HC Deb 30 April 1919 vol 115 cc193-4

But there are two points about which I must say something at once. The first relates to the existing Excise Duty on Motor Spirit. That Duty yields only a trifling revenue of some £50,000 a year derived entirely, I think, from Scottish Shale Oil. But a difficult position has recently arisen in regard to benzol manufactured in this country. Before the War benzol was one of those spirits which were occasionally and experimentally used for propelling motor cars but were not taxed when so used. In refraining from taxing it the Board of Customs and Excise acted upon instructions issued by the present Prime Minister and announced in the House of Commons in the early days of the new tax, to the effect that they were to aim at the taxation of spirit which was ordinarily and generally used for driving motor vehicles and not to attempt to levy the tax on the various substances, which though not generally used as motor-car fuel could be or were occasionally used as substitutes for or in association with it.

That was the position up to the War. The War has changed the position completely. During the War the production of benzol for war purposes was stimulated by the Munitions Department with remarkable results. There is now in existence a manufacturing industry with large stocks of spirit which the Munitions Department no longer requires, and a large continuous output amounting now to about 100,000 tons a year, of which 70,000 tons or thereabouts—that is equivalent to 21,000,000 gallons—are available for motor fuel. The Minister of Munitions promised to hand over those stocks to the trade for the use of motor petrol. The Petrol Control Committee undertook to release for motor fuel as much as could be put on the market. Then the Board of Customs and Excise felt it to be their duty to step in and to issue a warning that benzol so applied might be subject to taxation.

I have to consider what is to be done. We have here a case of an industry found vital during the War, created and stimulated for war purposes, practically created at the Government's instigation and under Government guidance. That industry is suddenly confronted with the loss of its market owing to the cessation of the War. That is not all. Benzol is not only important to the nation as an additional indigenous source of the supply of motor fuel, but it is a very important ingredient in the dyeing industry, an industry which, as the Committee knows, has been found so vital to our existence and to our trade that not only this but preceding Governments have done everything in their power to establish it and to promote its growth in this country. Under the circumstances, and acting on the advice of the Board of Trade, I propose to give legal authority to the exemption of benzol from taxation by repealing the Excise Duty, and I am glad to think that the Scottish shale industry, an industry which it is also in the national interest to develop, will, of course, obtain the advantage of the repeal.