§ The following duties of customs, imposed by Part I. of the Finance (No. 2) Act, 1915, shall, subject to the provisions of Section eight of the Finance Act, 1919 (which relates to imperial preferential rates), continue to be charged, levied, and paid, in the case of the duty on motor spirit until the thirty-first day of December, nineteen hundred and twenty, in the case of the new import duties until the first day of May, nineteen hundred and twenty-one, and in the case of the other duties until the first day of August, nineteen hundred and twenty-one, that is to say:—
| Duty. | Section of Act. |
| Increased duty on tea | 1 |
| Additional duties on dried fruit | 8 |
| Additional duty on motor spirit | 10 (1) |
| New import duties | 12 |
The CHAIRMANThe first Amendment on the Paper in the name of the hon. Member for Leith (Captain Wedgwood Benn) refers, I think, to the same subject as a new Clause which stands in his name and deals with the question of Imperial Preference. It appears to me that it would be much more convenient to take the discussion on the new Clause rather than on the words of this first Amendment, which is merely introductory.
§ Captain W. BENNCertainly, Sir. In that case the omission of the words "subject to the provisions of Section eight of the Finance Act, 1919 (which relates to Imperial Preference rates)" would be a consequential Amendment to be moved on Report?
The CHAIRMANThat is so. With regard to the second Amendment on the in the name of the same hon. Member. for Whitechapel (Mr. Kiley), there again it seems to me that the Amendment leads up to one standing fourth on the Paper, 1060 with the name of the same hon. Member. The first of these two Amendments deals merely with dates, and, I presume, was placed in that way to lead up to the Amendment dealing with import duties.
§ Mr. HOLMESI beg to move, to leave out the words
"Increased duty on tea…. 1."
4.0 P.M.
I want to take the opportunity of calling attention to the whole incidence of indirect taxation at the present time. There have been a number of people who have always been opposed to indirect taxation of any kind, but the majority of people have felt that there were two very good reasons for imposing indirect taxes. First, an indirect tax raises a large amount of revenue without the taxpayer really being conscious that he is paying it. Secondly, a number of people would not be taxed at all if we had only direct taxation. It is considered that everyone should pay something, at any rate, for the protection which they receive, and the privileges which they gain from the State. That applies particularly to foreigners, who visit this country and do not contribute to our direct taxation, but who do contribute something in indirect taxation, according to the commodities which they consume or purchase, and which are subject to Customs duties. While indirect taxation may be good from both those two points of view, taxes of any kind should not merely raise revenue, but should also confer a benefit, or, at any rate, should not impose any disability upon the country generally in other ways. I want to show the relationship at the present time between wages and indirect taxation. In the past, the wages of any trade have been fixed according to the labour supply and demand in that trade. As a rule, in each trade there has been a minimum arrived at either by legislation or trade union pressure, but wages have always risen according to how the skill of the workman results in the supply of labour in that trade being more or less below or above the demand, as the case may be.
Wages, therefore, went up and down according to the labour supply and demand, but since the War we have changed all that. Wages have risen with the cost of living, and, not merely has that been done from time to time by Government 1061 or private action, but actually agreements have been entered into in many trades with the employés that their wages shall always be on a sliding scale, going up or down as the cost of living rises or falls. The Minister of Labour on the 17th May gave an answer in which he set out a long list of trades where the employés have their wages fixed upon a sliding scale, and he added that while the number affected might be estimated at not more than 1,000,000, the index figures of the Board of Trade which fixed these wages were watched very carefully by employers and workpeople in all trades, and were practically always quoted in wage negotiations, so that in practice the workpeople of all trades, even where there were not these agreements, were affected by the cost of living. We have been given one specific case with regard to a rise in wages under a sliding scale. There are 400,000 railway workers who receive 2s. per week increase for every increase of 10 points in the index figures of the Board of Trade. We were told by the Minister of Food that one penny per lb. increase on sugar meant in rises in wages throughout the country £39,000,000. Unfortunately, I have not been able to ascertain what one shilling per lb. on tea would mean so far as wages are concerned, but it would not be unreasonable to argue that it could not be less than one penny per lb. on sugar. This sliding scale by which wages are regulated according to the cost of living is downwards as well as upwards, and I want to ask the House to examine the extent to which the wages bill of the country would fall if one shilling per lb. were taken off tea. The effect, first, would be that the price of tea itself would fall by one shilling per lb. That would mean that the index figures of the Board of Trade would correspondingly fall, and that, in turn, would mean that the wages of all employés under these sliding scale agreements would automatically fall, and, since the Minister of Labour has said that the wages of all workpeople of the country go up if those under sliding scale agreements go up, then, correspondingly, the wages of all employés would fall immediately the wages of those under sliding scale agreements fell.
Let us see how the workers themselves would be affected. They would have a reduction in their nominal wages but not 1062 in their real wages. They would be better off, though receiving less wages than at the present time. The effect of reducing wages in all trades would be to bring prices of all commodities down at the same time. A working class family under the sliding scale would have less wages correspondingly to the drop in the price of tea, but it would gain by a drop in the prices of every other commodity that it bought, and that was not included in the official list of articles which go to make up the Board of Trade index figure of the cost of living. Therefore, every working class family would be a gainer to that extent by the reduction in the price of all commodities outside the official list making up the cost of living. The Chancellor of the Exchequer probably will say that it is his first business to look after revenue, that he is getting £17,000,000 per year from the Tea Duty, and that he is being asked to give it up. I am going to show that probably he will lose nothing in revenue if he abolishes the Tea Duty, but, if my argument be correct that the abolition of the Tea Duty, acting through sliding scale agreements, would reduce wages throughout the country, then every firm in the country would make greater profits. They would not make greater profits on the goods sold in the home markets, but we are an exporting nation, and the price of the goods we export is not fixed according to the cost of production, but according to the price that we can get for them abroad. We could still get the same prices for those goods, but they would cost our manufacturers less in the making. Therefore, there would be a larger amount of profit on all exported manufactured articles. This would mean that all business firms, whether companies or private firms, would have larger profits, and the Chancellor, therefore, would collect additional Excess Profits Duty. Corporation Profits Tax, Income Tax, and, to a certain extent, Super-tax. I venture to believe that a great deal of the £17,000,000 which he would give up by the repeal of the Tea Duty would come back to him in this direct taxation.
The abolition of this Tea Duty would have a great psychological effect throughout the country. There is nothing which gives rise to a greater anxiety than soaring prices, and this abolition of the Tea Duty would not merely bring down the price of tea, but of all other commodities used in the household. At present people think that they have much more 1063 money than they had before the War, but really they have less. Their purchasing power is less because the cost of goods is so much more. One of the ways in which we are going to bring down prices is by economy all round, not merely Government economy, but economy of all individuals purchasing less. The more people exercise their purchasing power, the longer will the demand for goods exceed supply. If you reduce nominal wages—not real wages—in this way, then people will be better off, though they will think that they are worse off because they get less money. The whole effect of this Tea Duty on wages, cost of living, and everything would be towards sound deflation. The Chancellor of the Exchequer has been persuading the banks to withdraw credit facilities, to call in loans, and to refuse loans, and to a certain extent it has had effect, because it has caused speculators to throw goods on the markets and in some respects it has brought down prices; but, on the other hand, it has caused serious unrest throughout the business world. It has stopped enterprise and initiative, and it has caused a feeling of dismay which one would not have believed three months ago could have come about. Everyone wants to bring about deflation, but there is a great deal of danger in deflating too quickly. Inflation took place gradually during five years, and you cannot deflate in two or three months. This would be a sound method of deflation, as it would be very gradual and effective. I believe if the Tea Duty were abolished it would have the psychological effect of satisfying the public that prices were reducing instead of rising, and would make them feel that they had less money to spend when really they had more, making them withdraw their purchasing power to its fullest extent. It would reduce wages in all trades, that is nominal wages not real wages, and would tend towards sound deflation. Both psychologically, and from a business point of view it would bring us nearer to the possibility of resuming our pre-war position so far as the cost of living is concerned. The Chancellor would lose very little in revenue, because he would get it back by means of direct taxation.
Sir J. D. REESThe speech of the hon. Member reminds me of an occasion when one poet said to another, "My hurt is great, although it is so small," and the 1064 other poet replied, "Then 'twould be greater if 'twere none at all." The hon. Gentleman proved to his own satisfaction that the Chancellor of the Exchequer would absolutely profit by giving up a tea duty which now brings in £17,000,000. Speaking as one practically connected with tea, and having some knowledge of it all my life, I may say that nobody connected with tea really expects the Chancellor of the Exchequer this year to give up the Tea Duty, in spite of the immeasurable irrelevancies which are always indulged in on this occasion and in spite of the inevitable disquisitions upon direct and indirect taxation. I do not think any single person in or out of the House expects the Chancellor to do what the hon. Member has ingenuously and ingeniously suggested he ought to do. If the Chancellor were so simple as to accept the argument of the hon. Gentleman, the reduction of the Tea Duty might not result in wages falling. If the hon. Gentleman can show how in the future wages are to be reduced with the complete concurrence of and with advantage to those concerned, then he would indeed be a benefactor to the House, and to the country, and to the human race. While those who are practically interested in tea do not expect the duty to be abolished or even to be reduced at a time like this, nevertheless, I think it is desirable that somebody with a closer acquaintance with tea than the hon. Member should point out that the lower grades of tea just now are probably actually costing more to produce than what they fetch in the market. The producers of the tea, who are a loyal body, always ready to bear their share of taxation without a murmur, would be glad to be credited with that practical patriotism which they display in regard to the Tea Duty. It is no part of my business to object to the abolition of the Tea Duty, but I really regard this proposal as a waste of time. It has happened, I think, every year in the fifteen years I have been here, that some hon. Member has got up and proposed the abolition of the Tea Duty and told us how much better everybody would be if the proposition were adopted. I would venture to remind the hon. Gentleman that the direct taxpayer also pays indirect taxation, and that very simple fact seems to be totally forgotten when this issue of direct and indirect taxation is raised. Half of 1065 everything the direct taxpayer possesses is seized, because it is easy to be seen, and he also pays a larger share than others of indirect taxation, and then his ears are affronted by absolutely irresponsible and impossible suggestions like this.
§ Lieut.-Commander KENWORTHYIn spite of the allegations made against the Mover by the hon. Baronet who has just spoken, I feel bound to support the Amendment. It is true that both poor and rich and direct and indirect taxpayer contribute to this duty, but it is a tax which is particularly hard on the very poorest of the population. It is 1s. on the pound of tea, and that means that half of the cost of the tea which the very poor look upon, rightly or wrongly, and I think rightly, as a necessity, goes in taxation, and I think that is iniquitous. If and when we are responsible for the finances of the country, we are going to get rid of this tax on tea, and I think that time may be sooner than hon. Members opposite think. The great cry in the country to-day is about the terrible cost of living. The Chancellor of the Exchequer is being assailed from two quarters. First he is being assailed by certain sections of the rich for the way he is taxing them, and then by a certain section of the poor, not because of the way he is taxing them, because most of the poor creatures do not realise it, but because of the high cost of living which they place on Government extravagance and taxation. This cry is very bitter and very genuine, and comes particularly from the people living on small pensions and small fixed incomes. The Government say that they will do what they can to bring down the cost of living. Here is a direct and simple opportunity to do so. It may be said that we cannot afford to drop this £17,000,000. Of course we can, and it can be made up in many ways. We can do it by taxing great incomes and by a levy on War fortunes, and, above all, by economy. We are spending from £35,000,000 to £45,000,000 per year on an undefined policy in Mesopotamia to enable an Arab Government to be set up, or so we are told, and that alone is double the amount raised by this perfectly iniquitous tax. If the Government are in earnest, and wish to relieve the burdens of the poor, let them drop this Tea Duty. It is useless to say that 1066 tea is a luxury; it is not. It is a real necessity. It is part of their daily menu, and they cannot give it up. To expect them to pay a duty of this kind is quite i defensible, and it ought to be dropped We feel very strongly about this, and we are going to drop this duty directly we are in a position to do so. Perhaps if the Chancellor cannot alter the duty now, he may be in a position to hold out a hope of a reduction later on.
