§ On and after the thirty-first day of July no Entertainments Duty shall be levied where the price of admission, excluding the amount of the duty, does not exceed sixpence.—[Mr. Hogge.]
§ Clause brought up, and read the first time.
§ Mr. HOGGEI beg to move, "That the Clause be read a second time."
This raises a very important point which I have discussed privately at some length with the Chancellor of the Exchequer, therefore I do not propose to detain the House at any great length with the arguments which I hope to adduce in favour of the acceptance of this new Clause. The House will remember that in the last Budget we dealt with the whole subject of entertainments in a special way and for the first time. I have no doubt that the Chancellor of the Exchequer anticipated that he would get quite a considerable revenue out of the various entertainments he was taxing for the first time. The right hon. Gentleman stated quite definitely—I think he will agree with me in this at once—that in imposing that tax he had no intention of levying it upon the proprietors of these entertainments, but that it was a device on his part to compel people who otherwise did not contribute to the revenue of the country, to contribute to war taxation which he was raising from all classes of the community. If I can prove to him, as I hope to do, that the results of his tax are proving disastrous in many respects to the machinery which is collecting the tax for him, I hope he will be prepared to reconsider it. The taxes which were put upon entertainments were rather curiously contrived. The heaviest proportion of the taxation lay upon the cheaper class of seats. The lowest sum of taxation which was imposed amounted to 50 per cent, of the entrance money paid, 426 whereas the largest sum imposed only amounted to 8 per cent., and the people who were able to pay the largest sumof money for their amusements are contributing very much less than the industrial classes, who cannot afford large sums for these entertainments. If you take an industry which has perhaps been hit harder than any other by the Entertainment Tax—namely, the cinema industry—what has happened has been what one might expect would happen, and what I predicted would happen when the tax was imposed. People have been in the habit of paying anything from 1d. up to 6d. for admission. Supposing they have been in the habit of sitting in a seat which cost them 4d., when the tax was imposed these people immediately transferred 'themselves to the seats which were charged 3d., with the result that the Chancellor of the Exchequer got his Id. in taxation because there is a 1d. taxation upon a 3d. seat, but the proprietor of the industry lost 1d. of the income which he requires to keep his show going. The result of that has been very disastrous in many cases.
I have here a series of figures which I have shown to the Chancellor of the Exchequer's officials. In these figures I have practically laid all my cards on the table and met him perfectly fairly in regard to information. I have a series of forty separate cinema undertakings from all parts of the country. Included in this list there are such places as Manchester. Wakefield, Preston, Nottingham, Eccles. Liverpool, Oldham, Bolton, and Blackpool. The net result of the imposition of the tax on these forty halls has been that whereas they have contributed £630 in tax during the period the figures cover the loss to the proprietors of the concerns has been £671. Not one of these halls has made a single penny of profit since the tax was imposed, and there have been more cinema theatres closed down during the weeks in which it has operated than there have been for a very considerable time. I am not arguing as to whether cinema theatres ought to be closed down or not. The right hon. Gentleman himself has stated deliberately that the tax was not intended to fall on the proprietor of the entertainment, who is already reached in his Income Tax and who will be reached more and more according as his income increases, but upon the patron whom he could not get in any other way. It is a serious consideration for the right hon. Gentleman as to whether the machinery which he is making 427 use of to collect this tax is not going to be destroyed in a great many parts by the imposition of the tax. I have figures here which perhaps provide the only example I need give to emphasise this point. Here is a theatre in Manchester for which I have the figures for six weeks of the tax, six weeks immediately preceding the tax and six weeks of last year corresponding with the period liable to the imposition of the tax this year. If you take the first six weeks of the imposition of the tax of this theatre, and it is a typical theatre, one of what I call the industrial cinemas, this man lost in his first week £6 9s. 4d., in the second week £6 18s., £12 15s., £12 17s., £18 10s., and £9 9s. Altogether in six weeks he lost £67 0s. 9d., and he paid the Chancellor of the Exchequer £46 11s 6d. in tax. That is to say, the result of the tax upon him was that while he had to provide the Government with £50 worth of tax he himself lost £67, including the tax for the Chancellor. In the preceding six weeks his profit was £61. and for the corresponding period last year his profit was £26. A tax, the incidence of which falls in that way, is obviously one that requires to be reconsidered. I am certain the right hon. Gentleman was perfectly sincere when he thought there was a very large amount of money to be got out of taxing amusements. I did not agree, and never have agreed with him, and I do not agree with him yet. I am certain that particularly the working classes of this country have not got so very much money to waste in amusements, and I can give case after case of working men who go with their wives and children to cinema theatres who before had no chance at all of rational amusement who now come at long periods, or who only come once a week instead of twice a week—because the entertainment is changed twice a week—and in that way hit both the proprietor and the Chancellor of the Exchequer, because, while the proprietor wants their money, the Chancellor wants his tax.
