HC Deb 30 June 1924 vol 175 cc961-70
Sir JOHN PENNEFATHER

I beg to move, in page 2, line 6, at end, to add the words or twenty-five per cent. ad valorem, whichever may be the lesser. As will be seen from the Finance Bill, although the duty on tea per pound has been reduced, it still remains the same upon the cheap teas, mainly used by the poorer people, as upon the more expensive teas, mainly used by the better-to-do and wealthier classes of the community. The effect of this flat rate of 4d. per pound is that 8d. tea pays, roughly, 50 per cent. duty, 1s. tea 33 per cent., 2s. tea 17 per cent., and 9s. tea 8 per cent. Hence my Amendment, which I hope will be accepted by the right hon. Gentleman, because it would produce, in my opinion, a more equitable taxation. If it be accepted, 8d. tea will then only pay a duty of 2d. a pound, 10d. tea will pay a duty of 2½d., tea will pay a duty of 3d., 1s. 2d. tea a duty of 3½d., and it is only when the value of the tea comes to 1s. 4d. a pound or more that the present rate of 4d. a pound will be imposed. I think every Member of the House must be acquainted with the arguments in this matter, and, therefore, I do not propose to waste any time in making a long speech on the subject, but I hope the Chancellor of the Exchequer will accept the Amendment.

The CHANCELLOR of the EXCHEQUER (Mr. Snowden)

I should like to congratulate the hon. Member for Kirkdale (Sir J. Pennefather) upon having introduced a certain novelty into what has been termed a hardy annual. The Committee will observe that the purpose of the Amendment is to leave the maximum duty on tea at 4d. a pound, but to impose a duty of 25 per cent. upon the value of tea, provided that the duty should not in any case exceed 4d. a pound.

Sir J. PENNEFATHER

May I correct the right hon. Gentleman? I did not go into the question of what the duty might be on the higher priced tea, for the simple reason that, as the right hon. Gentleman knows, I should have been out of order if I had proposed any additional taxation.

4.0 P.M.

Mr. SNOWDEN

But the hon. Member's Amendment means that the duty would be 4d. a pound, or 25 per cent. of the value of the tea, whichever figure may be the lesser. Therefore, I think I am correct in saying that in no case would the duty exceed 4d. a pound. This question of an ad valorem duty on tea has been raised times without number in this House. I would remind the Committee that about 100 years ago there was in operation an ad valorem duty on tea, but it was speedily repealed, because it was found to be not only inequitable in its operation but impracticable in its working. On the face of it, it would appear reasonable that the duty upon tea should bear some proportion to the value of the article, but whatever strength there is in that demand is derived from the idea that the rich man's tea ought to pay a higher rate of duty than the poor man's, and I shall have occasion to show that, however cogent that reason may appear on the surface, as a matter of fact, in practice, there is little or nothing in it. It is a mistake to suppose that the working people of this country consume wholly cheap tea. As a matter of fact, the working people of the country have discovered that cheap tea is not economical. I have had figures collected, and they confirm the statement that I have made just now. Half the tea which is sold by the co-operative societies, the largest retailers of tea, is of a better quality, and I am told that their experience is probably the general experience.

Let us see how the hon. Member's Amendment would work out. The price of tea, as hon. Members know, fluctuates rapidly and considerably. I believe that the price of tea to-day is something like 1s. 4d. or 1s. 5d. A short time ago it fell as low as 4½d. No Chancellor of the Exchequer could possibly budget upon such a fluctuating basis. It would be quite impossible for him to estimate what the yield of the duty would be. For instance, supposing he assumed the average price of tea would be 1s. 4d., and he estimated that he could get an average yield of 4d. per pound. Supposing the price fell to 8d. or even to 4d., then three-quarters of his revenue would disappear altogether. That is the destructive argument from the point of view of the Chancellor of the Exchequer. I would point out to the hon. Member that the Amendment would not gain even the object which he himself has in view. He referred to tea at 4s. per pound. There is a small quantity of tea at that price, and even so his proposal would put only a duty of 4d. a pound on that tea, and it would also put a duty of 4d. on the tea at is. 4d. per pound. The hon. Gentleman's Amendment, therefore, I submit, would not realise the purpose which he has in view. Moreover, it is impracticable, however desirable it might be if it were practicable, to impose an ad valorem duty upon tea, because tea now is sold generally in blends before duty is paid, and all kinds of qualities go into the blend. The trade is unanimous that it would be impossible to work such a scheme. How are you going to ascertain what is the value of tea for the purpose of imposing the duty upon it? Probably the two largest retailers of tea in the country, the Co-operative Wholesale Society and a company whose name I will not mention, are also growers of tea. Therefore, it would be necessary in these cases for the Customs and Excise Authority themselves to fix the value of tea. I might advance other reasons, but those which I have submitted are sufficiently destructive and show the utter impracticability of the Amendment.