§ Sir D. MACLEANI understand my hon. and gallant Friend (Lieut.-Commander Kenworthy) has indicated the first duty he will undertake when he becomes Chancellor of Exchequer. At any rate, it does credit to his heart and I hope will also do credit to his head when the occasion arises. I wish to bring to the notice of the Chancellor a matter on which I hope to secure his agreement. As this Clause is drafted, it leaves the Committee no option but to vote for or against the whole of the duty as it at present stands. When the War broke out, the tea duty was 8d. on the lb., and Mr. McKenna was Chancellor at the time when an addition of 4d. was added, making it 1s. on the lb. Reference is made in this Clause to the Finance Act in which that figure is given. Hon. Members, I think, appreciate the difficulties of legislation by reference, and this is another instance. As the Clause is now drafted, there is no opportunity, I am afraid, of moving a reduction to 10d., or say, to 8d., as it originally stood. If the Clause were differently drafted, it would be possible to do so. I hope, therefore, that next year, if the Government is still in power, that my right hon. Friend will be in a position to meet my request that the Clause should be so drafted as to leave it open to the Committee to move a reduction of 2d. or 4d. or whatever figure any Member of the Committe might think fit to move.
At present it unfairly limits the Committee in the operation of its desires in dealing with the proposition of the Government. In the old practice it was open to the Committee to move either the abolition of the tax or a reduction in the tax, but we are now bound by a war practice, which I think next year should be altered so as to leave the Committee its old freedom in dealing with the tax. I am myself in favour of a reduction of the tea duty, but my only way of 1067 enforcing that desire is to vote for the Amendment.
§ Mr. RONALD McNEILLWhat is there to prevent my right hon. Friend from moving the insertion of the words "half of" before the word "increased"?
§ Sir D. MACLEANI do not think the Chair would be able to accept that. May I put it to you, Sir, as to whether that could be done?
The CHAIRMANI have already put to the Committee the question that the line stand part of the Clause. What was the suggestion?
§ Mr. McNEILLI asked whether it would not be open to move to insert, before the word "increased," the words "half of," or "two-thirds of," or any other proportion.
§ The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain)The point raised by my hon. Friend is one which I have not considered, but he can hardly expect me without consideration to promise that for the future there shall be even larger opportunities of moving Amendments and raising discussions on the Finance Bill than are afforded at the present time. As a general rule, I find that every subject can be discussed on this Bill and that most subjects can be discussed several times over, and I should be a little reluctant to extend the scope of our already very large Debate. The principal interest to me of my right hon. Friend's interposition in the Debate is that it seems to indicate that the hon. and gallant Member for Central Hull (Lieut.-Commander Kenworthy) did not speak for a united party. I was very much interested when the hon. and gallant Member said, "When we arrive in power, which may be much sooner than scoffers anticipate, our first task will be to abolish the tea duty.' I confess I was surprised at the apparent air of authority with which he delivered this sentiment, for I did not myself think that so experienced and so cautious a gentleman as the right hon. Member for Paisley (Mr. Asquith) would have committed himself in anticipation to any such drastic step, and I gather from my right hon. Friend the Member for Peebles (Sir D. Maclean) that the official 1068 Liberal Opposition have not committed themselves, and that the people who are committed by this "We" are the hon. and gallant Member for Hull and the whole of the Liberal party, excluding the majority of the Liberal party, which support the present Government, and the minority, which follow the right hon. Member for Paisley. I should not myself, if I were one of these poor people for whom the hon. and gallant Member professes to speak, bank upon the early repeal of the tea duty.
The hon. Member who moved the Amendment (Mr. Holmes) moved it for quite different reasons. He wished to introduce a discussion of a very interesting topic, but still of a kind which I rather deprecate in Committee on the Finance Bill, for if we follow his example and spread ourselves over these wide areas of economic theory and practice, how long we shall sit I do not know, but that our holidays will be greatly curtailed it is not rash to prophesy. I will content myself, in referenece to the argument of the hon. Gentleman who moved the Amendment, by saying that if his argument is well founded, or if the different arguments by which he supports this proposal are well founded, it is not the tea duty only that he desires to repeal or the repeal of which his argument would support. His arguments were equally directed to the whole of indirect taxation, and especially of all that part which sensibly affects the index figure of the cost of living. I think most of our indirect taxation does affect that figure more or less.
§ Mr. HOLMESNot beer and tobacco.
§ Mr. CHAMBERLAINI thought they did, but I do not know. This Amendment is not merely a hardy annual, but it is a perennial of the sturdiest growth. Whoever is in office and whoever is out of office, this question returns in one form or another every year, and every year the Gentleman at this Box resists the Amendment. Chancellors of both parties have raised the tea duty and lowered the tea duty. I have done both myself. On this occasion I am doing neither, but Chancellors have raised or lowered the tea duty as the financial condition of the country permitted a lowering or enforced a raising of the taxation of the country, and I have no doubt that that will continue to be the case in the future; but to 1069 suggest that 1in times like the present, when I am obliged to ask the House to increase the taxes, I should forego the tea duty for the sake of an economic theory the results of which in practice might, I think, lag far behind the expectations of the hon. Member, is, I venture to say, to make a proposition which the hon. Member would not make if he were standing in my place, nor would any hon. Gentleman who may support him in the lobby to-day. I observe that the hon. Member is taking a great interest in the Finance Bill and has put a good many Amendments on the Paper. I am glad to think that not all of them are of the same character as the one he is now moving, and if I am obliged to offer him an unqualified resistance to this first Amendment, I hope I shall be able to meet him on some of his later Amendments.
§ Mr. HOGGEThe Chancellor of the Exchequer has not attempted to meet the arguments of my hon. Friend who moved the Amendment, and all that he has said can be summed up in about a couple of words. He has pointed out that the effort to reduce the tea duty is in this House a hardy annual, and that because it is a hardy annual all that he requires to do is to resist it, because circumstances are not fortuitous. I would respectfully point out that apart altogether from the effort being made year by year to get rid of indirect taxation, the case which has been put forward by my hon. Friend to-day is entirely new. There are a new set of circumstances which have arisen as a result of the action of His Majesty's Government, and my right hon. Friend, the Chancellor of the Exchequer, has not done himself his usual justice by meeting the arguments which have been brought forward and attempting to show us why in the new circumstances he cannot agree to the suggestions of my hon. Friend. I suppose my right hon. Friend would agree that the best method of all in taxation is the method of direct taxation.
§ Mr. CHAMBERLAINNo, I do not agree. I agree with Mr. Gladstone when he said that direct and indirect taxes were twin sisters, to both of whose charms we should pay homage.
§ Mr. HOGGEI am glad to know my right hon. Friend goes to such a good source for his views, but I differ en- 1070 tirely both from him and from Mr. Gladstone.
§ Mr. HOGGEI hold this view, and I hold it strongly, that if ever you are going to interest the people of this country either in national or municipal expenditure, the only way to interest them actively and really is to make them understand that when they pay they are paying for government. If you allow people to run on in indirect taxation, and, therefore, not to appreciate what the Government is doing, the bulk of the people lose their sense of responsibility, and, if I had my personal way, I would get rid of all indirect taxation, and make all taxation direct, so as to bring home to the ratepayer and the taxpayer their responsibility of government.
§ Mr. MARRIOTTWithout any exception of income?
§ Mr. HOGGEWithout any exception. What are the new circumstances? Indirect taxation is levied in order that those people who are not touched by Income Tax should contribute to the revenue of the State. That was all very well when wages were determined in a different way from what they are to-day. My hon. Friend the Member for North-East Derbyshire (Mr. Holmes) pointed out quite accurately that wages were originally determined by supply and demand, but since the War—and I do not make this a personal charge against my right hon. Friend or his predecessor—wages have not been determined by supply and demand, but they have been determined by the cost of living, and we have now in active daily and weekly operation a system of index figures drawn up by the Board of Trade, which govern the wages of a large mass of the working people of this country. I think my hon. Friend read a quotation from a speech dealing with sugar, which showed that when the last increase was put on a pound of sugar, it meant an increase of 6d. in the wages of a large mass of the workmen of this country. That is to say, the moment the price of sugar went up, the wages of these people went up under the scheme which now operates, and, therefore, they were provided by the State—that is, the other direct and indirect taxpayers in the community—with the money to meet this new indirect taxation.
1071 Take that large class of the community, with whom we are always sympathising, but for who we are never doing anything, and who we describe as the fixed-income class, and I think no one in the Committee will disagree with me when I say that, of all the classes in the community who have been hardest hit during the War and subsequently, it is that class who have a small fixed income. If that is so, look what is happening to those people. They pay their direct taxation as well as their indirect taxation. The moment you increase, by the rise in the index figures of the Board of Trade, the wages of the working classes who are affected by that increase, you increase the price of the commodity which they sell to the rest of the community. Take the simple example of railway fares, which have gone up very high, and, I understand, are to go up higher still, because of, among other causes, the increased wage which is being paid to the railway worker. Now the railway worker is an indirect taxpayer, but, on account of the rise of wages, he is enabled to meet this. But those with fixed incomes, and the working classes who are not governed by the Board of Trade index figures, and do not share in this increase, have got to pay more for the commodity—in this case, railway fares—than they had to before. So that they are not only paying indirect taxation every time they buy a quarter of a pound of tea, but paying the other man's taxation every time. They are buying the commodity which he sells at a higher price, because he has got an increased wage owing to the cost of living.
That was the argument my right hon. Friend did not meet, and I submit the present moment is a very proper time to overhaul the whole system of indirect taxation. My right hon. Friend made merry about the differences between some of us on this side. My position is quite clear. The Liberal party has always been in favour of a free breakfast table. The Liberal party has always been in favour of the abolition of all taxes on food on the domestic table of the working classes of this country. My attitude has always been to vote against all indirect taxes on the food of the people, and that is the Liberal position without any doubt. I am not affected by the chaff of my right hon. Friend. If he will meet the point I have now emphasised, which, I think, 1072 he will agree he did not meet in his original speech, I can see some force in his argument, but, until he does, I am unconvinced by his reply, and am strongly in favour of the Motion of the hon. Member for North-East Derbyshire, who raised a point of which I feel sure the country will take note, because it is a real point we have got to meet.
§ Mr. W. GRAHAMI am quite sure my right hon. Friend opposite will not for one moment suggest that a large issue of this kind is to be dismissed by ascertaining the differences which may exist among Liberal Members on this side of the House. I can claim to speak for a party which is solid and united on at least this matter, and which yields to none in the desire to see indirect taxation very largely reduced, if not entirely swept away. I was also disappointed to hear the Chancellor of the Exchequer indicate that, as far as possible, we should avoid the discussion of principles in this analysis of the Finance Bill, and come down, as I take it, to the concrete facts before us. I venture to suggest, in reply, that we are compelled—briefly and relevantly, I hope—to look at the principles, and to have regard to this Finance Bill from the point of view of the solution of the social problems of our time. I think that is a relevant consideration in any discussion of a Finance Bill, and it is from that standpoint that, only for a moment or two, I intervene to-day.
There are three points in this discussion which are of importance now. In the first place, the actual amount involved is negligible. I do not suppose that any hon. Member will dispute that we can easily raise £17,000,000 from other sources, without appreciable hardship to any class. No Member who has studied, for example, the enormous amount of wealth which has been built up during the War, who has looked at any proposal for a Capital Levy, who has read the Report of the Select Committee which stated what had been done during war conditions in the way of increased wealth, would hesitate to suggest that, by a very slight adjustment of Income Tax or Super-tax, we could quite easily raise this sum. That is one point of the case which need not detain us. The second, and, to me, much more important point, is that beyond all 1073 doubt, tea is quite different from other classes of commodities which the great body of the community consume. In no sense nowadays can tea be regarded as a luxury. It has become even to the orthodox economist, one of the so-called conventional necessaries of life, and there is no doubt it has entered into the diet of all sections of our people. More particularly it has entered into the diet of the very poor, and it is from their standpoint that I wish to press this Amendment upon the right hon. Gentleman. All economists, and nearly all public men, are agreed that the very poor, who buy in very limited quantities, pay an amount of taxation which is really out of all proportion either to their ability or their share. The very fact that they purchase in such restricted Quantities carries its own penalty with it, and a very large section of that class of the population have not been able to increase their income during the War.
