HC Deb 01 May 1918 vol 105 cc1559-81

3. "That in lieu of the duties of Customs now payable on sugar imported into Great Britain or Ireland there shall, on and after the twenty-third day of April, nineteen hundred and enghteen, be charged the following duties:

£ s. d.
Sugar of a polarisation exceeding 98 degrees the cwt. 1 5 8

£ s. d.
Sugar of a polarisation not exceeding 76 degrees the cwt. 0 12 4
and intermediate dates varying between 25s. 8d. and 12s. 4d. on sugar of a polarisation not exceeding 98 and exceeding 76 degrees.
Molasses (including all sugar and extracts from sugar which cannot be tested by polariscope):
if containing 70 per cent. or more of sweetening matter the cwt. 0 16 3
if containing less than 70 per cent. and more than 50 per cent. of sweetening matter the cwt. 0 11 8
if containing not more than 50 per cent. of sweetening matter the cwt. 0 5 8 ½
Solid the cwt. 0 16 3
Liquid the cwt. 0 11 8
Saccharine (including substances of a like nature or use) the oz. 0 8 3

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."


I do not think that we ought to pass this without offering a few observations against this very large increase in the cost of living, particularly of the middle and working classes. Sugar has already been considerably enhanced in price, and I do think that we ought to offer some protest against this further increase in the duty. The Chancellor of the Exchequer seemed to think that the subsidy on the loaf compensated for this material increase in the cost of living, but I think we should follow the lead of the right hon. Gentleman the Member for Barnard Castle (Mr. A. Henderson), who suggested that the working classes would rather that the food taxes were completely abolished and that the Income Tax were developed or that a direct tax upon wages was imposed. It would be out of Order to speak of that matter just now, but one must offer some alternative if we protest against this particular tax. The same argument applies to many of the other taxes, such as the Luxury Tax, which tries to tax the thing rather than the result. I hope that many Members, while not prepared perhaps to divide the House on the Motion, will protest against the tax, which unquestionably falls heavily upon those least able to bear it, and which will certainly lead to a further increase in the cost of living. The right hon. Gentleman made out no case for this serious increase in the duty upon sugar, and I believe that many people will protest against it. It seems to me to be unjust. It is not as if the particular classes which it hits are not already feeling very much the increased cost of living. It falls upon old age pensioners and upon those with fixed incomes, and will materially affect the health and comfort of the community There is no justification for the increase which is now proposed.


I wish to join with my hon. Friend in protesting against the very serious increase in the duty on sugar. The only real justification offered by the Government for this charge was that the classes mainly affected by it were receiving a considerable benefit from the Treasury in the shaps of the subsidy offered upon the price of the loaf. That is a kind of argument which we should not accept in relation to a proposal of this sort. If there is objection, and I have always believed that there is grave objection, to the system of subsidising for the purpose of lowering the price of bread, then it is the duty of the Government, instead of seeking by way of taxation to obtain from those affected the equivalent of that which the Government is granting, to reduce the amount of the subsidy direct. That is the obvious, the practical and the logical course to take. In view of the new situation that has arisen in relation to rationing generally, it was the obvious duty of the Government to reconsider the whole policy in regard to bread, with a view to putting an end to this objectionable system of a subsidy and providing bread to the public on a rationed basis and of a decent quality. The justification to which I have referred is open to this further objection: In order to justify an increase in permanent taxation, the Chancellor of the Exchequer uses a subsidy which is temporary in character. He says, in effect, that because the working classes during the present year, and, possibly, for the remainder of the War, are to be entitled to bread at a price lower than the natural price, therefore he is justified in increasing taxation on a basis which is likely to be permanent after the War. It is from the point of view of the permanent effect of this tax that the House ought to discuss it. As my hon. Friend has pointed out, this tax falls with peculiar severity upon the poorer classes of the community. It is true that the great mass of the working classes at the present time are probably able to bear it, that the working population of this country have been during the last year and the year before enjoying higher wages than at any previous period, and that a larger number of them have been in the enjoyment of such wages. But that must not let us conceal from our minds the fact that there are large numbers of very poor and deserving people who are not in that fortunate position. There are, for example, the pensioners to whom my hon. Friend referred, but there is an even larger class than these; there are the dependants of the soldiers and sailors who are at present serving the country. It is quite true that these separation allowances have been increased, but everybody who regards these separation allowances in relation to the purchasing power of money will agree that the increase in these paration allowances has not by any means kept pace with the increase in the cost of living, that this class is the class which is suffering specially by the War, and that undoubtedly this form of indirect taxation is going to affect them most severely. If you take the class of officers, you find that a special provision is made in respect of the Income Tax for serving officers. The increases of the Income Tax which affect the civilian population do not affect them. But when you take this form of indirect taxation, which affects the wives and children of the serving soldiers of the rank and file, although they are not receiving any substantial increase in their allowances, they nevertheless have to bear this extra burden. If we look at this tax from the point of view of this very large class, the House should hesitate before giving its assent to the increase of this particular tax.

