SPIRITS (CUSTOMS). (Hansard, 1 May 1918)

§ Mr. L. JONES
It is not my intention, as the House will readily believe, to oppose these taxes, and I rise only for the purpose of asking two questions in connection with the Chancellor of the Exchequer's proposals this year for extra taxation of liquor. As this is the first of the taxes, the present is, perhaps, the most convenient opportunity for referring 1583 to the matter. My right hon. Friend will remember that last year he took off a large proportion of the Licence Duties, and he did that in spite of protests from some quarters that it was unnecessary to afford this relief to the liquor trade. He did not, however, anticipate, as he has himself admitted, that they would make the profits they have made during the past twelve months, and he based his reduction on an anticipated decrease, or, at any rate, no increase, in the profits of the trade. The first question I wish to ask is this: Now that he has realised that the liquor trade, owing to the monopoly and restrictions, have not lost money but, on the contrary, have made money — very large profits indeed — why has not the right hon. Gentleman restored the Licence Duties in this Budget, instead of leaving them at the reduced figure at which they were placed last year? I want to remind the House that before the War the Licence Duties were between £4,000,000 and £5,000,000. In the last year before the War they were £4,300,000. In the following year — or two years later, perhaps— they were £3,400,000. Last year they were £2,400,000, and this year they are estimated at 1,100,000. You have, therefore, the Licence Duties reduced to about 20 per cent. of their former figure. I cannot understand why my right hon. Friend, who based his reduction solely on the ground of a reduction of profits, seeing that the profits have been, and are being made, has not restored the Licence Duties. I desire to point out to him and to the House —

§ Mr. SPEAKER
The right hon. Gentleman cannot discuss the Licence Duties under this Resolution. There is nothing in it about Licence Duties. The discussion on these Resolutions must be confined to the subject matter of the particular Resolution before the House.

§ Mr. JONES
Very well, Mr. Speaker, I will not pursue that matter. Perhaps I can raise it on the Finance Bill, but I think I have said enough to make clear to my right hon. Friend the point. I do it really in no controversial spirit, but because a certain amount of money is being raised from the trade, and it is the question of the form in which that should be raised that I have risen to discuss rather than anything else. The second point I wish to raise is this: The taxes which the Chancellor of the Ex- 1584 chequer is putting on this year are taxes direct upon the liquor, and whereas the tax upon the Licence Duty — I think I am not out of order in saying that — is a tax upon a monopoly which cannot easily be passed on to the consumer, the tax on spirits or beer is one that is immediately passed on to the consumer, and has to be paid by the purchaser of the liquor. Now, it is quite true that that is affected in the present year by the fact that the Ministry of Food, I suppose, is stepping in and fixing the prices at which the liquor is to be sold. The question I want to put to the Chancellor of the Exchequer — and I do not know that the information will be available to-day — is what margin is he leaving, both in the case of spirits and in the case of beer, to the trade between the extra taxation and the prices which are fixed for sale to the public? What is the profit which he anticipates on the average will be made on the gallon of spirits and on the barrel of beer? I do not press the Chancellor of the Exchequer for an answer to that to-day. It may be necessary to consult the Minister of Food —

§ Sir G. YOUNGER
They do not know.

§ Mr. JONES
That is an assumption I should not like to make, but if my hon. Friend does so no one is so likely to know as he is. Yet the matter is one of exceeding importance. My impression is that a higher tax might have been charged relatively to the prices that have been fixed for the sale of liquor and still a very sufficient profit would have been left to the brewers and distillers, and the Chancellor might have got more money out of it without injuring any body. I shall be very much obliged if the right hon. Gentleman, before the Second Reading of the Finance Bill comes on, will let us know whether that point has been considered, and, if so, what is the margin he thinks it desirable to leave? I would point out that it is a necessary consideration for him to take into account for this reason: He is collecting in excess profits the greater part of what is left to the trade, and that is a very extravagant way of getting in revenue, as he knows well. It is far better for him to put on the maximum tax direct that he thinks it desirable to put on and to leave to the particular trade only that part of the profits which will enable them to make the pre-war standard of profit. The idea of taxation in any trade he is taxing is not that he should get revenue 1585 out of excess profits, but that he should so fix his taxes and his prices as to leave to the traders just the pre-war profit and no more That would hit his Excess Profits Tax, but it would be more profitable to the State and more convenient to the traders.

§ Mr. BONAR LAW
I am obliged to my right hon. Friend (Mr. L. Jones), first of all, for his readiness to leave to a later stage anything ho has to say on this subject. I may say — and it will doubtless surprise him — that I have listened to his speech this afternoon with pleasure, because I got rather a shock when introducing my Budget he praised my taxes on this commodity. I had a feeling — I hope he will not think I am accusing him of being narrow-minded — that if he was quite pleased I must have gone a little too far. I am glad he is a little more critical to-day. Of course, the point of view he puts as regards price was the chief factor in my mind and that of the Food Controller in coming to a decision as to the duty. The whole thing is in an absolutely artificial condition, and I may say to the House that I had a very strong temptation to get a very much larger revenue out of the trade even than the large amount I am asking for in this Budget — and it would be perfectly easily done. There is a demand, strange as it may seem to my right hon. Friend—

§ Mr. JONES
I know it well!

§ Mr. BONAR LAW
—for these commodities far in excess of the supply, and it is my opinion that at almost any price we could have sold them. The result would have been, if I had chosen, and the Food Controller was willing, that we might have put another 1d. or 2d. on the glass of beer and have got an almost unlimited revenue. But obviously that would not have been wise, chiefly for there a son that while food itself is scarce if we had done that the mass of the people of this country would have been so dissatisfied if they had not got it that we should have lost more than we obtained. That is what influenced the Government. Precisely the same thing would happen if in addition to giving the industrial population inferior beer — so inferior, I am told by those who are good judges, that it is not beer at all — we had raised the price. You would have had an amount of industrial discontent greater than could have been produced in any other 1586 way. As regards both beer and spirits, it is not an easy calculation to decide exactly how much should be taken for the Treasury and what the price should be. It is not easy, for this reason: Conditions are altogether different. If one could say that such-and-such is the cost of the production of the article, and so much is the cost of distribution, one could leave a fair margin of profit. That is precisely what I should like to do, but the conditions are so varied and so difficult to adjust that obviously there might be room for mistakes on our part, and whatever the figure fixed it would either be too favourable to one set of people or unfair to another. That is inevitable, and all I would say is that in conjunction with the Food Controller the whole matter was gone into as carefully as we could do it, and we came to the conclusion that the duty, when taken in connection with the prices fixed to the public, is fair to everyone concerned, and not least to the Treasury, in which I am more particularly interested.

		£	s.	d.
Chloral hydrate	…	the pound	0	3	6
Chloroform	…	the pound	0	8	8
Collodion	…	the gallon	3	10	0
Ether, acetic	…	the pound	0	5	2
Ether, butyric	…	the gallon	2	3	9
Ether, sulphuric	…	the gallon	3	13	2
Ethyl, iodide of	…	the gallon	1	18	1
Ethyl bromide	…	the pound	0	2	10
Ethyl chloride	…	the gallon	2	3	9

	£	s.	d.
For every gallon computed at proof of spirits of any description except perfumed spirits	0	15	3
For every gallon of perfumed spirits	1	4	3
For every gallon of liqueurs, cordials, mixtures, and other preparations entered in such a manner as to indicate that the strength is not to be tested	1	0	6