HC Deb 11 April 1927 vol 205 cc89-90

Now I pass to that familiar branch of our fiscal policy known to history, despite the wishes of its parent, as the "McKenna Duties." These are duties on imported foreign luxuries. Under them all parts and accessories of a motor car except one were, upon the authority of Mr. McKenna, and the other leaders of the Liberal party past and present, protected, for revenue and other purposes only, by a 33⅓ per cent. ad valorem duty. Tyres alone were left outside. Originally, as these duties were conceived by Mr. McKenna, by Lord Oxford, and by the right hon. Member for Carnarvon Boroughs and the right hon. Member for West Swansea (Mr. Runciman), they included a tax upon imported tyres. Tyres were an integral part of the original McKenna Duties, but at the last moment they were excluded, for the sake of a friendly arrangement with the tyre producers of the United States, to facilitate our blockade arrangements against Germany by passing all American tyres through our hands before they reached the Continent of Europe. I propose, alike in the interests of symmetry and revenue, to rectify this anomaly, and to perfect the work of Mr. McKenna and his colleagues by bringing imported motor tyres of all kinds within the ambit of the McKenna Duties as from to-morrow. Empire tyres will receive a rebate of one-third.

I have made some inquiries of the principal authorities in the trade as to the effect such a Duty is likely to have on prices. Their reports are encouraging; but I will not go further than to say at the present time that it will be very interesting to see to what extent, if any, this Duty is subsequently reflected in prices. An important foreign firm, that of Michelin, has already, in intelligent anticipation of such a development as has now taken place, begun to build a considerable factory in this country, and an American firm I am told, is likely to do the same. Therefore, there appears to be no danger of any lack of healthy competition between producers. The extension of the McKenna Duties to cover tyres is estimated to yield £700,000 this year, and £750,000 in a full year.