The third point is this, and it is one of principle, which I would press. I belong entirely to the school which feels it is wrong and mischievous to believe that we are going to achieve any social salvation by this endless pursuit of advancing prices by increase of wages. No doubt, so long as prices are advancing throughout the world, and in this country, we must do whatever we can to increase remuneration to meet it. But we are all perfectly satisfied that that offers only temporary relief, and what we are really looking for is such a reduction in world prices and in prices in this country as will afford a real, and not a nominal, gain to the people. Can the Government—can this House at the present time—make any contribution to that end? Mr. Smillie, in one of his recent speeches, was perfectly correct when he indicated that the real contest in which we should engage was a contest to keep prices down, and here, I think, by removing or alleviating the amount of indirect taxation, we should give to a very large body of the people—in effect, to nearly all the people—a real, as opposed to a nominal, benefit. I venture to suggest that that would be a real and constructive contribution to the solution of our social difficulties. We have just passed a measure involving a considerable sum of money to ease the lot of people dependent upon fixed incomes. We have spent further millions of money in easing the 1074 lot of old age pensioners, and you cannot suggest that to any real extent we have met either of the difficulties to which I have just referred. Here is a scheme by which you can easily find the money from other sources which it involves, which gives us an opportunity of making this a real contribution, which will probably ease the social difficulties of our time, and, from that standpoint, I venture to think we have promoted an Amendment full of constructive statesmanship in the consideration of the Bill in which we are now engaged.
§ 5.0 P.M.
§ Captain W. BENNThe Chancellor of the Exchequer quoted Mr. Gladstone as having said that direct and indirect taxation were twin sisters. I would ask the right hon. Gentleman in other respects he is endeavouring, or will endeavour, to found himself on the model of Mr. Gladstone? As I understand it, twins are born at the same time. They are of about the same weight. [HON. MEMBERS: "No!"] Well, I do not know, but I would like to ask the Chancellor of the Exchequer does he think that these twins of direct and indirect taxation should be of the same weight and size; that is rather an important question?
§ Sir J. NORTON-GRIFFITHSTwins are always the same size.
§ Captain BENNDid not Mr. Gladstone feel, and was it not felt in his time that direct and indirect taxation should bear a certain relation to each other. Does the Chancellor still hold that that relationship should be aimed at, because, if so, he will slice away a good deal of his Budget. We, on the contrary, think that in these days indirect taxation should be reduced and the burden placed on direct taxation, and this for reasons which have been repeatedly given by hon. Members in Debate. The hon. Gentleman who opened the Debate said that the tendency of these indirect food taxes is for them to be concentrated on the shoulders of those least able to bear them. That is the reason we object and shall continue strongly to object. This House is constantly passing Bills to give aid to certain people owing to the cost of living. The hon. Gentleman who has just spoken has pointed out that there was a sliding scale in existence by which certain classes got increased wages as the cost of living 1075 rose. The result is that these taxes are put upon shoulders that were never intended to bear them, and are restricted to a body of people who are the least able in the community to bear the heavy burden. Very often here quotations have been made from the speech of the present Prime Minister on this subject in the year he became Chancellor of the Exchequer. He was enlarging on the benefit of old age pensions. He quoted the words of various officers—words that are quite familiar in these Debates—which showed how this burden of the tea and sugar duties bore upon the poorest families. This is a poll tax. It is heavy in proportion to the income of those who will bear it. It is very heavy in proportion to their family. It is a tax that certainly in the national interest should be reduced to very small proportions.
It has been shown that the form in which this Bill is introduced is very objectionable from this point of view, because it does not permit a clear issue to be raised as to whether or not we should abolish the whole tax or reduce the tax. So far as I am concerned, I have not the least hesitation in saying here and now, and I am prepared to vote for a very substantial reduction of this tax. I should like to see it, and I hope to see it, totally abolished. We are not able to move an Amendment which raises this issue in a practical form. If they wish to get anywhere near their desire, hon. Members will have to go into the Lobby with us and support this Amendment to omit these words with a view later to substituting the rate of duty which they think better. I want to make that quite plain. I myself am going to vote for the Amendment, and I should then, assuming it is carried, vote for a further Amendment and support a lower rate of duty, and this is the only way in which the form of the Bill permits this to be done. Hon. Members who wish to see a reduced duty, and are not prepared to support the total abolition, will be compelled to vote in favour of the Amendment.
The argument put forward by the Chancellor of the Exchequer was that he must have the money. But that is an argument put forward for all taxes. T do not think there would be any real difficulty about his getting the millions 1076 required from other quarters if this duty were reduced. I will not make any reference to our foreign adventures or to expenditure incurred by the Secretary of State for War which would cover the whole of the Tea Duty, and make no difficulty about it. The Chancellor has it in his own hands. In an answer which he gave a few days ago in the House he gave us figures of the amount raised by the preferential rate, and the full rate, and, of course, I understand the former to be by far the greater amount of duty, £13,400,000. That is to say that the people who import certain tea get a reduction. I think, of 2d. in the pound—in respect of that duty. We contend that this preference is not going into the pockets of the people whom we might desire. Personally I do not care. It is the usual argument that this duty is being paid by the importers. We say the consumer here is not getting any benefit. The labourer in the Indian plantations is not getting any benefit. It is going into the pockets of the tea importers in this country. If, therefore, the Chancellor of the Exchequer really wishes to reduce the tea duty by 2d. he could easily find the money to replace the deficit by abolishing the preference given by the Finance Act of last year to certain importers of tea.
§ Mr. CHAMBERLAINThe result of that would not be to reduce the tax paid by the consumer. The abolition of the preference would cause 2d. more to be charged on all Indian teas, the main portion of the tea brought into this country.
§ Captain BENNNo, no. I think I am right in saying that all that would happen would be that the importers of Indian tea would pay the full duty.
§ Mr. CHAMBERLAINThen they would charge it to the consumer. Of course they would. As a matter of fact, over 90 per cent. of tea is imported at the preference rate, and the consumer is getting the benefit of that 2d.
§ Captain BENNThat is a point of fact, and I say it is not so. But, of course, the Chancellor has got much better sources of information than we have. But I am informed that this preference is not going to the consumers in this country. I may be wrong. The hon. Gentleman opposite, if he thinks that, can intervene in the Debate and say so.
§ Mr. R. McNEILLAll I wanted was your authority for that statement.
§ Captain BENNI have it from those who have looked into the retail price of tea, the importers of tea, and not the consumers of it. Therefore, I contend that it is in the power of the Chancellor to do so, if he wishes to alter the preference, or to abolish this preference duty on tea, which is of no benefit to the self-governing Dominions, but only to certain tea importers in this country; and he would give, in following our proposal, substantial and much-needed relief to the budget of the very poorest class.
Lieut.-Commander WILLIAMSI have always been rather interested in the speeches of the hon. Member for East Edinburgh. We know now, from what he has said this afternoon, that he is entirely a pre-Gladstonian in his ideas. Perhaps he would say that he is more post-Gladstonian. I rather doubt whether the House is taken with the argument on the particular point to which he addressed himself. The hon. and gallant Gentleman who has just sat down has endeavoured to put forward the old argument, that if you are giving a preference on one particular article or portion of an article, as in the case of tea, that then, if you remit the whole of that duty, the benefit will flow into the pockets of the importer. If you carry that argument to its correct and logical conclusion, you will take a very large sum out of the pockets of the Chancellor, and put an enormous sum into the pocket of the tea importer. I cannot see why the hon. and gallant Member has argued on the lines that he has in regard to the preference duty on tea, or that he can really logically come to this House and support a Motion which will give the tea importer an enormous benefit, and which will involve the Exchequer and the general community in a very great deficit, which will have to be made up in another way.
§ Sir D. MACLEANI will admit that my hon. and gallant Friend the Member for Leith did not claim to have meticulous accuracy. I am very glad, however, to be able to put up a very good defence of my hon. Friend the Member for East Edinburgh in regard to Mr. Gladstone. I find that there is no necessity for him to differ from Mr. Gladstone, and that, I am certain, will be a matter of very great congratulation to himself, as naturally it 1078 is to me. I have taken the opportunity of the interval since the Chancellor spoke to look at Morley's "Life of Gladstone." I find in the second volume, page 62, that in a letter written in 1859 to a correspondent Mr. Gladstone says:
Economy is the first and greatest article in my financial creed. The controversy between direct and indirect taxation holds a minor though important place.Further on, Mr. Gladstone says:I agree with you that if you had only direct taxes you would have economical government.I am sorry, on account of my hon. Friend the Member for East Edinburgh, being compelled to quote the next sentence:In my opinion indirect taxes will last as long as the monarch.A great many things have happened since 1859, but so far as Mr. Gladstone was concerned the whole tendency of his financial policy was to get rid of indirect taxes.
§ Mr. CHAMBERLAINNo, no. The right hon. Gentleman will forgive me; Mr. Gladstone never went to the country with a proposal to abolish indirect taxation, but only to abolish the Income Tax.
§ Sir D. MACLEANI am referring to 1859.
§ Mr. CHAMBERLAINAnd I to 1874.
§ Sir D. MACLEANMr. Gladstone went to the country in 1874, or some time in the sixties, to abolish Income Tax.
§ Mr. CHAMBERLAINHe twice held the expectation of bringing the Income Tax to an end. The first occasion that Mr. Gladstone went to the country was before the Crimean War, when he introduced an Income Tax on a descending scale. Later he was wishful for the abolition of certain indirect duties and the establishment of full Free Trade as he then knew it. Later, I think I am right in saying it was in 1874—
§ Sir H. CRAIKYes, it was.
§ Mr. CHAMBERLAINHe went to the country with a proposal to abolish Income Tax.
§ The DEPUTY-CHAIRMAN (Sir E. Cornwall)I am afraid the Debate is getting on to general principles.
§ Sir D. MACLEANThis is the only opportunity the Committee will have of 1079 discussing this matter, though I agree we may be going a little too far on the question of general principle. But the point is a very important one, that of the relationship between direct and indirect taxation. So long as we keep it to the question of the tea, perhaps you will allow the discussion to continue on the lines it commenced.
§ The DEPUTY-CHAIRMANI do not object to some diversion, but it is getting rather too wide.
§ Sir D. MACLEANI agree entirely. My point is that this Amendment raises a very important question as to whether or not the Chancellor will, in connection with this Tea Duty, give further relief and raise the necessary money to meet the deficiency by an increase of direct taxation. So far as I am concerned, I recognise quite frankly I do not think it is a practical proposal to ask the Government here and now to remit the £15,000,000 that is involved. I should not be honest if I did not say that. I think, however, that it may be reduced and the loss involved by a further reduction could be found by an increase of the Income Tax. I believe firmly in direct taxation and in freeing the food of the people, and tea comes under that heading. That is a policy which I am prepared to pursue and support
§ Mr. LYLE-SAMUELThe hon. Member for East Edinburgh (Mr. Hogge) could hardly have been speaking with accuracy when he said that historically the Liberal party had always been in favour of abolishing the Tea Duty, because in ten Liberal Budgets at no time have they ever suggested the total abolition of that duty. At no time has a Liberal Government ever cancelled such a sum as this duty will bring in. I have always defended this duty because it was free from the taint of protective tariffs and because every penny of it went to the Exchequer without any leakage or waste. It is one of the forms of taxation which Liberals have always found it easy to defend. There is, however, a very grave charge to be urged against the Chancellor of the Exchequer, and it is that the amount raised by this tax is, by the right hon. Gentleman's own deliberate and wanton act, less than it ought to be. No single portion of the British Empire asked that 1080 the tax should be reduced in a preferential manner depriving the revenue of so large an amount.