I think this tax is meant to be a permanent tax. I do not know whether the right hon. Gentleman has in his mind the idea that it is to be a permanent tax, but I am perfectly certain that no Chancellor of the Exchequer for the next ten or fifteen years, in the state of finances in which we find ourselves, will be willing to drop any tax out of which he can get any considerable amount of revenue. Therefore, I 428 begin with the proposition that this tax is likely to be permanent. If that is so, I suggest that it is bad business to smother the machine at the outset of what may become a permanant tax with every possible imposition which can be put on it. The percentage of the tax runs out in this way. Penny seats are taxed at 50 per cent., 2d. seats at 25 per cent., 3d. seats at 33⅓ per cent., 4d. seats at 25 per cent., 6d. seats at 16 per cent., 1s. seats at 16 per cent., 2s. 6d. seats only 6 per cent., 5s. seats 5 per cent., and over 10s. only 8 per cent. Therefore the right hon. Gentleman " is bound to get a better revenue and one which will come more evenly later if he starts with the imposition of a tax which will bring him that amount of revenue which the trade can carry at the moment, and he can increase it as the trade is able to meet it. I moved an Amendment, which he disposed of in a couple of sentences, asking him to postpone the operation of the tax until October, because the summer months are the leanest months of the year for people who cater for amusements, and if this tax had been imposed in October perhaps it might have been carried much more easily than it could possibly be carried at any other period of the year. I am convinced, from my own experience, and from figures which have been supplied to me from all over the country, that the Chancellor of the Exchequer is doing a great disservice to rational amusement in persisting in the tax as it is at the moment. When it was imposed there was the promise of a second Budget, when this could be reconsidered with the other taxes. Firms which were interested in the taxation of aerated waters got a definite promise that they should have their tax reconsidered, and that they might be dealt with in the second Bill. No hope of a second Bill is held out now. Perhaps that is a good enough thing from many points of view, but that opportunity will not arise. The tax is therefore bound to run until a fresh opportunity arises. In the meantime a large number of people in the trade who have been, and are, acting at the moment as collectors of revenue for the Chancellor of the Exchequer, are being driven out of their business. Many of them are being ruined.
8.0 P.M.
The House has always to remember the distinction that there is in the entertainment industry. There are very large wealthy corporations in big cities, and there are industrial concerns in provincial towns. The difference between the 429 two is very considerable, and the second of these concerns certainly cannot stand taxation of this kind. Therefore I am suggesting that the right hon. Gentleman should decree that after 31st July all the taxes should disappear below 6d., and that he should begin his tax there, and in future years, from year to year, impose heavier taxation downwards, when the trade is better able to meet it. I see by the right hon. Gentleman's look that he is not going to agree to the deletion of taxes under 6d If not, may I suggest that he might be able to meet the situation by agreeing to a lower figure. I think those interested in the trade would be prepared meanwhile to take the abolition of the tax on everything below, say, 3d. or 2d., in order that institutions which were carrying on quite well before the tax was put on shall not be driven out by the tax, and I am certain the Chancellor does not want to drive these people out of business. That is the last thing he has in his head. I think he has also had evidence that these people do not wish to evade taxation, and are as willing as anyone else to help him in raising revenue, but from the evidence which I have advanced now, and from a great deal more which I have given him personally, I think he is convinced that I have a case, and that I am not putting it too high. I am suggesting that the difficulty might reasonably be met, and I think with goodwill on the part of everyone, if he would agree to the figure which I have suggested since I put the Clause on the Paper that everything from 2d. down should go, and that he should be content with the Id. that he gets on 3d., 4d., 5d., and 6d., and that he can reimpose the tax on these other prices when he is assured from the experience of the tax on the higher tickets that the machinery which he has asked to collect is able to collect I hope he will be able to say something which will bring some comfort to the trade. I would remind him that a large number of people are scattered throughout the country in our smaller villages and towns who have every penny of their capital in these particular undertakings, and they are people who cannot hold out if this tax continues in this way. There are some people in the trade, perhaps a considerable number of people, who can stand the loss at the present moment which is accruing to them in collecting the tax; but there are others who cannot stand that loss and who 430 are being driven out of the trade, and their trade is being taken by the larger combinations who have always the capital at their disposal to buy up and get rid of the smaller men. I do not think the Government is entitled to drive anybody out of business by the imposition of a tax which is not meant to be put upon them, but which they are asked to collect. Therefore, I hope the Chancellor of the Exchequer—I am sure he will after the conversations I have had with him—will be prepared to meet us in some way.