Before assenting to this tax we should also look at the industrial effects of it. During the War, of course, the question of the sugar which is used as raw material is not a factor of particular importance in relation to the trade of the country. But undoubtedly the Chancellor of the Exchequer is looking at this as a permanent tax. We know that in the past the sugar-using trades have been a very important part of the export trades of this country. They have been very large, very valuable, and very prosperous trades. When the War comes to an end, undoubtedly it will be the object of those engaged in these trades to regain their old position as soon as possible, and it will be the interest of the country that those engaged in these trades should regain that position. When they have to face the new situation after the War, and when they will be endeavouring to restore their broken fortunes, they will find themselves handicapped by the very severe burden which this tax will impose. The probability in that situation is that you will have an outcry, when the War is over, both from the users of sugar and from the consumers who are affected, for a reduction of this tax, and that outcry may be so great in volume and dimensions that the Government then may not be able to resist it. It is the duty of the Chancellor of the Exchequer now to take a long view, and to look at the possible difficulties, either of himself or his probable successor, at that time. It will be a very inconvenient thing for the Chancellor of the Exchequer of that time to have to contemplate the reduction of any form of taxation, but you may have a situation in which the popular forces demanding such a reduction are so great that the Treasury and this House will not be able to resist it. It is of the utmost importance that such a probability should be in the minds of the Government and the House now, when this suggestion of an increase is under discussion.

It is not as if this were the only means that the Chancellor of the Exchequer has now of raising increased revenue. There are other classes in the community upon whom increased taxation could have been imposed without any of the grave objections which I have mentioned as affecting this proposed increase. Everybody who has taken part in the Budget Debates recognises the courage of the Chancellor -of the Exchequer's proposals, that he has faced the situation fairly and courageously, and that he has endeavoured to place the burden upon the community which is commensurate with the national liabilities. But, while we agree in admiring the way in which he has faced this difficult task, we are entitled to offer some detailed criticism of particular methods. This particular increase might well have been dispensed with on account of the facts I have mentioned, and the Revenue which the right hon. Gentleman would lose by that sacrifice could have been obtained by him by a very slight addition to the increase of the Income Tax which he has imposed. That would have been a preferable method. The increased burden imposed on Income Tax payers would have been comparatively slight, and there would not have been anything like the hardship which is likely to arise to very large classes owing to this increase in the Sugar Duty. I think the considerations which I have mentioned should be present in the minds of the House when discussing the proposals of the Government. It is true that we in this House, as well as the Chancellor of the Exchequer, should endeavour to see that the burden of the War is apportioned as fairly as possible among the different classes of the community, but when an addition to taxation is proposed such as that which we are now discussing, which involves a very heavy burden upon people who have not benefited by the War at all —namely, the particular class of dependants of those who are fighting —when we are discussing a burden which involves that hardship, I think we should ask the Government to reconsider the situation, and reconsider it in the light of this fact, that increases of taxation which would have affected officers have been modified so as to relieve them of any possible hardship, and that the same mitigation should be allowed in the case of those who are fighting in the ranks.


I would like to say, with regard to the remarks which have fallen from my two hon. Friends opposite, that I entirely agree with them in the protest they have made against the Sugar Tax, but it occurs to me that a more convenient time to do this would be when the Finance Bill comes up in Committee, and when we have a Clause imposing this new tax, and when the omission of that Clause can be moved. I rise now only, as far as that matter is concerned, to tell my two hon. Friends that why I do not support the action they are taking now is because I think the more convenient course would be to move the rejection of the Clause imposing this tax in Committee on the Bill, and by that time we would have had an opportunity of seeing what the country thinks of it, and we could do it altogether in a more effective and measured way than it is possible to do it this afternoon. I was sorry that my hon. Friend the Member for Coventry (Mr. D. Mason) spoke of not dividing the House. What is the use of raising these points if you do not divide on them? I hope my hon. Friend will pluck up his courage, and that when some of us move the rejection of this Clause when we have the Bill in Committee that he will support us. But leaving the question of sugar, I want to refer to one point in the very ingenious speech we have just listened to. Perhaps the Chancellor of the Exchequer will allow me to ask him this one question. I do not know whether he heard a remark which fell from the hon. Gentleman who has just sat down about the subsidy for bread. That was a very ingenious remark, and I would wish that we could have an answer to it from the Chancellor of the Exchequer, so that we should not have to raise it again. As we have the matter up now, perhaps the Chancellor of the Exchequer would explain to us why he did not adopt the course of taking so much off the bread subsidy instead of maintaining the subsidy at its full amount, and then taking the opportunity of taxing a certain article, especially sugar, which affects exactly the same consumers as bread —putting a heavy tax on them while the subsidy is given in regard to another article. It seems a moat confused method of finance, and a very ingenious problem has been put to the House by my hon. Friend who has just sat down, that the Chancellor of the Exchequer should take an opportunity of explaining why he did not adopt that course. If he does so, I am sure the House will be glad to hear him.

Mr. BALDWIN (Joint Financial Secretary to the Treasury)

I think the discussion which has been raised by my hon. Friends behind me is one to be expected. It has been raised very fairly and very considerately, and it demands an answer. The simplest answer to make at this stage of the proceedings —and I quite agree with my right hon. Friend opposite (Mr. Lough) that perhaps the more convenient time for a detailed discussion of this matter would be during the progress of the Finance Bill rather than on the Report stage of the Resolution —is to say that the reason which has guided the Government in imposing the tax is this: It has been argued that we should distribute the present taxation we have had to raise as fairly as we can through all classes of the community. Hon. Members will have noticed in the Budget that this duty on sugar is practically the only tax which affects people in receipt of incomes lower than £500 a year —that is, additional tax [An HON. MEMBER: "What about tobacco?"] I mean a compulsory tax. You do not pay the Tobacco Tax unless you smoke.


Do not take sugar in your tea!