In answer to a question we have been told that the loss of revenue to this country by this preference would be substantially £3,650,000, and that the loss of revenue next year in a full year will be £4,400,000, or a loss of £8,050,000 at a time when the Chancellor is asking us to show him how he can save £500,000. From the time of the Budget in 1919 to the end of this year, if you add the cost of officials who will have to deal with the revenue, there will be a loss of £10,000,000 in this direction. The Chancellor of the Exchequer has ridden his favourite hobby and has sacrificed this revenue. It is true that, from a party point of view, it is popular, and he will continue it, and yet he tells us that he will be grateful if we can tell him how to save £500,000. Here is a chance. The charge of the Liberal party is that the right hon. Gentleman has deliberately diverted from the Exchequer a vast sum which would have flown naturally into its coffers had he not interfered in order to pay tribute to a fiscal god which if it is not already dead ought to be dead
By his policy the growers or the merchants have not been benefited, the community is not getting cheaper tea, and nobody has thanked him for it. A preference has been given on tea when we had 92 per cent. of our supply grown within the Empire in order to put up a tariff against 8 per cent. grown outside the Empire, and even according to the old fiscal argument of the right hon. Gentleman that is not sound finance. I want the Liberal party to be clear about this. I do not see how any Liberal can vote for this Amendment. It is not proper that this large taxation should be sacrificed, and it is not inconsistent with Liberal views or with the great Liberal traditions which the hon. Member for East Edinburgh so bravely advocates that we should vote against this revenue. Our complaint is that the revenue is not as great as it should be because of the policy which the right hon. Gentleman has adopted.
§ Mr. MYERSThere are a large number of people who live from week to week upon the income of that particular period, who have no margin of income to utilise in any other direction after they have provided the bare necessities of life. The 1081 principle of taxation should be to levy it upon those who have a margin to drop on, and not upon the section of the community who have nothing left when they have met their dues and demands. A large section of the industrial population live purely in the hand-to-mouth fashion from week to week. There is another section of the community below the working-class standard, and I refer to those people we had under consideration a week ago. We put a measure through this House on the Second Reading, and we passed a Financial Resolution dealing with blind people. We shall make a call upon these poor people through this tax. The old age pensioners also come into this category, and we ought not to forget that there are a few scores of thousands of discharged soldiers without the means of livelihood, unable to get a job, who are living upon the pension or allowance which they get from the State. We ought not to pay pensions to old people and discharged soldiers and hold our hand out afterwards to take back a portion of that small pittance which is given to them in this direction.
We have heard the suggestion made that the Liberal party has always been in favour of a free breakfast table. To-day if we take tea, coffee, cocoa and sugar we find that those articles have never been as heavily taxed as they are now. The hon. Member opposite has also pointed out that ten Liberal Budgets have been introduced in a given period, and after all those Budgets have been discussed the taxes are heavier than they have ever been before in regard to this particular duty. The question of securing the £17,000,000 which the Tea Tax produces is quite a simple matter. I go back to the point that the taxes ought to be levied upon those who have a margin left after paying their taxation. We can look round in many directions and find agencies that would produce an additional £17,000,000, and they would not even know that they had made that contribution if they were not told—I refer to a tax on War wealth.
§ Mr. HOLMESThere is just one point which has been made, and it is that if this proposal is carried and the one shilling duty on tea is abolished that another £17,000,000 will have to be raised to replace the revenue which will be lost. The right hon. Gentleman the Member for Peebles (Sir D. Maclean) 1082 said he did not mind raising an additional sum by the income tax to that extent. I made a point to which the Chancellor of the Exchequer did not reply. The effect of a reduction of one shilling in the tea tax will be to increase direct taxation in four separate directions, and while the revenue may lose £17,000,000 by indirect taxation, it will probably get nearly as much direct taxation. Let me just briefly state how that will occur. The shilling duty taken off will reduce the price of tea. That will reduce the index number of the Board of Trade in regard to the cost of living, and this will automatically reduce the wages of every worker on the sliding scale. The effect will be to reduce the wages of other workers throughout the country because, as the sliding scale goes up it increases wages, and as it comes down it reduces wages. This will also increase the profits of a great number of business firms, and automatically there will be a larger assessment of profits under the Excess Profits Duty, the Corporation Profits Tax, the Income Tax and the Super Tax, and although we have to give up £17,000,000 of indirect taxation we shall get a larger amount by direct taxation.
§ Colonel WEDGWOODThe argument of the hon. Member who has just sat down is indeed admirable, and it should be well understood on these benches. Wages are governed by the cost of subsistence, and the more the Chancellor of the Exchequer reduces the cost of subsistence the lower wages will go. That is a lesson which cannot be laid too closely to heart. Under the present industrial system the wages of labour are not governed so much by the work done as by the cost of subsistence and nothing else. That is an admirable argument to come from the Liberal Benches and from the Liberal Free Trade Benches where sound economics are always preached, and the sooner we lay it to heart the quicker the chance will be of upsetting that particular law of wages which is keeping wages in their present position. What I was particularly interested in was the argument used by the hon. Member for the Eye Division (Mr. Lyle-Samuel), who denounced the idea that it was part of the policy of the Liberal party to reduce indirect taxation. He instanced, perfectly justifiably, the attitude towards indirect taxation of successive Liberal 1083 Chancellors of the Exchequer. He pointed out how they had been responsible for ten Budgets between 1906 and 1916, and yet instead of a reduction of indirect taxation, it had gone up and up.
It has been pointed out, rightly, that we must draw a quite clear distinction between the policy of the Liberal Government and the policy of the Liberal party. The policy of the Liberal party has always been to reduce indirect taxation. At one National Liberal Conference after another resolutions have been carried in favour of a reduction of indirect taxation, and in each subsequent Budget indirect taxation has inevitably gone up instead of down. It would ill become me to draw attention to these facts, for I was long a Member of the Liberal party; but it is because of this vast hiatus between the policy of the Liberal party and that of the Liberal Government that I, and so many others, find that we have to go somewhere else. I should like to point out quite clearly to my colleagues on these benches that if we wish to avoid the sad and evil fate of the Liberal party in this country, we really must, when we get into power, implement the words used by the hon. Member for Edinburgh (Mr. Hogge) and see that the Labour party and the Labour Government are both in favour of a reduction of indirect taxation—of the abolition of this form of taxation altogether. We have had many quotations from Mr. Gladstone. We quite understand that what that right hon. Gentleman said in 1880 he did not say in 1874, or in 1868, or in 1854. That is all very well. It is part of the policy of the old parties in this House, Conservative as well as Liberal, constantly to refer to the authority of other people; to point out, for instance, what Mr. Gladstone said and to proceed to assume that Mr. Gladstone got his wisdom from on High and nobody should venture to differ from him. That, however, is not the policy upon which we ought to go. It is no good talking of authorities and of accepting everybody as an authority who happens to get into the Dictionary of National Biography, and then to assume that that finishes the matter. The policy of our party is not to accept any authority, but to try to prove to the individual whether a thing is right or wrong. To my mind indirect taxation is wrong. I do not care whether Mr. Gladstone was for it, or Sir Robert Peel, 1084 or William the Conqueror, or anybody else. The important thing is that indirect taxation falls with crushing effect on the people least able to bear it, and, because of that, the Labour party and a Labour Government will be against it.
§ Lieut.-Commander KENWORTHYAs the Chancellor of the Exchequer refused to give way to me when I intervened on the occasion of his making a most unfair charge against me, I want now to say a few words in defence of myself and of my hon. Friend who proposed this Amendment. The right hon. Gentleman suggested that we spoke only with the authority of a party of two on this subject. Twice since I entered this House have we had Divisions on this question of keeping on the Tea Duty. I admit that the party to which I belong is a small one in this House—the Independent Liberal party I mean—but it represents a not inconsiderable body of opinion outside. Like the hon. and gallant Member for Newcastle-under-Lyme (Colonel Wedgwood), I have attended many conferences of the Liberal party, where we have unanimously declared for a free breakfast table. We still believe in that, and whenever we form a Government, and I hope it may be soon that we shall do so, we shall give our support to that policy. The country are getting pretty sick, at any rate, of the present Government, and there would be no difficulty in finding men to form another Government. Anyone almost would be a welcome change to the present muddlers. I believe I am speaking for the bulk of people outside who believe in Liberal principles, and who wish to do away with this tax on tea; we, at any rate, mean to get rid of it.
§ Sir W. JOYNSON-HICKSI rather look forward to the time when the hon. Member who last addressed this Committee becomes Chancellor of the Exchequer, for then he will be able to show us how what he advocates can be carried out in practice. It is interesting to find hon. Members around him giving different reasons for doing away with this tax. One set offer as a most conclusive reason that it ought to be done away with because it presses hardly on the lower class of wage-earners, while the academic Liberals are prepared to do away with it because it will reduce wages, and, presumably, the wages of the 1085 lower wage-earners. What the hon. Member for Newcastle-under-Lyme meant I am not quite sure. He was a Liberal, now he tells us he is a Member of the Labour party and he is not in favour of any authority whatever. He is not going to be guided by Sir Robert Peel or even by William the Conqueror. I can only suggest that if my Labour friends want to get on well with the hon. Member they will have to bow to one authority, and that will be the authority of the Pope of Newcastle-under-Lyme, because I am sure he will not work with anybody who does not agree with him. The reason why we ought to support the Government in regard to this duty is that everybody in this country must, if we are to keep our heads above water, bear some share of the taxation of the country; I do not care how small it may be. Of course it is much easier as an electioneering move to go down to one's constituents, and suggest doing away with all duties on tea, sugar, and so on, but the honest thing for Members of Parliament to do is to tell their constituents that there has been a war, that it has been for the benefit of the wage-earning class as well as of other classes. [HON. MEMBERS: "No, no!"] I wonder what would have happened to hon. Members on the Labour Benches, and particularly to the hon. Member for Hull (Lieut.-Commander Kenworthy) if the Germans had won this War and had come over here. I am sure of one thing, and that is that there would not have been quite so much free speech as there is in this House.
§ Lieut. - Commander KENWORTHYThere is not much free speech now.
§ Sir W. JOYNSON-HICKSI do not know how much more free speech the hon. and gallant Member wants. It seems to me he gets a fair share.
§ Colonel WEDGWOODWe take it.
§ Sir W. JOYNSON-HICKSI want to protest against the action of these Members of the House, whose speeches will undoubtedly be reported in the columns of the Labour newspapers. They are speeches which constitute a bribe definitely and deliberately offered in order to get into power. I say quite advisedly I am prepared to go down and tell my own constituents that the right and proper thing for any man, however poor he may be, is to pay his share of the 1086 expenditure on this War. That, I submit, is a conclusive reason for supporting this tax.
§ Mr. HOGGEThe speech we have listened to just now proves that some hon. Members have not been paying attention to the arguemnts which have been advanced against this duty. It has been suggested that we as academic Liberals are in favour of reducing wages. As a supporter of the Amendment I want to say that I am not in favour of anything of the kind. My hon. Friend who spoke last (Sir W. Joynson-Hicks) certainly could not have heard the speech of the hon. Member who moved the Amendment.
§ Sir W. JOYNSON-HICKSI heard his last speech, in which he distinctly raised the point referred to.
§ Mr. HOGGEOur proposal is not to reduce wages. We are facing an industrial situation about which every Member is conplaining from day to day in this House, namely, that you have a vicious circle of wages attempting to catch up prices. We have pointed out that these wages depend upon the index numbers of the Board of Trade, and that while certain classes of the community are getting an artificial wage, the rest of the community are being called upon to bear indirect taxation a second time. If a railway worker gets an increased wage because the cost of living has gone up, he does not get a second increase because the railway fares go up, and, therefore, it can be said he is paying indirect taxation a second time. I wish hon. Members would attempt to realise the new state of affairs which exists. At the time indirect taxation was originally levied it was levied when wages were governed by the laws of supply and demand, but to-day wages are governed by the cost of living, and that means that the community generally pays indirect taxation twice over. We say that that is not fair, and the only reply we have had from the Government Bench to-day is that this is a hardy annual, and that we cannot have our desire. I do not mind the Government beating us down in the Division Lobby, but I should like them to give us intelligent and substantial reasons why they cannot see their way to depart from the position they have taken up. The Financial Secretary of the Treasury is 1087 usually very good to us, and perhaps he, on behalf of the Treasury, refuses to meet the new situation in which wages are being governed by the cost of living instead of by supply and demand. For my part I am in favour of the total abolition of indirect taxation.