§ Mr. PRINGLEI beg to second the Motion. I do not desire, after the very full and detailed statement of the case which my hon. Friend has given, to enter into any considerations on the merits. I think it is only necessary to state that in my opinion, and I am sure every hon. Member who has listened to my hon. Friend's speech will agree, he has made out a case that the incidence of this tax, so far as the low-priced tickets of admission are concerned, has not been as was intended and expected when the tax was imposed. Instead of the tax falling upon the frequenters of these entertainments the tax has in actual practice fallen upon those who purvey the entertainments. Not only has that been the effect, but as a result of its incidence many of those who have been providing this perfectly legitimate entertainment have been so adversely affected that they have been forced to contemplate going out of business. Their losses have been so great that, especially in the case of the smaller men, they are likely to go out of business, and as a result their loss will ultimately accrue to the advantage of the larger people in the business who, in the meantime, can bear this loss, because of the higher class trade they do in other directions. I think in view of the secondary effects of the tax, and in view of the fact that the Chancellor of the Exchequer is unlikely to reap anything like the revenue which he anticipated in the cases now being considered, that he ought to accept the new. Clause which my hon. Friend has moved.
§ Mr. McKENNAMy hon. Friend who moved this new Clause has made out a case with considerable force in favour of his Motion. I have had the advantage of more than one interview with my hon. Friend, and he has laid before me, with very great fairness, the figures which he had in his possession. My difficulty in dealing with the subject does not arise 431 from the difficulty of answering his particular argument but from the nature of the tax itself. Everything which my hon. Friend says about this kind of tax in its effect upon the smaller man in competition with his bigger and more powerful rival is true and unavoidable. That is a condition of all taxation. Taxation of this kind, which has the same effect as increasing the cost of raw material, always operates "with greater harshness upon the man with small capital than upon the man with large capital. The Committee must accept all the evils necessarily connected with taxes of this kind, if they have indirect taxation at all. I do not see that we can go back upon the policy which the House has accepted in this respect. We have to take our system of taxation as a whole, and while we admit, and must admit, the peculiar effect of indirect taxation, there is no other means known to us or known to any other country by which you can get from everybody contributions towards the cost of the State anything at all proportionate to their means.
§ Mr. McKENNAIf the hon. Member will allow me to pursue my argument, I will not conceal anything from him. The Committee must remember that this tax only came into operation on the 15th of May last. In ordinary years it would be a bad time, in the middle of May, for a tax of this kind to come into operation, but this year it was a peculiarly bad time because the 15th of May was almost coincident with the date of the new summer time, a date which, to judge from the weather we have since enjoyed, was very badly made. It also coincided with a time when the cinema has been much affected by the Board of Trade Regulations, and there has also been an increase in the cost of electric light. Therefore, quite apart from the tax, there was bound to be a very serious decline in the amount of money expended by the public upon amusements. It is always known, and my hon. Friend will agree with me on that point, that the summer time is less productive in the way of amusement revenue than the winter time.