With regard to sugar, I think that perhaps hon. Members who are opposed to this additional burden are a little apt to lose sight of what is its actual incidence, and at the risk of being a little tedious I must take one or two minutes in pointing out what is the actual incidence. The amount of the tax comes to 2s. 8 ½d. per annum per head on the rationed amount of sugar. Well now, consider first of all what that charge is on a household which is in receipt of an income that renders it liable to Income Tax —an income of over £130 a year. It cannot be pretended that any additional hardship is inflicted there, because for each child who is an inmate of a house of that kind there is the additional burden of 2s. 8 ½d. in the year, and there is a rebate allowed off the Income Tax which amounts to 56s. 3d. There has been this year given also a rebate on the Income Tax for the wife — that is over and above what was given last year —a rebate equivalent to that given for one child —so that in all probability almost in every household within Income Tax-paying limits, which include a very large proportion of the working classes of to-day, there is no additional burden imposed by this tax; indeed, I think I should be probably be nearer the mark if I say there is a decrease in the burden.


Will not my hon. Friend admit that the tax presses on the whole consumption of sugar, which is £80 per head?


I think my right hon. Friend rather exaggerates. I admit, of course, that the tax presses throughout the sugar trade, but I am advised that the amount of sugar used in the sugar trade for articles of consumption to-day would increase the amount of what we may call the direct taxation on sugar by about 30 per cent.


Surely it presses on the whole consumption!

4.0 P.M.


Certainly, but the pressure would not be so great as my right hon. Friend says. I am advised that the pressure would increase the tax by about 30 per cent. It would add something like 1s. per head to the year's burden. Then we come to the class, of whom the hon. and learned Member for Lanark (Mr. Pringle) spoke, coming below the Income Tax-paying class. There, I admit, that the very smallest increase is an increase which can be felt; but we have to remember that if you consider a tax of this kind right to put on, it is not possible to make exemptions from it. It is, I am afraid, the fact that to a certain point those at the bottom of the scale do feel, and must feel, every increase in taxation which is put on But when the hon. Member speaks of the soldiers' dependants as if they were a class without anything to look to beyond what they get in the way of allowances, I cannot follow his argument the whole way, because I do not think that is a literal statement of fact. It is this very class —the class below the Income Tax-paying class —of whom, I think, we may fairly use the argument which was urged by the Chancellor of the Exchequer that, at all events, if they are to pay this very small increase in what is to them an almost necessary article they have, on the other side of the balance-sheet, something which is worth more to them, that is, the subsidy on the loaf. To the suggestions made by some hon. Members that we should have reduced the subsidy, the answer is very simple. If we were to reduce the subsidy, we should have advanced against us exactly the same arguments which we have used against us to-day in putting this slight increase on the Sugar Duty as to its effect upon the poorest classes. I hope the sense of the House as a whole will be with me in what I have said, and will agree to pass this Resolution on the Report stage to-day, reserving to itself, quite properly, the right to discuss it subsequently at any length it chooses.


My hon. Friend is such a persuasive speaker that one hardly likes to criticise what he has said, yet I cannot help thinking that he has hardly given a correct view as to what the tax on sugar really means to the very poor. We are not specially concerned at the moment with the tax so far as it affects the Income Tax payer, because, after all, although he is suffering in many ways he is not suffering in not actually getting a sufficient subsistence. Take the case of an agricultural labourer. Last year we passed a measure giving a statutory minimum wage of 25s. to the agricultural labourer. What does this tax on sugar mean in the case of the agricultural labourer? At the present time a family of five will be able to get 2 ½ lbs. of sugar per week. The total tax on that amount of sugar is 7d. Therefore, if the agricultural labourer pays 7d. per week in tax, that means 30s. per year on a wage of 25s., and really amounts to an Income Tax of 5 ½d. — [An HON. MEMBER: "Weekly? "] —No; but it comes to an equivalent of an Income Tax of 5 ½d., and it is in cases like that where the real hardship comes. Take the million old-age pensioners. The Government very rightly have put up the pension from 5s. to 7s. 6d. What does this tax mean to these old people? If it is hard on the agricultural labourer, with 25s. per week, it is three times as hard on an old-age pensioner, who has only 7s. 6d. per week.


He has not four people to keep.