§ Mr. SWANI want to support the Amendment, not as an academic advocate of any branch of the labour movement at all, nor with any burning desire to see wages reduced, but in order that we may increase the value of the wage of the ordinary wage-earner and help to maintain the value of the pension of the old soldier and of the income of the poor person. This tax presses on the poorest of the poor in the community. It has been suggested by the hon. Member (Sir W. Joynson-Hicks) that the poor ought to pay their fair share of taxation. We believe that the working classes of the
§ country pay all the taxation of the country, either direct or indirect, as it can only come out of the wealth which is being produced by labour.
§ Viscountess ASTORWhat about brains?
§ Mr. SWANYes, we include the brains, and we say that the poor of all classes, in paying this 1s. per lb. on tea, are paying for the War, while others are enjoying colossal incomes earned at their expense. I hope the Chancellor of the Exchequer will see his way clear to assist the poor of the community and to relieve them of this unjust tax which is of such importance in reducing their standard of living.
§ Question put, "That the words proposed to be left out stand part of the Clause."
§ The Committee divided: Ayes, 242; Noes, 45.
1089| Division No. 179.] | AYES. | [5.45 p.m. |
| Adair, Rear-Admiral Thomas B. S. | Colvin, Brig.-General Richard Beale | Hennessy, Major J. R. G. |
| Addison, Rt. Hon. Dr. C. | Cooper, Sir Richard Ashmole | Herbert, Hon. A. (Somerset, Yeovil) |
| Agg-Gardner, Sir James Tynte | Coote, Colin Reith (Isle of Ely) | Hickman, Brig.-General Thomas E. |
| Allen, Lieut.-Colonel William James | Coote, William (Tyrone, South) | Hills, Major John Waller |
| Astor, Viscountess | Cowan, D. M. (Scottish Universities) | Hinds, John |
| Baird, John Lawrence | Craig, Colonel Sir J. (Down, Mid) | Hoare, Lieut.-Colonel Sir S. J. G. |
| Baldwin, Rt. Hon. Stanley | Craik, Rt. Hon. Sir Henry | Hohler, Gerald Fitzroy |
| Balfour, George (Hampstead) | Croft, Brigadier-General Henry Page | Hood, Joseph |
| Banbury, Rt. Hon. Sir Frederick G. | Curzon, Commander Viscount | Hope, Sir H. (Stirling &Cl'ckm'nn'n,W.) |
| Banner, Sir John S. Harmood- | Davidson, Major-General Sir J. H. | Hope, James F. (Sheffield, Central) |
| Barnston, Major Harry | Davies, Sir William H. (Bristol, S.) | Hopkins, John W. W. |
| Barrand, A. R. | Davison, Sir W. H. (Kensington, S.) | Hopkinson, A. (Lancaster, Mossley) |
| Bell, Lieut.-Col. W. C. H. (Devizes) | Dawes, Commander | Horne, Sir R. S. (Glasgow, Hillhead) |
| Benn, Capt. Sir I. H., Bart. (Gr'nw'h) | Dennis, J. W. (Birmingham, Deritend) | Hunter, General Sir A. (Lancaster) |
| Betterton, Henry B. | Dockrell, Sir Maurice | Hurd, Percy A. |
| Birchall, Major J. Dearman | Duncannon, Viscount | Hurst, Lieut.-Colonel Gerald B. |
| Bird, Sir A. (Wolverhampton, West) | Edgar, Clifford B. | Jackson, Lieut.-Colonel Hon. F. S. |
| Blades, Capt. Sir George Rowland | Edge, Captain William | James, Lieut.- Colonel Hon. Cuthbert |
| Blair, Reginald | Elliot, Capt. Walter E. (Lanark) | Jephcott, A. R. |
| Blake, Sir Francis Douglas | Elveden, Viscount | Jellett, William Morgan |
| Blane, T. A. | Eyres-Monsell, Commander B. M. | Jesson, C. |
| Boles, Lieut.-Colonel D. F. | Falle, Major Sir Bertram G. | Jodrell, Neville Paul |
| Borwick, Major G. O. | Farquharson, Major A. C. | Jones, Sir Edgar R. (Merthyr Tydvll) |
| Boscawen, Rt. Hon. Sir A. Griffith- | Fell, Sir Arthur | Jones, J. T. (Carmarthen, Llanelly) |
| Bowyer, Captain G. E. W. | FitzRoy, Captain Hon. E. A. | Jones, William Kennedy (Hornsey) |
| Breese, Major Charles E. | Foxcroft, Captain Charles Talbot | Joynson-Hicks, Sir William |
| Bridgeman, William Clive | Frece, Sir Walter de | Kellaway, Rt. Hon. Fredk. George |
| Briggs, Harold | Ganzoni, Captain Francis John C. | Kelley, Major Fred (Rotherham) |
| Brittain, Sir Harry | Gardiner, James | Kinloch-Cooke, Sir Clement |
| Brown, Captain D. C. | Geddes, Rt. Hon. Sir E. (Camb'dge) | Knight, Major E. A. (Kidderminster) |
| Bruton, Sir James | Gibbs, Colonel George Abraham | Knights, Capt. H. N. (C'berwell, N.) |
| Buchanan, Lieut.-Colonel A. L. H. | Gilmour, Lieut.-Colonel John | Lambert, Rt. Hon. George |
| Buckley, Lieut.-Colonel A. | Goff, Sir R. Park | Lane-Fox, G. R. |
| Bull, Rt. Hon. Sir William James | Grant, James A. | Law, Rt. Hon. A. Bonar (Glasgow) |
| Burdon, Colonel Rowland | Green, Joseph F. (Leicester, W.) | Lewis, Rt. Hon. J. H. (Univ., Wales) |
| Burn, Col. C. R. (Devon, Torquay) | Greenwood, William (Stockport) | Lister, Sir R. Ashton |
| Butcher, Sir John George | Gretton, Colonel John | Lloyd-Greame, Major Sir P. |
| Casey, T. W. | Gritten, W. G. Howard | Locker-Lampson, G. (Wood Green) |
| Cautley, Henry S. | Guinness, Lieut.-Col. Hon. W. E. | Locker-Lampson, Com. O. (H'tingd'n) |
| Chamberlain, Rt. Hn. J. A.(Blrm.,W.) | Gwynne, Rupert S. | Lonsdale, James Rolston |
| Chamberlain, N. (Birm., Ladywood) | Hacking, Captain Douglas H. | Lorden, John William |
| Child, Brigadier-General Sir Hill | Hall, Lieut.-Col. Sir F. (Dulwich) | Lyle, C. E. Leonard |
| Clay, Lieut.-Colonel H. H. Spender | Hall, Rr-Adml Sir W. (Liv'p'l,W.D'by) | Lyle-Samuel, Alexander |
| Clough, Robert | Hambro, Captain Angus Valdemar | Mackinder, Sir H. J. (Camlachie) |
| Coates, Major Sir Edward F. | Hanna, George Boyle | M'Micking, Major Gilbert |
| Coats, Sir Stuart | Hanson, Sir Charles Augustin | Macnamara, Rt. Hon. Dr. T. J. |
| Cockerill, Brigadier-General G. K. | Harris, Sir Henry Percy | McNeill, Ronald (Kent, Canterbury) |
| Cohen, Major J. Brunel | Haslam, Lewis | Macquisten, F. A. |
| Collins, Col. Sir G. P. (Greenock) | Henderson, Major V. L. (Tradeston) | Mallalieu, F. W. |
| Malone, Major P. B. (Tottenham, S) | Pratt, John William | Sutherland, Sir William |
| Marriott, John Arthur Ransome | Preston, W. R. | Talbot, G. A. (Hemel Hempstead) |
| Martin, Captain A. E. | Prescott, Major W. H. | Taylor, J. |
| Mildmay, Colonel Rt. Hon. F. B. | Pretyman, Rt. Hon. Ernest G. | Terrell, George (Wilts, Chippenham) |
| Mitchell, William Lane | Pulley, Charles Thornton | Thomas-Stanford, Charles |
| Molson, Major John Elsdale | Purchase, H. G. | Tickler, Thomas George |
| Mond, Rt. Hon. Sir Alfred M. | Rae, H. Norman | Tryon, Major George Clement |
| Moore, Major-General Sir Newton J. | Randles, Sir John S. | Turton, E. R. |
| Moreing, Captain Algernon H. | Raper, A. Baldwin | Waddington, R. |
| Morris, Richard | Raw, Lieutenant-Colonel N. | Wallace, J. |
| Morrison, Hugh | Rees, Sir J. D. (Nottingham, East) | Ward-Jackson, Major C. L. |
| Mount, William Arthur | Rees, Capt. J. Tudor- (Barnstaple) | Ward, Col. L. (Kingston-upon-Hull) |
| Murchison, C. K. | Reid, D. D. | Warren, Lieut.-Col. Sir Alfred H |
| Murray, C. D. (Edinburgh) | Roberts, Sir S. (Sheffield, Ecclesall) | White, Lieut.-Col. G. D. (Southport) |
| Murray, Major William (Dumfries) | Robinson, Sir T. (Lancs., Stretford) | Williams, Lt.-Com. C. (Tavistock) |
| Newman, Sir R. H. S. D. L. (Exeter) | Roundell, Colonel R. F. | Willoughby, Lieut.-Col. Hon. Claud |
| Nicholson, William G. (Petersfield) | Rutherford, Colonel Sir J. (Darwen) | Wills, Lieut.-Colonel Sir Gilbert |
| Nield, Sir Herbert | Rutherford, Sir W. W. (Edge Hill) | Wilson, Capt. A. S. (Holderness) |
| Norris, Colonel Sir Henry G. | Samuel, A. M. (Surrey, Farnham) | Wilson, Daniel M. (Down, West) |
| Norton-Griffiths, Lieut.-Col. Sir John | Samuel, Rt. Hon. Sir H. (Norwood) | Wilson-Fox, Henry |
| O'Neill, Major Hon. Robert W. H. | Samuel, Samuel (W'dsworth, Putney) | Wood, Hon. Edward F. L. (Ripon) |
| Ormsby-Gore, Captain Hon. W. | Sanders, Colonel Sir Robert A. | Wood, Sir H. K. (Woolwich, West) |
| Palmer, Major Godfrey Mark | Scott, Sir Samuel (St. Marylebone) | Wood, Sir J. (Stalybridge & Hyde) |
| Palmer, Brigadier-General G. L. | Shaw, William T. (Forfar) | Wood, Major S. Hill- (High Peak) |
| Parker, James | Shortt, Rt. Hon. E. (N'castle-on-T.) | Yate, Colonel Charles Edward |
| Parry, Lieut.-Colonel Thomas Henry | Simm, M. T. | Young, Lieut.-Com. E. H. (Norwich) |
| Pearce, Sir William | Sprot, Colonel Sir Alexander | Young, Sir Frederick W. (Swindon) |
| Pease, Rt. Hon. Herbert Pike | Stanley, Major H. G. (Preston) | Young, W. (Perth & Kinross, Perth) |
| Peel, Col. Hn. S. (Uxbridge, Mddx.) | Starkey, Captain John R. | Younger, Sir George |
| Perkins, Walter Frank | Stewart, Gershom | |
| Perring, William George | Strauss, Edward Anthony | TELLERS FOR THE AYES.— |
| Pilditch, Sir Philip | Sturrock, J. Leng | Lord Edmund Talbot and Mr. Dudley Ward. |
| Pownall, Lieut.-Colonel Assheton | Surtees, Brigadier-General H. C. | |
| NOES. | ||
| Benn, Captain Wedgwood (Leith) | Kenworthy, Lieut.-Commander J. M. | Seddon, J. A. |
| Brown, James (Ayr and Bute) | Kenyon, Barnet | Short, Alfred (Wednesbury) |
| Clynes, Rt. Hon. J. R. | Klley, James D. | Sitch, Charles H. |
| Finney, Samuel | Lunn, William | Smith, W. R. (Wellingborough) |
| Galbraith, Samuel | Malone, C. L. (Leyton, E.) | Spoor, B. C. |
| Glanville, Harold James | Mills, John Edmund | Swan, J. E. |
| Graham, W. (Edinburgh, Central) | Murray, Dr. D. (Inverness & Ross) | Thorne, G. R. (Wolverhampton, E.) |
| Griffiths, T. (Monmouth, Pontypool) | Myers, Thomas | Tootill, Robert |
| Grundy, T. W. | Newbould, Alfred Ernest | Waterson, A. E. |
| Guest, J. (York, W. R., Hemsworth) | O'Connor, Thomas P. | Wedgwood, Colonel J. C. |
| Hall, F. (York, W. R., Normanton) | O'Grady, Captain James | White, Charles F. (Derby, Western) |
| Hallas, Eldred | Raffan, Peter Wilson | Wood, Major M. M. (Aberdeen, C.) |
| Hayward, Major Evan | Richardson, R. (Houghton-le-Spring) | Young, Robert (Lancaster, Newton) |
| Hirst, G. H. | Robertson, John | |
| Hodge, Rt. Hon. John | Rose, Frank H. | TELLERS FOR THE NOES.— |
| Irving, Dan | Royce, William Stapleton | Mr. Holmes and Mr. Hogge. |
§ Mr. KILEYI beg to move, to leave out the words,
New import duties … 12.This Amendment, if the Committee accept it, means the deletion of that part of the Clause which refers to the duties levied on manuafctured and semi-manufactured articles. Before inviting the Committee to accept this proposal, may I refer to the reasons which the then Chancellor of the Exchequer gave when, in 1915, the duties in question were imposed. I will read from the OFFICIAL REPORT of that period what Mr. M'Kenna, the then Chancellor of the Exchequer, said:I put forward therefore a list of articles, the importation of which may properly be restricted by means of duties in time of war on both grounds, namely, that of foreign exchange and luxury. So far as the duties do not put an end to importation they may be a source of revenue not to be neglected.1090 6.0 P.M.Last year, in the discussion which took place, the present Chancellor of the Exchequer, when pressed to remove the duties, asked the Committee to allow them to continue for another year, because the reasons which existed at the time when they were imposed still held good, and were, as a matter of fact, complicated to an even greater degree by the rate of exchange prevailing at that period. I regret that we are not favoured with the presence of the First Commissioner of Works, because, when these proposals were brought forward in 1915, they had no more strenuous opponent that the right hon. Gentleman. In 1915 he gave very powerful reasons against their imposition, and stated, in addition, that they were of a pettifogging nature and would be a source of irritation and annoyance, as well as a serious detriment to the trade of this 1091 country. It may not be without interest to hon. Members of the Committee to try and realise what was the volume of business affected by the duties in 1913. I take that year because it was a boom year, and a year not