Sir J. PENNEFATHER:

I admit that the arguments which have been brought forward by the right hon. Gentleman are very cogent and strong, but I confess that I think they fall with greater severity upon hon. Gentlemen who sit beside him and behind him than upon myself, because I was converted to the view expressed in my Amendment by speeches made by hon. and right hon. Gentlemen on the Front bench opposite.

Mr. SNOWDEN:

Not by me.

Sir J. PENNEFATHER:

I did not say by the right hon. Gentleman, but I think there are very few Members behind him who have not from time to time expressed indignation at the fact that a poor person's tea is taxed as highly as a rich person's tea. I have in mind a speech made by the Lord Privy Seal at Harpurhey just before the General Election. He waxed really most eloquent on the point, and when he was interrupted he took up his interruptor with some heat. In fact, it was reading that speech of the right hon. Gentleman that led me to make some remarks upon the subject. They were followed by a question as to whether I would be prepared to support his policy, and in an unguarded moment I gave a pledge that I would do so. Therefore, I am fulfilling my pledge, but I think I am entitled to point this out, that in fulfilling my pledge I have elicited the fact that all the criticisms which hon. and right hon. Gentlemen opposite made of their predecessors on this point were not justified, and that the promises of those of them who inferentially said that if they got into power they would do what others have found impossible were piecrust.

Amendment negatived.

Mr. H. H. SPENCER:

I beg to move, in page 2, line 6, at the end, to insert the words The provisions of Section 8 of the Finance Act, 1919, shall be applied to tea from China and from the Dutch East Indies. I feel sure the Chancellor of the Exchequer will give this Amendment his great sympathy, because it is one after his own heart. It provides for a reduction of taxation that I know is as dear, if possible, to the heart of the Chancellor of the Exchequer as it is to my own. It is an Amendment which will only rob him of a very small amount of revenue. I think, upon last year's figures, it would probably amount to £90,000, but that amount would go straight into the pockets of the consumers. I move this Amendment, because I feel that of the whole of the countries of the world China and Holland are the two countries which treat us best in tariff matters. Let me give an instance on this tea question. China levies a duty on our goods of about 3 per cent. to 5 per cent. Holland levies a duty on our goods of 5 per cent., and not only that but Holland is an exception to the whole of the other foreign countries of the world in that the Dutch people treat the English people just as well as they treat their own people in the Dutch East Indies. There is no preference given by Holland to their own traders over the English traders in the Dutch East Indies. That is a very strong argument for extending the same reciprocal treatment to the Dutch and the Chinese.

There is a stronger argument still against penalising the Chinese tea growers. China is one of the few nations in the world which has not complete fiscal freedom. We have given, and given freely, to our own Colonies the right to exercise the very widest freedom in their own fiscal affairs, but by means of various Treaties the Chinese have not that right, and I say that to impose upon China a limitation in the right or power to increase her own tariffs and then in return to put a higher tariff on Chinese goods is calculated to leave the Chinese suffering under a very great sense of injustice. Hon. Members will agree with me that our Colonies impose very much higher tariffs on British goods than the Dutch or Chinese. India has just gone in for a 15 per cent. all-round tariff on British goods against the 5 per cent. which the Chinese put on. India does not give us any Preference. The Chinese are a sensitive nation. It will be within the recollection of the Committee that three or four months ago the Chinese, suffering under what they regarded as unjust treatment by the Japanese, imposed a very rigid boycott upon Japanese goods. I want to take away this feeling of injustice from the Chinese. The whole British Colony in China to-day is enthusiastically in favour of this small measure of justice being done to the Chinese. The total extra duty that was collected last year on China tea was only about £63,000. At the present rate of duty it would amount to about £32,000. I am asking the Chancellor of the Exchequer, for the sake of the sentimental feeling between China and this country, for the sake of the strongly expressed desire of all the British Colony in China, and for the sake also of the fact that China is one of our very best customers to give us this small concession.

