§ (1) The additional duties of Customs payable under Part I. of the Finance (No 2) Act, 1915, on tobacco imported into Great Britain or Ireland, shall, as from the third day of May, nineteen hundred and seventeen, be doubled, and shall continue 819 to be charged, levied, and paid at the double rate until the first day of August, nineteen hundred and eighteen.
(2) The additional duties of Excise payable under Part I. of the Finance (No. 2) Act, 1915, on tobacco ground in Great Britain or Ireland, shall, as from the third day of May, nineteen hundred and seventeen, be doubled, and shall continue to be charged, levied, and paid at the double rate until the first day of August, nineteen hundred and eighteen.
(3) Sub-section (3) of Section eighty-three of the Finance (1909–10) Act, 1910, and any other enactment relating to drawback on tobacco, shall have effect as if the rates set out in the First Schedule to this Act were submitted for the rates set out in Part III. of the Second Schedule to the Finance (No. 2) Act, 1915, in cases where it is shown that additional duty has been paid at the double rate imposed by this Section
§ Mr. BONAR LAW
I beg to move, in Sub-section (1), after the word "until," to insert the words "the sixteenth day of July, one thousand nine hundred and seventeen, and as from the last-mentioned date the said additional duty instead of being charged at double rate shall be increased by fifty per cent, and shall be continued, levied, and maintained at that rate until"
This is also one of those charges which nobody would like to put on if it could be avoided Before we decided to put on this duty we had a strong feeling that there was one class who should if possible be saved from the charge, and there is an Amendment put down by two of my hon. Friends to exclude soldiers of His Majesty's military forces. From my own knowledge of the position of soldiers who are engaged in Home defence, I know that although their separation allowances, compared with former scales, are now generous, yet our soldiers really are very badly off compared with men who are earning wages, and therefore there was a very strong desire to exempt them from this particular duty. But when we began to see how the thing would work out, it was found that it was not possible to do it. In the first place, our regiments are in towns all over the country, and are coming into contact every day with their friends who are not members of His Majesty's Forces. We do not impute to them any lower level of intelligence or honesty than to other 820 people, but I think that it would be almost impossible for them to resist the temptation of giving their friends cigarettes at prices lower than they would have to pay, and I am advised that the loss of revenue from that cause would be very great, and that it would be to an extent which no one could foresee. Another difficulty which I think of great importance is this: It would, of course, be quite possible to supply soldiers with tobacco through canteens, and to make an arrangement by which they could escape this higher duty, but what would be the effect? I have made inquiries, and I am told that something like four-fifths of the tobacco bought by soldiers is bought from small shopkeepers, and the effect of any such arrangement is that this custom would disappear altogether from these small shops; so that, while trying to do a service to the soldier, you would be doing a great injury to the class which is now catering for soldiers. We came to the conclusion, therefore, that it was not possible, as I should haze liked, to make any concession to apply in this way. Then the next thing which we have to consider is the question of price. It is all very well for certain people to say that tobacco is not a necessity, but is a luxury. It is very difficult to draw the line between a necessity and a luxury. I have received, for instance, in answer to a question which was asked by my right hon. Friend (Mr. Lough), received information as to the amount derived from two articles which he specified and from other domestic necessities, some returns from the Revenue authorities in which I find that they class tobacco as a necessity. The effect of this increase of duty has been to raise the price of tobacco, and it is of course, a very heavy addition to the cost. On the whole it is those who have a low rate of wages who feel that it is a very heavy increase. One consideration brought out by the discussion of this Amendment, and to which I attach as much weight as do those who have moved it, is that the increase in the duty should not be used as a means for getting higher prices for the tobacco