I think that is correct, but you cannot put it quite on an average of five, and I think in the case of the old-age pensioner it is a matter of extreme hardship. I would like to know from my right hon. Friend whether he has consulted the Labour portion of the Government in regard to this tax? I notice that the Parliamentary Secretary to the Ministry of Food, in speaking last year on the Sugar Tax, reminded the House of the case of labourers getting only 23s. per week, and he said distinctly that those men could not afford to pay the tax that was then suggested. Then he went on to say: There are a few millions of people in this country whose level of subsistence is still so low and whose wages are so inadequate in view of the cost of commodities, as to make it undesirable that any additional impost should be placed upon them. The right hon. Member for one of the Divisions of Glasgow (Mr. Barnes), who is a member of the War Cabinet spoke a year earlier on this question of sugar, and protested strongly against an additional tax on the ground that so much came from the pockets of the poor. If those protests were valid then, they are valid now, and whilst I agree with what has been said, that bold as the Chancellor of the Exchequer's proposals are in regard to the raising of money, I would like to see more money raised, and I believe more money ought to have been raised. It is not that I am objecting to his raising £10,000,000, but it is the method of raising it that I object to. I believe it would have been far better to have put this on the Income Tax, and let the Income Tax payers find it, instead of getting it from families who really cannot afford to pay. I should also like to draw attention once more, because we are apt to forget these facts, to the very interesting summary that was made by the right hon. Member for Glasgow (Mr. Barnes) with regard to the findings of the Commissioners who visited the industrial areas to inquire into the unrest there. In speaking of the main factor of unrest, he said: All the Commissioners put in the forefront as the leading cause of unrest the fact that the cost of living has increased disproportionately to the advance in wages. The Commissioners are unanimous in regarding this as the most important of the causes of industrial unrest. Not only is it the leading cause of unrest in itself, but its existence in the minds of the workers colours many subsidiary causes in regard to which in themselves there might have been no serious complaint. We know perfectly well that since then the Government have been trying, mainly through the action of the Food Controller, to reduce the cost of food, and all kinds of artificial devices have been adopted to get the cost down, often at very great expense and with very great difficulty, and now the Government are proposing to increase very largely the cost of this very important item of food, which already, I believe, has increased in price, with the duty that has been put upon it, more than any other, with the exception of fish and eggs. I really feel that this is a very serious proposition which the Government have put before us, and one that requires very serious consideration. It has been said again and again —and we are all agreed about this —that the mere putting up of wages to meet this increased cost of living does not really settle the difficulty, because the cost of living goes up with the rise of wages. I am perfectly certain that the increase now suggested in the Sugar Tax will be used all through the country, and I think probably rightly used, in order to ask for increased wages. I fancy that many people in very good positions will regret this, and would have preferred that this money should have been got out of increased Income Tax and not have been taken from the pockets of the poor and from a class of the community many of whom are not, with prices as they are, really getting all they should get for the necessary sustenance of life. I regret very much that the Chancellor of the Exchequer has suggested this tax, and I am sorry to think that he proposes it at a time when I recognise that he has done so much in other ways. I think that is a very serious blot on his financial proposals.


The Financial Secretary to the Treasury has again to-day repeated the figures as to the amount of this tax per head of the families in this country. I really do not know why he lays such stress upon the sugar ration. The Estimates of the Treasury are that this tax is to raise £12,000,000. It is not asking the arithmeticians of the Treasury to perform a very difficult sum to see that the average burden upon the individual, if £12,000,000 is distributed, per head of the population amounts to 5s. per head. In any calculation which the hon. Member makes as to the burden which is thrown on a family he cannot put this tax at less than 5s. per head. That is, I think, the burden which will fall upon the people as a result of this tax. My hon. Friend says the tax is small, that it is not a heavy tax, and that It is fair that this part of the population should bear some of the extra taxation. That is one line to take, but the Government does not stick to that line, because after they have said that it is desirable to enforce fresh taxation upon the poorer classes who will mainly feel this burden, they point out that they are giving them back, in one way or another, the equivalent of any fresh taxation that is being put upon them. I think the Government has seriously weakened its case by resting it upon a comparison with the bread subsidy. I do not see what the two things have to do with one another. All through that comparison they make the assumption, which I believe is not justified, that the people of this country are getting the full benefit, in the price of bread, of the large subsidy. I put it to the Government that it would have been quite possible to save out of the bread subsidy, by a readjustment of their arrangement, at least the £12,000,000 which they are raising out of this tax, and they could have done it without raising the price of bread. That is my very strong impression.

The CHANCELLOR of the EXCHEQUER (Mr. Bonar Law)

I should be very glad if my right hon. Friend would toll mo how this could be done.


It will hardly be in order to do so now. I believe a large part of the subsidy is going in too large profits, which I have no doubt will come back to the Chancellor in the shape of excess profits from the bakers and others; but by the arrangements which they have made they are wasting a large part of the bread subsidy, and they could have got the £12,000,000 which they are raising from sugar by lowering the bread subsidy without at the same time raising the price of bread. If I am right, the position is a very serious one, and even now the Government might reconsider the position before the Budget passes into law.


I very much regret to have listened to the speech of the Financial Secretary. He did precisely the same as the Chancellor of the Exchequer did when he introduced the Budget in describing the effect this tax was going to have and the burden it would impose on the working classes. Neither speech is true nor in accordance with the facts. These are the words used by the Chancellor of the Exchequer: The ration of sugar is ½ lb. per week; the duty is l ½d. per 1b. Therefore the burden upon each consumer is l ½d. per fortnight." — [OFFICIAL REPORT, 22nd April, 1918, col. 717.] I asked him in his second speech whether this applied to the sugar which was sold over the counter. He said Yes." But that does not cover sugar which is consumed by the working classes. The total yield of the tax is £13,200,000, and not the £12,000,000 which has been indicated. Docs the House think for a moment that merchants are going to handle £13,200,000, and put it out in duty, without demanding a profit upon the duty which they have paid? It is a perfect farce. When you buy sugar, as I have bought it myself, you do not consider how much duty is in the sugar. You consider what is the price of it, and whatever the price is you put that into the stuff which you are manufacturing, and it is upon the basis of the total amount of the ingredients in the thing you are manufacturing that you estimate the profit. Therefore it is absolutely unfair for the Chancellor of the Exchequer and the Financial Secretary to deliver speeches calculating first of all that it was going to be equal to 1 ¼d. a lb. per fortnight and now that it is going to be 2s. 8 ½d. a year. That statement is contrary to fact, and I can only regret that two men occupying such high positions should try to throw dust in the eyes of the working classes by declaring that that is the amount they will have to bear. Another consideration is the price of goods which will be increased by this tax. There is an enormous number of articles which contain sugar, and when you get a large increase in duty the burden of the tax will always be greater upon the people who use every article in which sugar is contained than the duty itself warrants. It is no use blaming manufacturers or traders. They have their outlay of money and they must get their profit upon it. I regret beyond measure that we should have had two speeches such as these because they are contrary to fact, and I trust we shall never again have such speeches delivered from the Front Bench.