affected by any war influence. The total volume of the imports of these articles—clocks, watches, musical instruments, and motor-cars—at that period was £10,500,000 sterling. The idea of these taxes was to put a stop to the bulk of that trade. I find, however, that in the year 1919, which has just closed, that total was reduced from £10,500,000 to something like £9,000,000. To be quite fair, there is a considerable difference in the value of the commodities, and it is interesting to note that, as far as the volume of trade is concerned, there was no substantial decrease. I think that is a very significant fact in conjunction with these figures, which will not be without interest to the Committee. Both the Chancellor of the Exchequer of 1915 and the present Chancellor of the Exchequer regarded these commodities as being articles of pure luxury, and yet, in a statement published in the OFFICIAL REPORT for the 1st June, which gives some analysis of the figures relating to these articles, it is shown that the revenue derived from the duty on motor-cars was £1,021,000, while the duty derived from accessories and component parts—that is to say, parts used by our manufacturers for building up machines—was £975,000; so that practically half of the total consisted of semi-manufactured goods. In the case of musical instruments, the revenue derived from completed instruments was £72,000, while that derived from component parts was more than double that amount, namely, no less than £165,000. I think I shall be quite safe in assuming that at least one-half of the revenue received is revenue which is put upon manufactured or semi-manufactured articles which affect the trade of our manufacturers. There was a difference of something like £1,500,000 between the imports of these goods in 1919 and in the year preceding the War. It is very interesting to find, on examining the figures, that in 1913 we re-exported of these commodities a little over £1,500,000. In the year 1919, due, I suggest to the imposition of these duties, it was some- 1092 thing less than £250,000. We have managed to lose during that period, without any chance of recovering it, a very substantial amount of re-export trade, because 50 per cent. of it at least applies to material or component parts, and the imposition of the duty has had a serious effect, because it has prevented the re-sale of a very considerable part of these goods. There is an interesting point in connection with the interpretation of their duties by the Customs officers. I was told the other day about a glass importer who imported mirror glass. He was asked by the Customs authorities whether any of it was used by lamp manufacturers, and he explained that it was, for instance, by motor-car manufacturers, who would use it in making motor lamps, and it would also be used in making lamps for ships and railways. "Very well," said the Customs, "you must pay the duty." He naturally rather demurred, and said he could not keep a record of where every sheet of glass went and how it was used. But he was told that if he did not pay the duty he could not get his glass, so he wisely paid the tax and passed it on to the consumer. He was not going to bother to go round at the end of the year and inquire of each person to whom he had sold the material as to what proportion was sold for this, that or the other trade.
That leads one up to another illustration of what effect the tax has had in increasing prices. Let me take it now on completely manufactured articles. You could buy clocks in pre-War days for three or four shillings. On account of enhanced cost of production, and having to have to go to other markets to purchase, you found yourself in the midst of the War unable to obtain these clocks for anything under 30s. The 33½ per cent. was put on such things as transport charges, and the price of the article increased to something like 50 per cent. before the importer obtained it. The result was that he locked up a considerable amount of capital and, having to provide a substantial amount of money, he necessarily wanted a larger return. Then as each successive shipment arrived the freights increased on each fresh batch, and the tax increased on the batch, and so the circle went on until such an article as a cheap clock, which is a necessity in every workman's family, went up from 3s. or 4s. till is reached 30s. There is a similar 1093 state of affairs in regard to watches, the bulk of which are of a cheap metal kind, and some millions of them were imported. It is essential, as they are not made in this country, that they should be imported, and owing to the duties the prices were regulated accordingly and were increasing all the time. Another class of goods which will show the injurious effect the tax has had is musical instruments—pianos, for instance. In pre-War days the piano industry in this country was a very important one. Thanks to our facilities for being able to import mahogany and walnut wood, and being able to obtain component parts, we assembled them in this country and were able to produce at a lower price than any competitive country, and we did an enormous business in cheap pianos.
The War has a good deal to answer for in the way of increased difficulties, but, apart from that, the taxes have caused irritation, and there is delay which could be avoided in gettng the goods, and it would not be without interest if I quoted the transport charges on a consignment to the London Docks: Taping and sealing, 9s.; opening for Customs examination, 6s.; taking into bonded warehouse for Customs examination, 3s.; bonding charges, 4s. 6d.; warehousing, 2s. 3d. Another item is Customs entry and clearing formalities, 7s. 6d. This is a very interesting document of the charges of a transport carrier, showing the formality which has to be gone through in order to obtain a consignment of goods on which 33⅓ per cent. is levied. These details show the injurious effect upon trade of retaining these irritating duties, which are a source of annoyance, and are no substantial gain to the community. It is true that the revenue received during the past year amounted to £2,700,000, but if you remove the shipping charges and other expenses, I suggest that the total revenue derived from the importation of the article could not be put down at anything more than £1,000,000. I know the Chancellor of the Exchequer will very likely say these are articles of luxury, and he cannot do without this £1,000,000 or £2,700,000. He complains that we do not show him any practical way of raising revenue, although I, as a Free Trader, object to revenue derived in this fashion altogether. If he wants a suggestion I will invite him to turn his mind to such articles as diamonds, pearls and precious 1094 stones, which could not have amounted before the War to anything less than £3,000,000. There will be very little difference of opinion as to these being articles of luxury, and I think all the lot would go in a decent-sized trunk, and the right hon. Gentleman would not need a gigantic staff. He would not cause irritation, and importers would be saved the list of charges I have read out.
It will be aruged that motor cars are articles of luxury. What you import in way of motors cars are those of a low-grade standard which, since the War, we have not been able to produce. In my judgment it would be unwise for us to place any obstacles in the way of enabling cheap and quick transport to be effected, and we ought to encourage the import of articles of this character. All the industries which I have mentioned are feeling the effects of the tax. The greater the restrictions placed upon these commodities the higher the prices. It is a mistake to have described these as articles of luxury. They are a sheer necessity. In the year 1915 these were some of the first articles in which increased prices played a part. You have only to start in one or two directions and plenty of other articles follow. I confidently suggest that the time has arrived when, without any serious disadvantage, these duties could be removed, and the result would be, in my judgment, to give a flillip to our trade in these directions, and also to our overseas trade, to retain which we are anxious to do all we can. This country has an enormous business in supplying articles to different parts of the British Empire. If you take a country like India you may have a small trader who requires a miscellaneous collection of goods, and he wants consignments of them. He cannot have a separate consignment, say, of clocks and of some other class of goods, but they must be combined, but on account of the very high prices you have put up a serious obstacle in the way of developing that branch of commerce, and, as a result, you lose the sale of other commodities. The Chancellor of the Exchequer says he has set up an arrangement for the purpose of giving drawbacks for this overseas trade, but if he knew all the paraphernalia that is necessary before you can get such a scheme into operation he would realise the extent of the delay. I am told that if you want to get something out of 1095 the stores it would take anything from seven to ten days before you could get the goods removed. If you had sent a consignment of watches and you wanted to take ten out you would have to take your full consignment away. In view of the insignificance of the revenue, I submit that the Chancellor of the Exchequer would be well advised in abolishing these duties and, if he wants more revenue, he should look in other directions.
§ Lieut.-Commander KENWORTHYI am not going to follow closely the arguments of my hon. Friend who has just spoken, but I entirely agree with every word he said. This tax, by reducing imports from abroad, reduces our export trade. My hon. Friend has dealt with the matter as one who has had close experience. I want to draw attention to one or two other matters in connection with these new import duties. I would draw attention to the tax on cinema films. The Finance Act of 1915 lays it down that the tax on the blank film on which no picture has been impressed should be one-third of a penny per lineal foot. That is a tax on the raw material of the cinema industry, which is an industry of tremendous and growing importance. We wish to see the British cinema trade encouraged in every way, and here is a direct tax on the raw material of that trade. The positive film, that is, the film containing pictures ready for exhibitions, is taxed at the rate of one penny per lineal foot. That is the finished article. The next tax in the scale is extremely interesting. The negative, that is, a film containing photographs from which positives can be printed, is charged 5d. per lineal foot. The negative will need a certain amount of British labour expended upon it, and you charge five times as much per lineal foot as you do for the positive film ready for exhibition. I understand that the plea of the high priests of Tariff Reform is that, by preventing goods from coming into this country or by preventing finished goods from coming into this country, you give more employment to British men and women. Here is a case in which, apparently, the incidence of the tax works in exactly the opposite direction. The finished article is only taxed at the rate of 1d. per foot, but the negative, which will require a good deal 1096 of work expended upon it by the skilled artisans of the cinema trade, is taxed at the rate of 5d. This tax works out to a very considerable sum on every film shown. On a thousand feet film, which only lasts twenty minutes, the tax on the positive finished article is £4 3s. 4d., while the tax on the negative is £20 16s. 8d. The total estimated yield of the tax, according to the financial statement, is £250,000.