§ Mr. McKENNANotwithstanding the bad season of the year, how has our in 432 come from the tax come in? Not at all badly. We have raised in six weeks £400,000. That would give us an average of between £3,000,000 and £3,500,000 a year. Our estimate was only for £5,000,000. Therefore, we may assume that if during the worst six weeks in the year, from the 15th May, we have been able to raise £400,000, we may assume that our original estimate has a very fair chance of being realised. When in these six weeks, and under these conditions, we can obtain a revenue of that kind, can it be said that the tax has ruined the industry? I do not think that can be said.
§ Mr. HOGGEI never maintained that, as the right hon. Gentleman knows. I have been quite frank with him. I have shown him how some people are overcoming it. I am not so much concerned with that argument as with this argument: Is the Government entitled to use the cinema proprietor to collect this tax, and in the collection of the tax to destroy the machinery? You are getting taxation from the people who attend these places, but you ask the provider of the entertainment to collect the tax from the people, and I have brought forward facts to show that the collection is shutting down these people who provide the entertainment. I say that is not fair. That is my point.
§ Mr. McKENNAMy answer is that it is much too early to say that the effect of this tax is to shut down any large number of people or firms engaged in the amusements industry. The effect of summer time, both natural and by statute, is far more serious in our judgment upon these amusements than the tax. We say that in any event a tax of this kind must have, unavoidably, somewhat the effect which has been outlined by my hon. Friend, because every tax which adds to the cost of production must operate to put out of trade those who are only just living upon the margin of profit. Therefore, the argument of my hon. Friend if it is worth anything at all is an argument against all taxation of this kind. In regard to this particular case, I say that it is much too early to come to the conclusion that the tax is not a proper tax. If we find, when we have had sufficient time to consider its whole effect, that the tax does not permit of entertainments being given to a class and in a way which they were given before the introduction of the tax, then I admit a case will have been made out for reconsidering the incidence of the present tax; 433 but for the reasons I have given I do not think such a case is by any means proved now. In the instances given by my hon. Friend, the proprietors of the houses would have lost money owing to the other causes I have mentioned even if there had been no tax at all. It would not be fair in regard to this or any other tax to close one's mind against evidence as to the ill effects of the tax, when the conditions have been such as to enable evidence to be properly taken. But, as I have said, I do not think we have had sufficient time yet to judge the operation of the tax. I hope my hon. Friend will be satisfied with the same assurance which shall be given to him as has been given to the table water manufacturers, that we will examine the facts and keep an open mind, and if when sufficient time has elapsed we find that the hon. Member's case is as good as he makes it out today we shall be only too glad to introduce an Amendment.
§ Mr. LOUGHI think my right hon. Friend has not given quite a fair reply to the very able speech made by the Mover of this new Clause. It is a most interesting subject and the House will yet have to consider it. The Chancellor of the Exchequer has rather exaggerated one or two things and he has made one or two statements which I think in a short time he will find it necessary to correct. He compared this to an indirect tax. It is not an indirect tax, but a direct tax, and that is the mistake which the Treasury has made. When it comes to Income Tax my right hon. Friend knows exactly what to do. He knows that the Income Tax upon a man with a small income will be light. He does not take the same proportion from a man with, say, £100, as he does from a man who has £10,000. He puts a lighter tax upon the man with little money. My hon. Friend (Mr. Hogge) has shown that in this particular case the Chancellor of the Exchequer is taking exactly the opposite course. He takes 50 per cent. of the takings in one case, and where it is graduated up he only takes 5 per cent, in the other case. Therefore, I think the Chancellor of the Exchequer is making a mistake. We are sympathetic with him in desiring to get money for the War, but I believe an unanswerable case has been presented by the mover of this Clause. He has shown that the effect of pursuing this tax will be to destroy the industry, so that the Chancellor of the Exchequer will kill the goose that lays the golden eggs. I gave 434 him an example, although I did not press it, and I am not going to press it now at any length, and that is an example which is occurring in London in regard to penny entertainments—the charge made by municipal and various authorities in the public parks. These will be all stamped out of existence if the Entertainments Tax is levied upon them as it now is. My hon. Friend (Mr. Hogge) was very wise in asking the Chancellor of the Exchequer to fix some low scale, whether it be 3d., 2d., or Id., and to graduate the tax a little more wisely. I do not suppose that we will succeed with the Chancellor of the Exchequer now, but that we will have to rest satisfied with the answer which he has given. I am very glad my hon. Friend has raised the question. I believe we shall find that the Chancellor of the Exchequer is proceeding on a most unfair and unsafe principle. It is not judicious to impose a tax which will cause a greater loss to any section of the community than the tax produces. That is an axiom. The Chancellor of the Exchequer will find it very difficult to trace the loss which he may be causing to owners of penny entertainments. They are a humble class, scattered over the community, with but a small capital, but if the total loss exceeds the amount of the tax a great injury will have been done by the imposition of the tax. I do think it a manifest injustice to take such a large proportion of the poor people's money as compared with the small proportion of the rich people's money which is taken, and I do think that a little more might be done in the matter. If there was any disposition generally to support my hon. Friend I would be glad to do anything I could to secure acceptance of the principle which he has laid down.
