other article, and yet this is an article for the benefit of which the infant industry argument is used. That argument is always used in every country when protection is asked for at first, and it always proves that the infant is never able to do without it later on. I do warn the House of Commons and the Government that it is the beginning of Protection—the thin edge of the wedge of Protection. Is it fair, while we have a Coalition Government in power to alter the principles of taxations in this country? Surely, the fair thing is that when we have a Coalition Government we should have the status quo on the ground of common action. I protest against the introduction of principles so alien to the principles of taxation of this country. I protest with all my heart against the introduction of them as being absolutely unfair to those of us who have believed in and practice the principles that are generally called the principles of Free Trade. It is not fair because we have a Coalition Government to bring in the principles of Protection, and embody them in our Budget proposals. Surely, if there is any kind of article for which it would be right to infringe the principle laid down by my hon. Friend just now, namely, that the result of taxes should go to the Exchequer and not into the pockets of private individuals—a very sound tenet, surely, of taxation, and one that has served this country very weir in the past, and upon which all our Chancellors of the Exchequer so far have acted —it should not be for an article of luxury like tobacco, but rather for the sake of an article like wheat. [An HON. MEMBER: "Sugar"!] Certainly sugar is a necessity of the poor; tobacco is a luxury of everybody. This argument about the wrongs of Ireland in the past has no application in the present case. A little bit of favour has been given to the industry of tobacco growing in Ireland, and I would join with the hon. and learned Member for Kildare in paying tribute to the persistence and ability with which the hon. Member for Clare has pressed this matter. As I have said already, I would be very glad for any means to be employed except this unsound one—if you like by paying a bonus, if it is thought necessary. But this principle of levying duties, a higher on the foreign product and a lower on the home product, although no doubt it has its advantages, is not the principle upon which the taxation of this country has been levied for years past, and on grounds of absolute fairness I protest as a believer in this canon of taxation, namely, that the result of taxation should go into the pocket of the Exchequer, and not by a side wind into the pockets of individuals, and create the vested interest which has been such a curse and cause of corruption in so many other countries. Under present circumstances it is absolutely unfair to introduce a new principle of taxation in this country.


So far from there being anything unfair in the present proposal, it is absolutely in accordance with my hon. Friend's own ideas. It will be observed that the additional Customs Duty on manufactured tobacco is 1s. 10d., and the additional Excise Duty 1s. 10d. Therefore I assume that my hon. Friend's observations, so far as they were intended to bear upon our Debates in this House, related to some other duty than the Tobacco Duty. When we come to some other duty, perhaps that will be our best opportunity to discuss the matter of unfairness. In the meantime, what is the whole discussion about? Under the former duties, there was an allowance of 2d. a lb. in order to cover the cost of Excise restrictions on manufactured goods. Well, the Excise restrictions on manufactured goods remain after the additional duty is imposed precisely as before the full duty is imposed. What ground, then, is there shown for adding to the 2d. per lb. which is the present allowance? I should not be ready to admit that it is a protective tariff. It was intended to cover the cost of the excessive restrictions placed on manufacture and leave it there. I do not desire to raise any new question of controversy. All I ask is to leave it there and let us get on to the next duty and be satisfied with the 2d. a lb. to cover the cost.


I agree with what the hon. Member for Kildare has said on this question. I have listened to the eloquent appeals which have been made during the past three or four years on this point, and I should be exceedingly pleased if the Chancellor of the Exchequer could see some way of increasing this small advantage to the Irish tobacco grower. We already allow him 2d. per lb., and I think it is agreed that that does not enable him to overcome the initial difficulties. It has been stated that to raise 1 acre of tobacco in Ireland it is necessary to spend £18 in wages alone on that acre. It has been shown that if the Chancellor of the Exchequer would give a wider and a fuller rebate on home-grown tobacco the acreage under tobacco would immensely and quickly increase. When this War is over we shall require employment in every imaginable way for our home industries, and I think the Chancellor of the Exchequer might take time by the forelock and do something to increase employment in this country by making this rebate 4d. or 6d. instead of 2d. The right hon. Gentleman only needs to inquire how much employment is given already in this country by the tobacco industry to assure him on this point.

Lieut.-Commander WEDGWOOD

Is the hon. Member aware that there is a war on, and that we want to get elsewhere?


I am preparing the ground for when the War is over. The land of Ireland can grow this tobacco if you will only put the people in a position to compete with those who have had a monopoly in this respect for eighty years. Why not try and give this employment and this industry back to our own people? I should be exceedingly pleased if the suggestion of my hon. Friend the Member for York has some weight, and I hope it is not too late to increase this Excise preferential treatment on home-grown tobacco, which will tend to increase employment.

Question put, and agreed to.