CLAUSE 6.—(Increased Excise Duty on Beer.) (Hansard, 5 July 1920)

§ Colonel GRETTON
This Clause proposes an increase of the beer duty amounting to 30s. per standard barrel. I do not think the Committee, or even the Chancellor, realises the vast increase which has already taken place in the taxation of beer. Before the War the taxation of the standard barrel of beer was 7s. 9d. In 1914 this amount was increased to 23s.; in 1916, to 24s.; in 1917, to 25s.—all except the first comparatively small increases. In 1918 the duty was doubled, and the 25s. made 50s. In the Budget of last year a further increase was put on of 20s. making 70s. per standard barrel. The Chancellor of the Exchequer now proposes to add a still further 30s., making the total duty on a 1122 standard barrel of beer under this Clause 100s., which, in addition to the Brewers' License duty of 6d. per barrel, will make a total beer duty per standard barrel of £5 Os. 6d. No one can do otherwise than admit that this is an enormous tax on an article which is very largely used and has been part of the customary diet of more than half the population for centuries past. I am not complaining at the present moment on the part of the manufacturer. This is chiefly a consumer's case. The Committee will remember the prices of beer sold by retailers are fixed under a scale issued by the Ministry of Food, beginning at 7d. per pint and increasing by pennies to 9d. per pint sold across the counter, and that beer is a gravity far less than the pre-War standard barrel. The new tax is calculated on the basis that the consumer shall pay ld. per pint more for that beer which is to be taxed. One penny per pint on a standard barrel of 36 gallons amounts to 24s. The scale has had to be raised in order to make the consumer pay it, and that means 6s. per barrel to be found by the manufacturer and the retailer. In ordinary time the tax in itself is a very serious matter. I believe the Chancellor of the Exchequer stated when he introduced the Budget that the licensed trade and the retailers were in a position to pay this tax because there had been a fall in the price of material.
On that point the right hon. Gentleman was wrongly advised, because the prices of materials have increased far beyond the knowledge of most people in this-country and the members of this Committee. The malt which is used in brewing beer has increased from 24s. per quarter to 135s. per quarter. Sugar used in brewing which cost 14s. a cwt. before the War now costs 70s., and hops have increased in price from £6 to £20. It is true that when all the suitable homegrown barley had been purchased there was afterwards a slight fall in the price of 10s. or 15s. Barley had risen to 130s., and it fell to about 115s., but the small quantity sold at that price had really no effect upon the price of the material, and it is so inconsiderable that it cannot affect the price of the stocks for next season. The manufacturers of beer and the growers are faced with the extraordinary high price of materials, and there is no prospect of any reduction. 1123 I will now turn to the consumers' side. The consumers now require to pay about 7d. a pint for beer, which they were able to buy at 2½. or 3d. before the War, and this Budget will raise the price to 8d. Before the War taxation was less than ½d. per pint, and now it is at the rate of ½d. per pint, and the Chancellor of the Exchequer has added ld. per pint to that. This has become a burden so great that it is pressing with undue severity upon the consumers of beer, and the tax levied at this high rate is calculated to defeat the Chancellor's own aims. We are considering the question of raising money for Exchequer. Already under these taxes, which have been collected in many districts, the consumption of beer has sensibly and definitely declined. I am told that the revenue returns for the first quarter are less than have been estimated. If that is so, the tax proposed is already diminishing the consumption of beer, and therefore the amount of revenue which should be collected. In the case of every tax there is a point where it defeats its own ends and ceases to be productive. I contend that the tax has overtopped the point where it will yield the amount which the Chancellor of the Exchequer expects to collect, and this proposal is going seriously to diminish the consumption of beer, and the tax will not yield the amount which has been estimated. No doubt the right hon. Gentleman has made some allowance for this.
We who are connected with the brewing trade are bound to protest against this tax, because it has become so oppressive to our customers, and it is one which will fail to raise the sum which the Exchequer requires from it. It would have been better to have left the tax upon the basis of its previous level. I know there are some people in this country who think that a tax which diminishes the consumption of beer, or of any alcoholic drink, is an excellent tax, but we are not considering taxation either from political or philanthropic motives, but for the purpose of raising revenue without being unduly oppressive to any large class of people in this country, and from that point of view this tax is not justified. It has become unduly oppressive upon a large class of people, and it is a proposal which I venture to think will not yield that increase of revenue which the 1124 Chancellor of the Exchequer expects from it.

Mr. CHAMBERLAIN
I note that my hon. and gallant Friend does not suggest that the duty is unfair to the trade itself, but that it is to the distributor of the article.

§ Colonel GRETTON
I am afraid I conveyed a wrong impression. What I said was that at the present moment the trade would not complain of the tax if it were not that they are faced with the very high cost of materials, and therefore the tax in the next season will become oppressive, even if it is not oppressive at the time it is put on.

Mr. CHAMBERLAIN
In the region of prophecy any of us may be mistaken. I rather think my hon. and gallant Friend misunderstood me when he quoted me as having said that the cost of the articles employed in brewing had already fallen. What I intended to convey that a fall in the price of barley, for instance, would be an advantage in the future. My hon. and gallant Friend seems to be more concerned as regards the consumer. The consumer is a taxpayer, and if he does not contribute in this form he must contribute in some other form, or other people must contribute it for him. One has to take the Budget as a whole. There is so much revenue to be raised, and, so far, I see no reason for the gloomy anticipations as to consumption which my hon. and gallant Friend indulges in. On the contrary, the returns for May exceeded our estimates. I think the consumption will depend much more on employment and wages than on the additional duty we have found it necessary to impose.

§ Sir G. YOUNGER
While the intention of my right hon. Friend is no doubt quite good, the results are not likely to be at all satisfactory from this almost savage taxation on an article very inferior in itself. If the beer were of the old quality which we had before the War people might drink it and be willing to pay the additional charge. But I do not think they are going to drink the beer produced under existing conditions. Therefore, I say the tax is likely to be unproductive. It certainly will not yield what the right hon. Gentleman expects. I have received many surprises in my life, but the biggest surprise of all has been this addition to the duty on beer. It is a case of 1125 over-taxation, and I believe that in Scotland already the trade has been knocked down by 20 per cent.

	£	s.	d.
For every thirty-six gallons of worts of a specific gravity of one thousand and fifty-five degrees … … … …	5	0	0

	£	s.	d.
For every thirty-six gallons of beer of an original gravity of one thousand and fifty-five degrees the drawback of …	5	0	3