The Assam and Ceylon tea people do not require any preference. I have just been looking through a list of the profits that they have made. I have a list of about 30 or 40 India and Ceylon tea companies. I will just read a few. I see that the Ceylon Tea Company's last dividend was 40 per cent., the Jokai Assam Company 30 per cent., the Alliance Tea Company 40 per cent., the Nediem Tea Company 35 per cent., the Doom Dooma Tea Company 30 per cent., the Derby Tea Company 40 per cent., and the Pabbajam Tea Company 60 per cent. Those were the profits distributed. All prudent companies put something to reserve. This claim that our Colonies need these niggling preferences and doles will not bear looking into. Let me just give an example to show how they do not need it. I would like to bring before the notice of the Committee a prospectus that I saw in the "Times" this morning. It is that of a company which has some very distinguished directors. There are two members of the House of Lords, one of whom has the additional honour and distinction of being the husband of a Noble Member of this House. This prospectus gives an estimate of the profits to be made by this Colonial company. The calculation is that the cost of production of sugar by this company is going to be £10 per ton, and that at a price of £20 per ton, which is £5 less than last year's price, this Colonial sugar company is going to make 100 per cent. profit on the cost of production. That is as stated in the prospectus, and it makes no allowance for fresh preferences although the present preferences are to be further extended. I want to press for the Chancellor of the Exchequer's sympathetic consideration of this matter. I know he wishes to reduce the duty on tea as far as he can. I know he wants to bring about good feeling with our Colonies. This small Amendment will only deprive him of a trivial amount of revenue, but at the same time it will do a great deal to bring about good feeling for ourselves in the two countries which treat us best in trade matters. I trust, therefore, the right hon. Gentleman will accept the Amendment.

Mr. SNOWDEN

The hon. Gentleman who submitted this Amendment is quite right when he says that it is one which appeals to my heart and to my sympathies. But, unfortunately, there are a lot of things which appeal to my sympathies and to my heart which I am prevented from doing. The hon. Gentleman more than once stated that the amount of revenue involved is very small—something like £90,000 a year. That may be a very small amount com- pared with the hundreds of millions of taxation imposed at the moment. May I take this opportunity, however, of saying that we have a large number of Amendments on the Paper, nearly all of which are proposing further reductions of taxation. I have no doubt that hon. Members in charge of those Amendments will, like the hon. Member for South Bradford (Mr. H. H. Spencer), appeal to me to grant the concession, because it does not involve much loss of revenue, and I shall feel much difficulty in resisting those appeals; but I am bound to do it. If I were to concede all the Amendments that are down on the Paper it would involve a loss this year of tens of millions of pounds There is one Amendment which involves nearly £30,000,000 loss of revenue. There is another Amendment involving £13,000,000 or £14,000,000. A large number involve £2,000,000 or £3,000,000, and there is a number of Amendments involving tens and hundreds of thousands of pounds. It is quite clear I cannot concede all these; and that is my answer to the case put before me. I have made a large remission of taxation this year. I have made a remission on tea of 4d. a lb., and by so doing I have gone a long way to promote that better feeling between this country and China to which my hon. Friend has referred. I am sure my hon. Friend will admit that I have gone quite as far as I can. I am reluctantly compelled to refuse to accept the Amendment.

Mr. NEVILLE CHAMBERLAIN

In the course of this afternoon an hon. Member on the benches opposite described the Lord Chancellor as one who had been for a long time an ornament of the Liberal party. From the speech to which we have just listened it is obvious that another Chancellor—the Chancellor of the Exchequer—might be described equally fairly as having a bond with hon. Members below the Gangway, in that they both prefer to conciliate countries like China and the Dutch East Indies rather than our Dominions and Dependencies. Apparently the sentimental reasons which unite the hon. Member for South Bradford (Mr. H. Spencer) with China are far greater than those which weigh with him in considering the claims of India and Ceylon. I cannot but deplore that such sentiments should be expressed in this House at such a time, and I also deplore that the hon. Member should seek to create prejudice by quoting a prospectus showing what are expected to be the profits of a certain company. I may remind him that prospectuses are not always realised, even when they are political prospectuses, and no one knows that better than the Chancellor of the Exchequer.