A great many people talk about the increase of wages which has gone on in different parts of the country. It is true there has been an increase of wages, largely in munition areas, but there are plenty of districts where there has been little or no increase, and where the income of the people is greatly lessened. Take the whole of the East Coast, which is liable to possible invasion. Yon have a great reduction of population. Edinburgh has benefited little or nothing by contracts being placed there. The University has been drained of its students, and an enormous number of poor people have had their incomes largely reduced in consequence, while house rents have been increased, and to impose a burden like this upon such a people is a perfect scandal. I have had a large number of letters from small confectioners all over the country, and there was a deputation of confectioners before the duty was imposed. They described their condition then. What will be their condition after the duty? A great many of those who have gone into this trade are widows who have been driven to take it up because they have lost the breadwinner of the family, and this imposition on them is perfectly unfair. The list of taxes composed in this Budget begins with Customs and Excise, and so on. A great many have said, "You should have increased Income Tax." I agree with that, but it is remarkable that there are two taxes which have never been increased since the War began: one is the Land Tax and the other is the Land Values Duty. At the same time you are increasing the Sugar Duty, which falls severely on poor people, and I sincerely trust that Labour Members will divide on this, so that we may enter a strong protest against this great increase.


I want to reply to one argument which was addressed to the House by the Financial Secretary. By a series of arithmetical gymnastics, with which I did not wholly agree, he showed that there was no burden whatever upon anyone who paid Income Tax. He devoted the major part of his speech to a consideration of schemes which would relieve the Income Tax payer of burdens even under the present financial proposal. But the whole point of the criticism against this proposal is that it falls with such extreme hardship upon those below the Income Tax level, and whom it has been the deliberate policy of this House to preserve from further taxation. I was very surprised indeed that the hon. Gentleman said, in justification of this increased burden on the extremely poor, that the Government had given them a 9d. loaf, but it is the fact that the Government gave a 9d. loaf to the poor that ought to prevent them imposing this new taxation. The 9d. loaf was given at great expense, because the margin available in the case of the extremely poor was wholly insufficient to meet the increased cost of bread. Therefore, if you give the extremely poor this great concession with regard to the price of bread, you are really rendering that policy a nullity if you add to the price of articles of food almost equally necessary. Therefore I do not think the hon. Gentleman was entitled to say that this taxation was right and fair and just because the 9d. loaf had been given to the poor.

There is another consideration which has scarcely been noticed in connection with these proposals. When the hon. Gentleman speaks of it as amounting to 2s. 8d. in a year he forgets that a tax upon sugar means an increase in other foods which are also largely used by the poor. The articles of food which are at present rationed are wholly insufficient for anyone, and the official rations have to be supplemented by foods which are not rationed. In the case of the poor, articles of food in which sugar is a most important ingredient have to be bought and consumed, and therefore not only is the price of sugar being raised to the extremely poor, but also the price of non-rationed foods which are essential. It is because I feel that the hon. Gentleman has not given a justification for this tax, and has used arguments in defending it which should really condemn it, that I hope it may yet be rejected.

Captain SMITH

I hope the Chancellor of the Exchequer will reconsider his determination to keep on this extra tax. Of all the taxes which he imposes this time this has been more talked about as being unjust than any of the others, and while one can heartily congratulate him on the great fairness of his taxation I cannot do it with regard to the Sugar Tax. I shall certainly take advantage of any Motion to eliminate this additional tax whenever it comes before the House, and I am quite sure I am not by myself in this attitude. The Secretary to the Treasury said the object was to spread over the taxation in order to get the required yield. Surely people who have to buy commodities for their families are punished enough without having increased taxation put on necessary foods. If anything is required for the people of this country now, it is that they should be assured of a reasonable amount of food to carry them through this War, wherever the money comes from, and should not be called upon, especially those at the lower end of the scale who cannot afford it, to pay these increased prices. The argument in reference to the cheaper loaf does not appeal to me very much. The loaf is bad enough now, at the price it is, and I submit that the efforts of the Government ought to be directed to its improvement, and, if the subsidy is to be given to keep the price of bread down, there are a variety of other sources than sugar from which the Chancellor of the Exchequer could derive revenue by taxation in order to meet that subsidy. I am quite sure that if the right hon. Gentleman could bring out a scheme of taxing luxuries, as he has done already, but to a greater extent than he has done, I think that he would find that an increase of that source of income would be greatly supported. The increase might be two or three-fold the tax proposed, and I think that revenue obtained in that way would be greatly preferred to the proposed increase of the tax on sugar, which is an exceedingly important article of diet for the great masses of people.

Sugar enters into a great number of articles which are used in the household, and housewives and members of families are at the present time pinching themselves in order to save sugar against the time of the fruit season, when they propose to make jam superior to anything, in quality, that they can purchase in the shops. That is a very important feature of domestic economy, and ought not to be overlooked. Yet it is at this very time that you propose to impose this increased tax on this article of sugar, and people are rather disheartened, thinking that after all they are being called upon to pay higher prices for jam, sugar and syrups that are of such inestimable value to any household in helping to keep down the consumption of other articles. The bread now supplied has nothing like the intrinsic value of the bread which was supplied in pre-war times, and I think the Chancellor of the Exchequer, rather than increase the Sugar Tax, which he supports by reference to the cheap loaf, should look to other sources of taxation, and, if he does so, I believe that he will cause a great amount of satisfaction throughout the country. So far as I am concerned I shall oppose this tax in every division that takes place.