itself. My right hon. Friend the President of the Board of Trade has set up a committee to control the prices of tobacco and they have gone very closely into the whole question as to whether or not the addition which was put upon the price was justified by the increase in the cost of manufacture. There can be no doubt there has been a 821 very heavy addition to the cost of production, and that has to be taken into account. The price of the leaf abroad has risen and the charges and cost of manufacture are very important, and have resulted in a good deal of the added cost of tobacco apart from the duty charged. Looking into the subject, I inquired about the low-priced tobaccos to begin with, and I came to the conclusion, after a good deal of inquiry, that in view of the greater cost of production, and in view of the high price of the leaf abroad, it would not be asking too much to keep to twopence in some cases, but on the cheaper manufacture we have decided to increase the price only by half that amount, and the effect of the Amendment will be that the lower-priced tobaccos will be raised by Id. instead of 2d. Another suggestion which was made was that we should have graduated prices and graduated rates of duty and that the higher-priced tobacco should pay the higher duty. But on examination it was found absolutely impossible to do that. The Committee will understand that, apart from the home market there is a great deal of tobacco exported abroad on which we have to impose the full duty, and there is no method by which tobacco could be exported some at one price and some at another, and the result is that I ask the Committee to increase the duty by 11d. instead of 1s. 10d., so that the lower-priced tobaccos will only be raised in price by a penny, though a larger amount may be added to the higher-priced tobaccos. I have been in consultation with the representatives of the Board of Trade who are dealing with the matter, and I understand that they will be able to fix the prices on which the duty can be settled at an advance of one penny.
§ Mr. BONAR LAW
Discussion is not possible at this point. I hope, on the whole, that the Committee will see that this is as fair a way as we can possibly adopt of dealing with the subject, and I hope there will not be a long discussion.
§ Mr. WARDLE
I should like to say at once that I am much obliged to the Chancellor of the Exchequer, and it seems to me that we have a very good case on the whose Clause. It is undoubtedly a fact that the effect of this great increase in the Tobacco Duty has had an enormous effect on the working classes throughout the country, and, indeed, it has something to do with the unrest which has been experienced in the country during the last few months. Whatever it may be to other people, tobacco has become a necessity of vast numbers of the community. It may be that there are some people who can do without tobacco quite easily, but when the habit has once been formed, and when, as we know by experience, it enables men to go on smoothly with their work, I venture to think that the concession which has been made by the right hon. Gentleman will be very much appreciated throughout the country. I wish the duty could have been made still less, but as circumstances are at present, we accept what is proposed.
§ Sir WILLIAM COLLINS
I had the honour and pleasure of introducing a deputation of working men from Derby to the right hon. Gentleman the Chancellor of the Exchequer, and they put a very strong case before him on behalf of their fellow working men. The right hon. Gentleman has pointed out the difficulties which he has had to encounter, and, as I understand, has decided that in the case of the cheaper tobaccos the increased duty, instead of being 1s. 10d., will be 11d. A good deal of the unrest and friction which was caused by the former proposal arose from the fact that the addition of 1s. 10d. in the lb. translated itself into something like 2d. on the ounce, or something like 2s. 6d. or 3s. a lb. There was a good deal of suspicion in the minds of some of the working men whom I introduced to the right hon. Gentleman that this was another case of what is known by that ill-defined term "profiteering." At any rate, the right hon. Gentleman has shown that there are other causes of the increased price of tobacco besides the increase of duty. I understand that with the assistance of the Board of Trade and by the action of the 823 Committee of Control, the additional price on the cheaper varieties of tobacco will not exceed 1d. an ounce, and that, I am sure, will be received throughout the country as a reasonable and fair concession.