That is a very serious tax to put upon the amusements of the people, in addition to the ordinary Entertainments Tax. You are doubly taxing the cinema industry. I admit that a small proportion of the films shown are not conducive to education, and do not tend to raise the standard of the morals of the people, but the great majority are of distinctly educative value to the community and especially to young people, and it is very questionable whether it is good policy taxing them in this way. There is no corresponding tax on newspapers. There was a tax on newspapers in the Sixties, but it was taken off, and bitterly was it assailed at the time by the Conservatives of that day. No one has suggested re-imposing the tax on newspapers. Why should this special industry of the cinema, which is very closely allied to the newspaper industry, be taxed in this way? Its other close ally is the theatre, which is only taxed by the ordinary Entertainments Tax which the cinema has to pay as well. Mr. Charlie Chaplin is taxed £20 for every 1,000 feet, and the same applies to the world's sweetheart, Mary Pickford. Are cinematographs such a luxury that they have to be taxed in this way. They are the amusement of the poor, and the very poor. People who cannot afford to go to an ordinary entertainment or music hall manage to scrape together a few pence in the poor districts of our great towns and see a cinematograph entertainment, and, undoubtedly, their minds are diverted and often improved. Why should there be a special tax on the importation of films? I should have thought the most valuable films were those manufactured in foreign countries. We want the people of this country to have knowledge of other countries, and I should have thought the Chancellor of the Exchequer would have particularly welcomed films showing scenes in foreign lands, for he and his school would like 1097 to paint the whole map red. With few exception they would like the inhabited globe to be included in the British Empire. Therefore, I should have thought he would have been reluctant to impose a special tax on films manufactured abroad. From the educational point of view it is a mistake.
The other taxes are just as objectionable. I entirely agree with the hon Member (Mr. Kiley) in regard to the taxes on clocks, watches and motor cars, and I certainly cannot understand why there should be a special tax on musical instruments. Surely we want a little music nowadays. Why should we want to put an ad valorem tax of 33 per cent. on cheap musical instruments from abroad? Do we not all remember the cry in the dark days when all the soldiers were telling us to send out mouth-organs and musical instruments; anything that would make a cheerful noise. After all the suffering and darkness of the War we want a little music in the homes of the people, and I object most strongly to the artificial raising of prices. It is impossible at the present time to buy cheap musical instruments. I tried the other day to buy some cheap mouth-organs for my children. I could not get a decent mouth-organ anywhere. The cheap and nasty ones I could get were five or six times the pre-War price, the explanation being that these things were made abroad and we have not been able to make them at home. This is not a trade suitable for this country, and we have to pay heavily for inferior articles. I have the greatest objection to these import duties, because the artificial embargoes on trade are the curse of Europe to-day. We ought to set an example in sweeping them away. The one thing above all others that is impeding the recovery of Europe is in setting up all these small States which are blockading each other and putting artificial obstacles in the way of trade. They ought to be swept away and we ought to set an example in sweeping away the obstacles. It is because these import duties are an hindrance to trade and put up prices on things that are not luxuries, but are necessities, that I shall vote against them.
§ Major HAYWARDI rise to support the Amendment, and if I do not follow the arguments of my hon. Friend (Lieut.-Commander Kenworthy), I hope I shall not be considered to be against cheap 1098 music in the homes of the people. These import duties were first imposed, not as War taxation, but as War legislation. The object of these duties was not so much to raise revenue as to prohibit they import of the articles altogether. That was the primary object of the original duties. To make it more sure that that should be effective during the War, the articles themselves were prohibited entirely from coming into this country, so that, after the prohibition was removed, a new situation entirely arose which bears no relation whatever to the circumstances which existed when the duties were imposed. I think I am right in saying that when we opposed the retention of these duties, during the discussion on the Finance Bill last year, we did so on the grounds that the War was now over, that the circumstances had changed, and that these duties should now go. My recollection is that the Chancellor of the Exchequer supported their retention because he said he found the duties there and that the War position had not entirely changed, and that, moreover, he was not altogether unmindful of the revenue that was derived from them. The arguments that were used last year on this question apply with even greater force to-day. Another year has passed, and to that extent the War conditions have further receded. I do hope that the Chancellor of the Exchequer will see his way not to impose these duties any further. There is also the question of the cost of their collection. I do not think we know yet exactly what that cost is, but I recollect seeing in a White Paper some months ago, in a list of addition and and reduction of staff in various Governments Departments, a very large increase in the Customs and Excise Departments. I venture to suggest that that was largely due, not only to the import duties, but to the preference which was imposed. I shall be greatly obliged if the Chancellor of the Exchequer, when he replies, will tell the Committee exactly how many new Customs officers have been appointed in order to do the extra work imposed on that Department through these import duties and preference duties. This question does really raise the whole problem of preference and protection. It is impossible to get away from that fact. You have first of all the full duties against the foreigner, then you have the reduced 1099 duty against the Dominions and the Colonies, and then again you have no corresponding excise on the home manufacturer. I do hope the Chancellor of the Exchequer will tell us that the time has come—perhaps he will give us some date—when we can anticipate the end of these duties and that he is not going to use the adventitious aid of these duties, which he found imposed, in order to drive in the thin end of the wedge of a widespread and permanent system of protection.
§ Mr. CHAMBERLAINI do not know whether it is possible for the Committee to consider a question of this kind without reference to old controversies or whether the hon. Gentleman opposite will give me full credit for what I say when I tell them that in making the proposals that are now under discussion I made them on pure grounds of revenue, and not as a part of any larger trade policy, or from any particular preference for Customs Duties over any other form of taxation. I found these duties in existence; I found that the conditions which had given rise to their existence continued to a greater or lesser extent. The revenue which I could command was no more than was necessary for the purposes which I had in view, and I did not consider the taking off of a tax which was efficient as a revenue raiser, but, on the contrary, I was engaged on the more difficult problem of finding taxes which I could increase so as to produce further revenue. It was therefore purely as a revenue matter, and for the purposes of the revenue, that it was decided—not by myself alone, but by the Cabinet—to continue these taxes this year. I say frankly to the hon. Gentleman that I do not think that this is a time when we ought to reduce or repeal them. I am not quite sure whether, if some of my hon. Friends opposite who have criticised these proposals were to find themselves in office at the present time, they would decide to repeal these taxes rather than repeal some other taxes. The hon. Gentleman who moved the Amendment (Mr. Kiley) was concerned with the effect of these duties upon our re-export trade. I think we are attributing to one cause what is really the result of another cause. The hon. Gentleman made no allowance for the fact that drawbacks are placed on 1100 the re-export of articles. I venture to say that the real reason why our export trade was affected was because the home demand has been so great.
§ Mr. CHAMBERLAINCould the hon. Gentleman have imported more last year? I doubt it. An hon. Friend has said that, with reference to the manufacture of motor cars in Italy, that it had been suggested that these duties were hampering their export trade there. But it was admitted in Italy that they were sending all the cars they could send, and that they had orders for more cars than they could make. It has been the great demand for these articles in home markets which has prevented their re-export. The hon. Gentleman also dwelt at some length on the inconvenienced caused to importers. I think there has been no inconvenience or trouble. The duties are working very smoothly, with very little friction, and there have been no substantial disputes. The hon. Member who spoke last (Major Hayward) asked me to give him the number of Customs officials who had been added for the purpose of the collection of these duties. I have asked the Chairman of the Board of Customs, and I am informed by him that no additional officials were required for this purpose.
§ Mr. CHAMBERLAINNo, that is due to quite different reasons. If the hon. Member has knowledge of any particular case where delay has occurred, perhaps he will call the attention of the Board of Customs to it, or else, perhaps, he will draw my attention to it by private letter and I shall be glad to go into it. But I do not think that I should find that there has been any unreasonable delay on the part of the Customs officials.
§ Mr. LYLE-SAMUELDo I understand the right hon. Gentleman to say that no additional officials have been appointed primarily with regard to the duties arising out of Imperial preference?
§ Mr. CHAMBERLAINThe question was how many additional officials had been appointed in order to carry out and collect these new duties which were imposed by Mr. McKenna, and to carry out 1101 the grant of preference imposed last year, and the answer is "none." The hon. and gallant Member for Central Hull (Lieut.-Commander Kenworthy) ranged over most of the articles dealt with, but he spoke with particular feeling about musical instruments, and with deep regret of the obstacles which the duties placed in the way of his incurring the charms of music in his own home. He told us pathetically how he had been out to buy mouth-organs for his children, and how, owing to the operation of these taxes, he could find none for sale at a reasonable rate, but only bad ones at a high cost. I dwell on this pathetic story because it shows how dangerous it is to jump to hasty conclusions or to accept the first answer a tradesman gives you when he is unable to supply you with the article you desire at the price you are prepared to give. There is no duty on mouth-organs.
§ Lieut.-Commander KENWORTHYDoes the mouth-organ come under the same head as toys?
§ Mr. CHAMBERLAINMouth-organs are classed as toys, and not as musical instruments. I got my information from the Board of Customs who administer the tax, and the information is that mouth-organs are treated as toys and are not taxable.
§ Mr. CHAMBERLAINI must ask the hon. Gentlemen to accept what I say. I really cannot carry the matter further. I think I have covered most of the points raised. There is one plea of a very technical kind which was raised by the hon. and gallant Member for Central Hull with regard to cinema films He said that the negative films were charged at a higher rate than the positive. He appeared to think that that was contrary to all the teachings which have gone before. If that be so, it ought to commend itself to him, because we have been said to have been wrong in the past, and therefore it may be assumed that we are now doing what is right. The reason for it is that the negative film is, so to speak, the parent of an unlimited number of positives. I found these duties in existence, and we still assume that it is not the moment for encouraging the import of things which we can do without. Our financial position is not so flourishing that there is any reason 1102 to encourage people to spend money on things that they can do without. These goods are coming in—indeed, it was one of the complaints that, instead of the tax being effective in keeping the goods out, they were coming in—in almost equal quantities, or in almost equal value, to what they were in 1913, before the War. It is not that I desire to encourage further importation of things we can do without, in view of the general financial position and of the exchanges, but if they do come in I think we get our revenue from this source with as little hardship and difficulty as would be involved in picking up a similar revenue anywhere else, and £3,750,000 is a revenue I cannot afford to throw away.
§ Mr. LAMBERTThe Chancellor of the Exchequer makes it very difficult for men who, like myself, want to support the Government. I candidly confess I am disappointed with him. I am an unrepentant Free Trader, and I see nothing whatever to alter my view. I say quite emphatically that in my judgment this tax is a protectionist tax. I regret that the Chancellor of the Exchequer is keeping it on. When it was put on it was put on as a War tax to exclude motor-cars, musical instruments, watches and the like from America; we did not want to import these articles of luxury. Whether it was the best method or not I cannot say. For my own part, I should have preferred another and far more drastic method. I would have said, "Prohibit all these imports that the country can do without in time of war." The Chancellor of the Exchequer says now that it is a port of the revenue and that even if he were to take off the tax this is not the first tax that he would take off. He, therefore, proposes to keep on a protectionist tax as a part of the normal revenue of the year. I say frankly that that offends my Free Trade principles, and I am sorry that he has done it. He has colleagues, or he has one colleague who spoke very strongly against these duties from a Free Trade point of view—one of his colleagues who has recently been taken into the Government. I tell the Chancellor of the Exchequer that he is here throwing the discord of the fiscal controversy into his Budget. If he wants to keep out motor-cars and says we cannot afford them, or that we cannot afford musical instruments or films, let him prohibit their importation. That is one 1103 way. But do not let him endeavour to bring in Protection by this side wind. That is one reason why my right hon. Friend had so little success in his electoral campaign. He was bringing a revolution into the fiscal system under which this country has enjoyed so much prosperity since the days of Sir Robert Peel.