The Committee must not run away with the impression that we are dealing only with the question of sugar. We ought to give the Chancellor of the Exchequer credit for so framing his Budget as to spread taxation over the largest number in the most equitable manner possible. Of all the taxes that are imposed, this on sugar is the one with which I have the least sympathy, because it is a tax on a necessity of life. At the same time it is inevitable that it should be imposed. It is not as big a tax in proportion to the value of the article affected as it was before the War, when the tax on sugar, before the War, was a moderate one, yet big as the tax is now, ad valorem it is not so big as it was in pre-war days. I think that ought to be borne in mind. It ought also to be remembered that in all these taxes the effort on the part of the Chancellor of the Exchequer must be to spread them over the people as equitably as he can. I suppose there is hardly a tax to which a thousand objections could not be taken by almost everybody. In reference to this tax, I could cite twenty or thirty almost fatal objections to it, but we really must not forget that we have to raise an enormous sum of money to meet the cost of the War, and so long as that is done equitably, all we can do is to accept a tax of this kind, whether we like it or not.


The Chancellor of the Exchequer and his colleague the Financial Secretary to the Treasury, in supporting the Sugar Tax, are under two misapprehensions. First, they argue that the workers are, at any rate, better able to bear this tax than they were at any former period. But I would point out that wages have not gone up in every instance, nor can it be said that in every case this tax is in no way oppressive. I think that is a misapprehension. There are great sections of the population whose spending capacity to-day is actually less than it was before the War. The bulk of my own Constituents have received only a miserable advance in wages, while there has been a 100 per cent. rise in the cost of living. They are paying 12s. in the £in rates, and they are reduced to the very margin of subsistence, so that every penny of increased cost most certainly affects large numbers. During the Debates which we had in pre-war times in regard to this character of taxation, it was argued that it was oppressive and unjust and, if that was the case then, it must be so now to a very much greater degree amongst a large number of the community. It docs seem to me an absolute farce to have coal boards sitting, and other Committees sitting, to effect artificial restrictions in the use and price of commodities, at the same time that you are increasing artificially the price of a prime necessity of life. Since the War the cost of sugar has gone up from 2d. a lb. to the amount, with taxation, of at least 7d. a lb. —an enormous and oppressive increase.

There is another fallacy in the mind of the Chancellor of the Exchequer. He talked of spreading these taxes equitably over the masses of the people, and there seems to be the idea that there is a certain amount of justice in bringing in people who are not touched by those taxes which are yielding vast amounts of revenue, and which the Chancellor of the Exchequer, in reply to a question yesterday, evidently regards as direct taxation. The right hon. Gentleman referred to the Excess Profits Tax as a direct tax bringing in some £300,000,000 a year. These excess profits are being made by profiteers out of the pockets of the very people on whom you are going to impose this Sugar Tax. Those profits do not come miraculously from heaven or miraculously from below; they are taken out of the pockets of the people by profiteers, from whom the Government take 80 per cent The Chancellor of the Exchequer looks upon that as direct taxation, but in reality it is indirect taxation, because it falls most heavily upon those people whom the Chancellor of the Exchequer is going to bring in to contribute to the taxation on sugar, on the ground that they are not now sufficiently taxed, and are escaping the burden of the imposts levied under the Budget. That is not the case, and I shall oppose the tax when we go to a Division.


I wish to appeal to the Chancellor of the Exchequer to reconsider the whole question of this tax. The hon. Member for Liverpool (Sir W. Rutherford) suggests that the intention of the Chancellor is to spread the increased taxation as equitably as possible over all people. I think there is no justification for this particular increase of taxation that we are now discussing. In securing this extra money the right hon. Gentleman is obtaining it from those who cannot afford to pay it. I think that taxation ought to be raised from those who are able to pay it, without cutting into their means and scope of living. Small as this increase may be, it really means to a very large section of our people a reduction in their living; it will mean that they will have to go without some necessities of life. I think it is a pity, if an increase of money is required, that it cannot be found from other sources than sugar. There are many other sources that the Chancellor of the Exchequer can find from which to draw the money he requires. Let me suggest one, for instance: The Government has imposed a Super-tax on incomes over a certain amount; why not impose that tax after £1,000 instead of after £2,500 a year? There are other alternatives, if one cared to suggest them; there are many directions from which money could be procured other than this source from which the Chancellor of the Exchequer proposes to draw it. I hope the right hon. Gentleman will seriously consider this matter between now and the discussion of the Finance Bill. I think, whatever my colleagues may do, that they agree with me as to the injustice of this particular tax, and we may be bound to divide against it when we come to the discussion of the Finance Bill. I would, however, appeal to the right hon. Gentleman to give this matter reconsideration, and I am certain that, if he promises to do that, there will be no necessity for a Division taking place at this moment.