I am grateful to the right hon. Gentleman for having reduced the tax on the cheaper varieties of tobacco, though in the case of the soldier I am still a little disappointed, and I could have wished that there was some more straightforward way of dealing with his ease. I would point out that tobacco still is up to 6d. an ounce, as compared to 3½d. previous to 1916, and that 6d. an ounce represents the soldier's net pay. The soldier only draws 1s., and in the majority of cases 6d. is deducted in respect of various charges. The Chancellor of the Exchequer has in mind the people with low wages among the civil population, but I would point out that the soldier has a very much lower wage than even the lowest paid civilian, and I had hoped that the right hon. Gentleman would have given some special treatment to the soldier. The right hon. Gentleman says he does not wish to injure the small tobacconists, but perhaps he might find out some method of dealing with the point as to the soldier, because it does seem a little bit hard that he should have to pay to save the small tobacconist. There is another way of dealing with the matter. The Chancellor of the Exchequer might decide to give a soldier 1 lb. or ½ lb of tobacco per month free of duty, and I shall be glad if the right hon. Gentleman will give that suggestion his consideration. The soldier abroad gets his tobacco duty free, and I submit that the right hon. Gentleman might consider whether ½ lb. of tobacco per month free of duty could not be issued to the soldier at home. I should think there would be no difficulty in persuading the Army Council to agree to such a proposal, and I understand that the actual cost of the tobacco, exclusive of duty, is only 1s. per lb.
§ The CHAIRMAN
I think the hon. and learned Gentleman had better defer the discussion of that point till he reaches the Amendment which is upon the Order Paper in his name.
§ Mr. BUTCHER
The Chancellor of the Exchequer told us that arrangements had been made by the Board of Trade with regard to the duties on tobacco so that the increase on the cheaper kinds of tobacco would only be a 1d. per ounce. Can he tell us to what classes of tobacco that would apply? For instance, does it apply to plug tobacco which soldiers and others smoke, and what is the effect on cigarettes? Perhaps he can tell us how these arrangements will affect the selling price of cigarettes under the altered duties?
§ Mr. BONAR LAW
It is impossible, of course, to give details of that kind. What I said was that I was told that they had every hope that the increase on certain kinds of tobacco would not exceed a 1d. per ounce, and as regards the. other kinds of tobacco that they are to be regulated by the Committee which is dealing with tobaccos and which will take into account all the circumstances of the case.
§ Mr. SHERWELL
Can the right hon. Gentleman give us an assurance that this reduced tax shall not be levied on water? I think it is the experience of almost everyone who smokes that since the increase of duty the consumer of tobacco has paid not merely more than the increase of duty, but he has also found that his tobacco is considerably watered and consequently he has paid duty on that at the high rate. I am quite aware that this adulteration by adding water to tobacco is illegal, but so far as I am aware—and my experience in this respect is, I think, the same as others—there must be some laxity of inspection which allows retail tobacconists to charge the full price on duty-paid tobacco for water, which forms a very considerable portion of the tobacco you get. I think it will be found that there is very much more in this point than the experience of the Chancellor has led him to feel. I think it would be a good thing if the Treasury or Customs and Excise Department would undertake some system of inspection to ensure that the tobacco consumer is not defrauded as he has been during the last two months.
§ Amendment agreed to.
§ Mr. BALDWIN
I beg to move, in Subsection (2), after the word "until," to insert the words "the sixteenth day of July, nineteen hundred and seventeen, and as from the last-mentioned date the said 825 additional duties instead of being charged at tho double rate shall be increased by fifty per cent, and shall continue to be charged, levied, and paid at that increased rate until."
§ Mr. DENMAN
May I ask whether the Government are satisfied that they can adopt this course, having regard to the Resolution which we have already passed and to which statutory effect has been given? Have we any right now to alter that Resolution as from a certain date and still give the Resolution statutory effect? I gather the Government intends to leave the duty at the reduced rate as from the 16th inst. I have examined the Provisional Collection of Taxes Act, and it seems very doubtful if they have this power.
§ Amendment agreed to.
§ Further Amendments made: In Subsection (3), after the word "in" ["set out in "], insert the words "Part I. and Part II."
§ After the word "were" ["were substituted"] insert the word "respectively."
§ At the end, insert the words '' or the increased rate imposed by this Section as the case may be."— [Mr. Baldwin.]
I beg to move, at the end to add the words, "Provided that no additional duties under this Section shall be payable on tobacco sold by the Army Canteen Committees to soldiers of His Majesty's military forces."