§ Mr. MORRELLI desire to express to my hon. Friend who moved this Clause the gratitude which we all feel for the able way in which he did so, and I hope sincerely that my right hon. Friend, as I am sure he will when the time comes, give sympathetic consideration to the proposals of my hon. Friend. I am specially interested in some c f those small places of entertainment in my own Constituency, and I can assure the Chancellor of the Exchequer that the evidence which I get as to the immense hardship caused by this tax is very real. I have here the takings from 15th May to 3rd July of a very respectable small cinema house in 435 my Constituency, and I find that the takings of that period in 1915 were £1,843, and in 1916 £1,425, showing a decrease of £418. In addition to that this man has had to pay a tax of £279. He gives me a very interesting comparison of what happened in the week ending 3rd July, when he had the same company as he had in the corresponding week last year. This year the takings for the week were £162, whereas in the corresponding week last year they amounted to as much as £314—that is to say, they have been reduced by one-half, and in addition to that he has had to pay £31 in tax, and in the letter accompanying these figures he points out that they have not only had this tax, but they have been deprived of their men who have had to attest and were called up, and were put to extra expense. He goes on to say that the only result will be that unless some relief is provided he will have to close down this particular place of entertainment. On those grounds I am very glad that my right hon. Friend has promised consideration for this proposal.
§ Sir H. CRAIKIt is suggested that this tax is to be considered solely in the interests of those people on whom it happens to fall. They may be, for all I know, a very deserving class, but I do not think that their industry is one which is essential for this country, and that they should have to pay a certain tax is not only fair but absolutely just. There is another aspect which hon. Members opposite might do well to consider. Do they really think that these entertainments are of any use, and that in fighting for them they are doing any good either for the country or for the public generally? I am prepared to speak not in the interests of any particular taxpayer, but in the interest of the children who chiefly throng these very cheap entertainments, absolutely, in the vast majority of cases, to their physical destruction. I am not going to make any attacks in reference to their moral tendencies. I do not know what they may be, but I am perfectly certain that the bulk of the teachers all through the country, and the medical attendants in the schools, will tell you, what my own experience abundantly confirms, that the physical effects and the effect upon the eyesight of the children are most deleterious, and are increasing. If incidentally this additional tax, which I think, from the liberal figures quoted by the hon. Member who has just sat down, must not fall 436 upon a particularly poverty-stricken class of persons, is to check this sort of entertainment, and lessen the number of children going to it, it will have worked very considerable good. I know that that is not a proper motive for taxation, but in recent taxation we have learned a great deal, and we have been told that we are becoming moral, sober, and everything else by means of taxation. If, incidentally, this tax closes down some of these entertainments, which are certainly not of any great benefit to this country, and physically do harm to a very large number of children and injure their eyesight to a great extent, I for one shall be very pleased that the Chancellor of the Exchequer has not given way to the appeal.
§ Mr. HOGGEIn view of the promise of the Chancellor that he is prepared to consider the incidence of this taxation at some period in the near future, if a case can be shown, I beg leave to withdraw the Amendment, and I thank him for what he has said.
§ Motion and Clause, by leave, withdrawn.