I will not now repeat the arguments which I and my hon. Friend have used. I rise rather to make an appeal to the House as to whether or not they consider that there has been sufficient discussion at this stage, and will allow the matter now to go to a Division. Anyone who has introduced a Budget requiring taxation on the scale that this Budget requires it, is bound to try to make all those who ought to pay taxation bear their share in the cost of the War. [An HON. MEMBER: "Except the landowners!"] I think they are paying a good deal, and I think also it has been generally admitted that I have tried to frame the Budget from that point of view. The House ought to bear this in mind, that we have to carry on this War, and that we have got to get a great deal of money, not merely by taxation, but by borrowing. I am perfectly certain that, from the point of view of those who are in earnest in trying to see that this country is not beaten in this struggle, nothing could be worse than to give the impression that those who have money ought alone to meet the cost, and that those who are not so well off ought not to be made to contribute according to their ability to pay. It has been said that another 1d. on the Income Tax would meet the case. That is perfectly true. But I think that even those who use that argument must feel that there must be some stage at which the burden of the War, from the money point of view, is being borne by all classes according to their means. That is where the trouble comes in. The House must remember that in this Budget an allowance for the wife, in addition to that for children, has been granted in the case of Income Tax payers, while we have made no addition to the Income Tax on incomes up to £500 a year. These facts have been taken into account in dealing with the Budget as a whole, and I should not have felt justified in leaving incomes up to £500 untouched if I had not done something in the way of indirect taxation to balance the account. That is the motive which has influenced us. It is quite natural there should be a discussion, and even a Division, on this Resolution, but I hope that we shall now be allowed to get on with the business of the Committee.


I certainly desire to respond to the appeal of the Chancellor of the Exchequer that we should not delay the Division. But there is a point I should like to recall to the right hon. Gentleman's mind. He has told us it is his desire — and I am quite sure his Budget has shown it — in the main to put the taxation on those who can best bear it. But this Sugar Tax presses most heavily on those who can ill afford to pay it. The Sugar Tax does not come under the character of a sumptuary tax; it is a tax on a necessity of life, especially for children, and those who have to provide for children will have to bear this additional burden, not only on the sugar ration itself, but on those articles containing sugar and necessary to supplement the sugar ration, which is hardly sufficient for children of tender years. I would also like to call attention to the fact that it is one of the canons of taxation that the extra amount the public have to pay should, as far as possible, reach the Treasury. But in this particular case, as shown by my hon. Friend the Member for Edinburgh, it is clear that a large part of the extra money paid by the public for articles in which sugar is

an ingredient can never reach the Treasury. There is not only the profit on the increased turnover, but the inevitable extra price which must be put on articles in which sugar is an ingredient from the very nature of the calculations of prices. A ½d. is the smallest addition that can be made to theprice of many articles, such as jam, biscuits, cocoa or condensed milk, into all of which sugar finds its way, and when the increased duty is something just under a ½d., the extra charge to the consumer must be the full ½d., while if the addition to the duty is represented by ¾d., the public is charged 1d.; therefore a considerable portion of the increase paid by the consumer is never received by the Treasury. The duty, therefore, presses particularly heavily upon those who have to use these articles which constitute an essential part of their food supply.

Question put, "That this House doth agree with the Committee in the said Resolution."

The House divided: Ayes, 141; Noes, 56.