I gather that the Chancellor of the Exchequer was very sympathetic to the ease of the soldiers in this respect, and I hope, if I can show him an alternative proposal for giving some advantage to the soldiers, he will, at all events further consider the matter. Let me remind the Committee that even under the concession which has been made an ounce of tobacco will cost a whole day's pay to the soldier. We know that in some instances the stoppage of tobacco is a punishment, and I submit that under these proposals we are punishing the soldiers, although no doubt anxious to give them the advantage of any reduction. The Chancellor stated that one difficulty with regard to my proposal was the small shopkeeper. I submit that the large proportion of the 826 soldiers buy their tobacco in the canteen. However we may sympathise with the position of the small shopkeeper or the small tobacconist, I submit that the soldier has some claim to our consideration. My original proposal was that I lb. per month per man should be issued free of duty, and the alternative proposal which I now suggest is that ½ lb. per month per man should be issued under the Army Council by an arrangement with the Army Service Corps with the ration. The cost of such a concession would not be very great. I am informed that tobacco brought to this country costs, free of duty, about a shilling per lb., and if my suggestion were adopted it would only mean sixpence per man per month. I cannot obviously state the total amount representing the total number of men, but I would ask the Chancellor to consent to forego the duty on that ½ lb. per soldier per month. I am told that this suggestion is quite practicable, and that the tobacco could be issued with the rations to every soldier at home in the same way as it is now done abroad. It would be a valuable concession. To a certain extent, also, it would meet the position with regard to the small shopkeeper, because most soldiers smoke far more than the amount I suggest, and they would therefore still spend a considerable amount in buying tobacco from the small shopkeeper and they would also have-more money left to spend. I do hope the Chancellor will consider the matter and will notify the Army Council that if they are prepared to issue the tobacco in this way that he will not stand in the way by insisting on the full duty being charged.
§ General Sir IVOR PHILIPPS
I am sorry that the Chancellor of the Exchequer does not see his way to accept this Amendment. I can quite understand that there are difficulties, but what I rose to say is that I deeply regret that the Chancellor should have gone further and said, as far as I understood him, that he is against a. ration of tobacco being issued to the soldier because it would be unfair to the shopkeeper. I really must enter a protest that the question of the issue of a ration of tobacco to our soldiers at home should depend in any way on the question of the local shopkeeper. The sailor gets his ration of tobacco, and you do not consider the local shopkeeper there, and the soldier gets his ration abroad. [An HON. MEMBER: "The sailor is not on shore."] He is sometimes, and he gets this ration in. 827 harbour and brings it on shore with him. I really believe the soldier ought to get it too. It is suggested that it would harm the shopkeeper. I really do not quite follow that argument. I think our soldiers' pay is so small that it is our duty to see that everything that is necessary for their "domestic necessities "—to use the words of the Chancellor—should be provided. The mere fact that the Chancellor of the Exchequer has called tobacco a domestic necessity proves to me that it is desirable that the Army Council should supply it. I do not rise—I hope the right hon. Gentleman will understand—to object to his not accepting this Amendment, but in order to protest against his having gone further and against him saying that he does not think tobacco should be issued as an Army ration. It is issued abroad, and I consider it should be issued as an Army ration here. The question of the local shopkeeper really does not arise, and, as my hon. and gallant Friend (Colonel Hope) has so clearly pointed out, the largest amount of tobacco is bought in the regimental canteen. I do hope that the Chancellor will reconsider this matter and not put his foot down altogether against tobacco being issued as an Army ration.
§ Amendment negatived.
§ Clause, as amended, ordered to stand part of the Bill.
§ CLAUSE 5 (Effect of Repeal of s. 2 of 2 & 3 Geo. 5. c. 8) and Clause 6 (Powers to Reduce Minimum Weight of Packages of Imported Tobacco) ordered to stand part of the Bill.