Mr. PRINGLE

It is very interesting to find the right hon. Gentleman the Member for Ladywood (Mr. N. Chamberlain) reproving the Chancellor of the Exchequer for refusing this concession. The Chancellor of the Exchequer has always been really individual. He shared with me the struggle against the compulsory features of the present National Health Insurance Acts, and there again he proved himself characteristically individual. I quite agree with what has been said by the right hon. Member for Ladywood in discrediting the illusion that these preferences have any effect in conciliating our Colonies and Dependencies. Of all existing preferences the preference on tea is obviously one which should have that consequence in India, but we know enough to realise that that is not the real effect. Can it be suggested that the attitude of the people of India since this Preference was granted to them has improved towards this country? That is the great test. If it is true, as is asserted, that Preference is going to really improve the relations between the Mother Country and her Colonies, we surely ought to see proof of that in India. But has there been any improvement there? Has there been any reciprocity on their part? No, and on the contrary we have seen the Indian Government bringing in a protective tariff against which many hon. Members are complaining. We are, in fact, getting no return from India. I think the hon. Member for South Bradford (Mr. H. Spencer) has made out a good case for his Amendment. Here we have two other countries affected by the Preference. and they are countries which give exceptionally favoured treatment to the goods of this country, better treatment than India gives us. Why not admit China and Holland to the same terms in relation to the tea duty as India, which does not appreciate Preference at all? I was surprised at the Chancellor of the Exchange objecting to this Amendment on the score of expense. After all, it would only mean a loss of revenue of £90,000, and that surely ought to be no ground for refusing the remission. I hope ray hon. Friend will press his Amendment.

Mr. PERRY

I hope the Amendment will be rejected. I think both the hon. Members for South Bradford (Mr. H. Spencer) and Penistone (Mr Pringle) have laid themselves open to very severe criticism and attack when the next Debate takes place on Colonial Preference; they then will find some difficulty in pleading for Preference for China and the Dutch West Indies. I want to oppose the Amendment for two reasons. In the first place, I object to any further encroachment on the estimated Budget surplus of £4,000,000. I remember a former Chancellor of the Exchequer declaring that every Chancellor of the Exchequer should budget, not merely for a single year, but for future years. If there are any more encroachments upon the estimated surplus of £4,000,000 this year it is going to make it most difficult for the Chancellor of the Exchequer to carry out schemes of social reform which are very much in request. I am certain that if this and subsequent Amendments are rejected, hon. Members who sit on these benches will be taunted with voting against a reduction of taxation on the people's food, but we are quite prepared to meet that criticism. The Budget only provides for a, surplus of £4,000,000, and already encroachments have been made on that surplus by the extension of pre-War pensions and by removing certain disqualifications of old age pensioners. It is, therefore, going to be extremely difficult to make any" further encroachments on the surplus, and I hope the Chancellor of the Exchequer will maintain, not only on this but on subsequent Amendments, the position he has already taken up.

Mr. H. SPENCER

I resent very strongly the insinuations of the right hon. Member for Ladywood (Mr. N. Chamberlain) that I seek to favour China and the Dutch East Indies rather than our own Colonies and Dependencies. One of the greatest insults that can be offered to our Colonial friends is to insinuate, as is constantly being done in this House, that their loyalty and affection depend on Tariff Preferences. So far is that from true that I would point out that when we had a system of Colonial Preference we had nothing but bad blood between dif- ferent parts of the Empire. We do not want a recurrence of such things as Mr. Hughes telling Mr. Bruce that he had only touched the Old Country for £3,000,000 when he should have touched it for £17,000,000. That sort of bargaining is altogether unworthy of real Imperial sentiment, and if the right hon. Member for Ladywood and others look upon our Empire in that light, then I am not surprised they talk in the way they do on the subject of Colonial Preference. I am sorry the Chancellor of the Exchequer has not seen his way to accept this Amendment, but I trust that next year, whether we have a Liberal Chancellor of the Exchequer following a Socialist, or a Socialist Chancellor of the Exchequer calling himself a Liberal, this little reform will be brought about so as to promote goodwill between the Mother Country and other nations. Under the circumstances I ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause ordered to stand part of the Bill.

Clauses 2 (Reduced duties on cocoa), and 3 (Reduced duties on coffee, chicory and coffee substitutes) ordered to stand part of the Bill.