Division No. 32.] AYES. [4.50 p.m.
Agg-Gardner, Sir James Tynte Falle, Sir Bertram Godfray Marriott, John A. R.
Agnew, Sir George William Fell, Sir Arthur Mason, James F. (Windsor)
Amery, Captain L. C. M. S. Foster, Philip Staveley Middlebrook, Sir William
Archdale, Lieut. Edward M. Gibbs, Colonel George Abraham Morison, Hector (Hackney, S.)
Baker, Maj. Sir Randolf L. (Dorset, N.) Gilmour, Lieut.-Col. John Morison, Thomas B. (Inverness)
Baldwin, Stanley Goddard, Rt. Hon. Sir Daniel Ford Morton, Sir Alpheus Cleophas
Banbury, Rt. Hon. Sir F. G. Goulding, Sir Edward Alfred Nicholson, William (Petersfield)
Barnes, Rt. Hon. George N. Greig, Colonel J. W. Orde-Powlett, Hon. W. G. A.
Barrett, Capt. R. W. Gretton John Parker, Rt. Hon. Sir G. (Gravesend)
Barran, Sir John N. (Hawick, Burghs) Gwynne, R. S. (Sussex, Eastbourne) Parker, James (Halifax)
Barton, sir William Hamilton, Rt. Hon. Lord C. J. Pennefather, De Fonblanque
Beach, William F. H. Harmood-Banner, Sir J. S. Peto, Basil Edward
Beckett, Hon. Gervase Harris, Sir Henry P. (Paddington, S.) Philipps, Maf-Gen. Sir Ivor (S'hampton)
Bellairs, Commander C. W. Havelock-Allan, Sir Henry Philipps, Captain Sir Owen (Chester)
Benn, Arthur Shirley (Plymouth) Helme, Sir Norval Watson Pryce-Jones, Colonel E.
Boles, Lieut.-Colonel Dennis Fortescue Hermon-Hodge, Sir R. T. Randles, Sir John S.
Brace, Rt. Hon. William Hewart, Rt. Hon. Sir Gordon Rees, G. C. (Carnarvonshire, Arfan)
Bridgeman, William Clive Hinds, John Roberts, Sir S. (Sheffield, Ecclesall)
Brookes, Warwick Hodge, Rt. Hon. John Robinson, Sidney
Bull, Sir William James Hope, James Fitzalan (Sheffield) Rutherford, Sir W. (L'pool, W. Darby)
Burn, Colonel C. R. Hughes, Spencer Leigh Samuel, Rt. Hon. Sir Harry (Norwood)
Butcher, John George Hunter, Major Sir Charles Rodk. Sanders, Col. Robert Arthur
Carew, C R. S. Illingworth, Rt. Hon. Albert H. Shortt, Edward
Carnegie, Lieut.-Colonel D. G. Jardine, Ernest (Somerset, East) Smith, Rt. Hon. Sir F. E. (Liverpool)
Cator, John Jardine, Sir J. (Roxburgh) Smith, Harold (Warrington)
Coats, Sir Stuart A. (Wimbledon) Jones, J. Towyn (Carmarthen, East) Spear, Sir John Ward
Cochrane, Cecil Algernon Jones, W. Kennedy (Hornsey) Spicer, Rt Hon. Sir Albert
Collins, Sir W. (Derby) Lambert, Rt. Hon. G. (Devon, S. Molton) Staveley-Hill. Lieut.-Col. Henry
Cooper, Sir Richard Ashmole Law, Rt. Hon. A. Bonar (Bootle) Stewart, Gershom
Cornwall, Sir Edwin A. Lindsay, William Arthur Stirling, Lieut.-Col. Archibald
Cowan, Sir W. H. Locker-Lampson, G. (Salisbury) Stoker, R. B.
Craig, Colonel Sir J. (Down, E.) Lonsdale, James R. Strauss, Arthur (Paddington, North)
Craik, Rt. Hon. Sir Henry Lowe, Sir F. W. Strauss, Edward A. (Southwark, West)
Currie, George W. M'Calmont, Brig.-Gen. Robert C. A. Sutherland, John E.
Dalziel, Davison (Brixton) MacCaw, William J. MacGeagh Sykes, Col. Sir Alan John (Knutsford)
Davies, David (Montgomery Co.) M'Curdy, Charles Albert Terrell, George (Wilts, N. W.)
Davies, M. Vaughan- (Cardiganshire) Macmaster, Donald Thomas, Sir A. G. (Monmouth, S.)
Dawes, James Arthur McMicking, Major Gilbert Tickler, T. G.
Denman, Hon. Richard Douglas Macnamara, Rt. Hon. Dr. T. J. Turton, Edmund Russborough
Denniss, E. R. B McNeill, Ronald (Kent, St. Augustine's) Walker, Colonel William Hall
Duncan, Sir J. Hastings (Yorks, Otley) Maden, Sir John Henry Walsh, Stephen (Lancs., Ince)
Du Pre, Major W. Baring Malcolm, Ian Walton, Sir Joseph
Ward, W. Dudley (Southampton) Williamson, Sir Archibald Wood, Sir John (Stalybridge)
Wardle, George J. Willoughby, Lieut.-Col. Hon. Claud Younger, Sir George
Waring, Major Walter Wilson, Capt A. Stanley (Yorks, E.R.) Yoxall, Sir James H.
Wason, Rt. Hon. E. (Clackmannan) Wilson, Rt. Hon. J. W. (Worc., N.)
Whiteley, Sir H. J. (Droitwich) Winfrey, Sir Richard TELLERS FOR THE AYES.—Captain F. Guest and Lord Edmund Talbot.
Williams, Aneurin (Durham, N.W.) Wood, Hon. E. F. L. (Yorks, Ripon)
Adamson, William Haslam, Lewis Smith, Capt. Albert (Lancs., Clitheroe)
Alden, Percy Hogge, James Myles Stanton, Charles Butt
Arnold, Sydney John, Edward Thomas Taylor, Theodore C. (Radcliffe)
Baker, Joseph Allen (Finsbury, E.) Jones, Rt. Hon. Leif (Notts, Rushcliffe) Thomas, Rt. Hon. J. H. (Derby)
Burns, Rt. Hon. John Jowett, Frederick William Thorne, William (West Ham)
Carr-Gomm, H. W. Kenyon, Barnet Tillett, B.
Chancellor, Henry George King, Joseph Toulmin, Sir George
Clough, William Lambert, Richard (Wilts, Cricklade) Verney, Sir Harry
Crooks, Rt. Hon. William Lough, Rt. Hon. Thomas Watt, Henry A.
Dalziel, Rt. Hon. Sir J. H. (Kirkcaldy) Macdonald, J. Ramsay (Leicester) Whitehouse, John Howard
Davies, Ellis William (Eifion) Marshall, Arthur Harold Whyte, Alexander F. (Perth)
Davies, Timothy (Lincs., Louth) Needham, Christopher T. Wiles, Rt. Hon. Thomas
Dougherty, Rt. Hon. Sir J. B. Outhwaite, R. L. Wilkie, Alexander
Duncan, C. (Barrow-in-Furness) Price, C. E. (Edinburgh, Central) Williams, Llewelyn (Carmarthen)
Essex, Sir Richard Walter Pringle, William M. R. Wilson, W. T. (Westhoughton)
Ferens, Rt. Hon. Thomas Robinson Rattan, Peter Wilson Yeo, Sir Alfred William
France, Gerald Ashburner Richardson, Arthur (Rotherham)
Galbraith, Samuel Rowlands, James TELLERS FOR THE NOES.—Mr. David Mason and Mr. Anderson.
Gilbert, J. D. Rowntree, Arnold
Harvey, T. E. (Leeds, West) Smallwood, Edward

Question put, and agreed to.

Resolution reported,