This is the commencement of revolution—you put on a protective duty for the sake of revenue. Of course, one has heard these arguments over and over again in this House. The Government is straining the allegiance of many of its supporters by the enormous number of officials and the bureaucratic tendency that it exhibits in every piece of legislation it introduces. This, again, is only another sample of the endeavour, by Government action, to stimulate trade. I presume my right hon. Friend is keeping on this tax in order that he may stimulate the motor-car manufacturers and that he might give more employment to them. I feel that the country is in a very grave financial crisis. There is no man listening to me who has a greater anxiety as to the next two or three years from the point of view of employment and—I will not say financial stability, but I do feel that we are coming up against a great industrial crash. I ask him, as one who desires to support a Government that will guide the country in these difficult times, not to throw this apple of discord of the Protectionist controversy into these Budget Debates. I feel strongly on the subject. I know it does not appeal to the Chancellor of the Exchequer, because he has followed his ,distinguished father as a Protectionist for a good many years, but I tell him frankly that I am sorry he is continuing these duties, because they make it far more difficult for a Free Trader like myself to support a Budget which, when he introduced it, I thought was a courageous Budget designed to overcome the financial difficulties with which we were confronted.
§ Mr. RAFFANI have listened to the Chancellor of the Exchequer with a great deal of disappointment. I gather that not only will he adhere to the tax this year, but that he gives us clearly to understand that he has no hope of being able next year to dispense with it, and as far 1104 as I can see it is likely to remain a part of our financial system. When the right hon. Gentleman says that he does not approach the question from the point of view of the old controversy, it appears to me that he forgets the circumstances under which this tax was imposed. When Mr. McKenna imposed this duty, he made it quite clear that he did not aim primarily at revenue. Indeed, subsequent action was taken which resulted in no revenue at all being secured from this source. What was desired then was to conserve shipping accommodation, and in the special circumstances of the War that was no doubt abundantly necessary. The right hon. Gentleman says that the circumstances under which the taxes were imposed have not yet altered completely. The main circumstance has altered completely. The right hon. Gentleman will not now argue that it is necessary to impose any fiscal instruments for the purpose of securing that shipping accommodation will be used for one purpose rather than another. With regard to that matter, there is a complete change. My recollection is that when this tax was proposed by Mr. McKenna and when it was attacked on Free Trade grounds, the right hon. Gentleman said that he did not regard these taxes as taxes which he would impose if he was endeavouring to begin imposing a system of Tariff Reform on the country. While I am strongly opposed to these taxes because they are protective, I think they ought to be opposed by all sections of the House, because they have not the merit even of being good protective taxes. If we were to endeavour to set up a system of protection in this country, I do not think anyone would select these particular articles and exclude all others. Therefore this proposal has the demerit that it violates Free Trade principles, that it creates considerable antagonism in many quarters, and that it is bound to revive old controversies, while on the other hand it does not conform to the canons of those who desire to set up a protective system.
It is a tax of 33⅓ per cent. The result of the tax is to add at least 50 per cent. to the cost which the consumer has to pay for motor cars, musical instruments, watches, and all the other things to which it applies. That really is the vice of any protective tariff. Can anyone suggest that it is desirable now to make it diffi- 1105 cult for people to purchase motor cars? In the United States the motor car is in general use, not only among the lower middle class but among working people. I am told that in several of the American States there is a motor car for every two families, and that it is quite usual for a working man to use a motor car for the purpose of going to his employment. In this country the motor car is a luxury. The right hon. Gentleman states that the tax did not prevent re-export because there was a large home demand for the article. If there is a large home demand for the article, why should the right hon. Gentleman intervene this obstacle which prevents that demand being satisfied? It is perfectly obvious to every business man that if you add 50 per cent. to the price of an article you thereby limit the sale of that article. There can be no doubt that these taxes are fully protective in their character. While I would not for a moment impugn the right hon. Gentleman's statement that he is endeavouring to approach this question apart from old controversies, I suggest that because of the fact that the old controversies are there and that, whatever the composition of this Parliament may be, there is every indication that the majority of the people still adhere to the principles of Free Trade, he would have been well advised, even if it had gone against his own views, to endeavour to sacrifice his duty. The right hon. Gentleman is always able to say to us, "Here is so much money which I am raising. How do you propose to raise it?" I would not, of course, be in order in answering in detail, but I suggest to the right hon. Gentleman that if he desires to be impartial with regard to old controversies. he is taking a very curious way of showing it, when he retains this tax for the purpose of revenue and throws away another instrument for raising revenue, the Land Values Duties, which would enable him, if they were properly developed, not only to provide all the sum which would be sacrificed if these duties were abolished, but would provide him with a considerable additional sum. If the ideal of the Chancellor is to steer clear of questions which have divided the people of this country in the past he should reconsider his decision in regard to these two matters, and if he does so I think his Budget is likely to have a 1106 much easier passage than will otherwise be the case.
§ 7.0 P.M.
§ Mr. WALLACEA supporter of a Coalition Government generally finds that a certain amount of compromise is necessary, but there are subjects on which no compromise is possible. I consider that these two import restrictions come under that category. I regard the reply of the Chancellor as wholly inadequate to meet the criticisms levelled against these duties. The object of their original imposition was two-fold, namely, for the purpose of restricting sales and conserving shipping. It is not correct for the Chancellor to say that the same conditions still obtain as those which obtained when these duties were imposed in 1915. Last year there was very strong opposition to the continuance of these duties, and in July the Chancellor said, recognising how strong the opposition was, that he would only continue the duties provisionally for another year. In response to very strong representations from some Coalition Liberals, he altered the date to which the duties were to run from August, 1920, to the 1st of May, 1920. He seems now to regard them as a permanent part of our fiscal system. Like my right hon. Friend (Mr. Lambert), I am an unrepentant Free Trader. I do not wish to give a silent vote, and I shall certainly vote against the Government so far as these duties are concerned. Whatever position the Chancellor takes up, he will always be suspect to Free Traders. Although he considers these duties innocuous, I regard them as another example of that tinkering with the foundations of Free Trade which has been the basis of that great commercial structure we have built up. I do not think we ought to countenance the continuance of these duties for another year. I consider that those who professed Free Trade principles in the past, and who do so to-day, should show their opinions in a decisive manner in the Division Lobby.
§ Captain W. BENNThe revenue derived from some of these duties is really trifling, and I think we are likely to arrive at the position which existed many years ago, when many duties yielded such a trifling amount that it was hardly worth while to continue to collect them. When the Chancellor said that no special staff was appointed to collect these duties, are 1107 we to understand that the staff of the Customs and Excise is exactly the same, and the accommodation the same as before these duties were imposed in 1915?
§ Mr. CHAMBERLAINThere has been a very considerable increase in the staff of the Customs and Excise, but that is not in connection with these duties.
§ Captain BENNThat is where I think we must be allowed to judge for ourselves. I think we are entitled to say that in our judgment the collection of preferential rates and customs duties on these articles does involve additional duties and additional staff. I think we have discovered through this Debate that there is a large administrative charge which falls to be borne on account of these duties which under those circumstances are not justifiable on the grounds of revenue at all. The Leader of the House, when these duties were imposed, said that duties of this kind would never under any circumstances be continued after the War was over. That was a very definite statement. I am quite aware circumstances alter, and that a Government may be forced to do things it had not intended to do at an earlier stage. When we are asked to sanction these duties it is that kind of thing which shakes our belief in the permanence of Ministerial pledges. I come now to what is really the most important point in the whole discussion, and that is, what are the Members of the Coalition Liberal party going to do on this Amendment? That is what we want to know. The Chancellor, when he was discussing this matter last year, said that there was plenty of time to come to a decision, but that for the time being War conditions existed, and they had not decided. That day of decision is always being postponed. We are anxious to know when the decision is going to be arrived at. The Chancellor said, when they had decided that future policy, that these duties would be re-enacted or altered or, with qualifications, be made to conform to the policy decided upon. We are asked to re-enact them, and the inference is that the Government has decided in a Protectionist sense. What are the Free Traders among the Coalition Liberals going to do? On the last occasion we moved an Amendment definitely limiting the imposition of these taxes. The hon. Mem- 1108 ber for Middleton (Sir R. Adkins), who is a senior Member of this House, came down and said that they would make terms, and an arrangement was made by which these duties were limited to the 1st of May, and we were then asked to look at their temporary character. Now it is proposed to enact them for another year, and to incorporate them bodily in our fiscal system. Where is the hon. Member for Middleton to-day. My right hon. Friend the Chairman of the Coalition Liberal party stated that he intends to vote against these taxes this year. On the last occasion 13 Members of the Coalition Liberal party voted against the Government, and three of them have since accepted the onerous duties of office. I think it is too much to ask that they should pay the penalty which would follow if they were to exercise independent judgment on this occasion, but what about the other ten and about some outside ten? Might not what happened to the three out of the 13 be an encouragement to them? The day of decision on this cannot be indefinitely postponed. We have got to make up our minds whether it is to be Protection or Free Trade. We cannot go on year after year saying that the conditions are such that it is not time to decide. Now is the day, now is the accepted time.
Colonel CREIGMy hon. Friend asks what are the Coalition Liberals who are Free Traders going to do? If they have any sense they will support the Government. Bon. Members opposite have been angling for our vote. This is the offspring of a Liberal Government. These taxes were imposed under a Liberal Administration, and we find them in operation. As the Chancellor said, they keep out a certain number of things which we are not absolutely in want of. In the programme before the General Election, and which Liberals have taken note of and accepted, it was laid down that no new policy had been contemplated or is being contemplated, and while that is adhered to we shall support the Government, notwithstanding all the angling of the other side for our votes.
§ Mr. LYLE-SAMUELNo man who is a Free Trader can fail to support this Amendment, and any Member of the Committee who, for whatsoever reason, supports the Government in this matter, has ceased to be a Free Trader. The 1109 Chancellor said that he found that the duties here. We are quite aware of that, but our case is that the time has come for the duties to be abolished, and that they are of a Protectionist character. They are not serious from the point of view of revenue, and are bringing discredit upon Protection, if Protection ever could be credited. If the Chancellor is seeking revenue, and if he wants to stabilise the exchange, there are all sorts of luxuries he might attack. Why not select diamonds and pearls instead of picking out motors and musical boxes and mouth organs? How these things were selected I do not know, but they bring in a negligible and contemptible amount of revenue, and they are retained, as we know, because the Chancellor, by maintaining them, has been able to introduce Imperial preference as a permanent part of our fiscal policy. I am very glad that these particular proposals are now before the Committee for examination. We, Free Traders, have always held that you will not advantage the commercial life of this country, but ultimately destroy it by introducing Imperial preference, and these import duties have proved our case up to the hilt. The Chancellor of the Exchequer says he cannot afford to do without the £3,750,000 that they bring in, but he has more than sacrificed that sum in order to give the preference on tea. At this moment the Exchequer is impoverished, despite the import duties, by the loss he has made in granting preference. Of course, there is no Free Trade defence of these duties, and any
§ hon. Member who will support the Government on this Amendment has abandoned his Free Trade convictions, and ought to have the honesty to admit to himself that he has abandoned them. I am glad to say I have not abandoned them, and I shall follow the right hon. Member for South Molton (Mr.Lambert) in this matter in support of the Amendment.
§ Mr. D. M. COWANI am not quite sure that my parliamentary memory carries me back to the occasion when the thirteen free trade Liberals voted against the Government, but I think I must have been among them. At any rate, if I did not vote against the Government then, I feel myself compelled to do so now. I am a free trader, and I do not think the Chancellor of the Exchequer or the Government have been very generous towards those of us who support them but are free traders. They have had a long run for these special duties, and I think a little timely consideration for those who have sometimes supported them under very considerable difficulties might have led them to take these duties off at the present time. We were willing to admit the necessity for the duties during the period of the War, but now that comparative peace has come I think all duties of a protective character should be dropped.
§ Question put, "That the words proposed to be left out stand part of the Clause."
§ The Committee divided: Ayes, 240; Noes, 65.
1111§ Clause ordered to stand part of the Bill.