HC Deb 01 May 1928 vol 216 cc1514-8
48. Lieut.-Commander KENWORTHY

asked the Chancellor of the Exchequer if he is aware that the petrol companies ordered an increase of 4¼d. per gallon on petrol on the morning following his Budget statement; whether the imposition of this extra farthing was taken after consultation with him; and, if not, whether he proposes to take any action?

The CHANCELLOR of the EXCHEQUER (Mr. Churchill)

I am aware that the price of petrol has in many cases been increased by 4¼d. a gallon, but the Treasury is in no way responsible for the extra farthing. I had, however, been informed that in the event of a duty the oil companies would find it necessary to make some addition to the tax in order to meet the extra expense of distribution, of lying out of the duty during the period between payment and recovery from their customers, and of the loss of duty on the proportion of spirit which is lost by evaporation and wastage after duty has been paid. It must be observed that when the former petrol duty of 6d. a gallon was removed in 1920, the companies reduced the price by 7d. and not by 6d. a gallon.

Lieut.-Commander KENWORTHY

Is the right hon. Gentleman aware that this farthing per gallon means an extra payment to the companies of about £1,000,000 a year? Is it suggested that the cost of collection, etc., mentioned by the right hon. Gentleman will involve £1,000,000? Is he further aware that it is common knowledge that the petrol companies are going to make over this Petrol Duty?


Of course, whenever a new tax is imposed, certain reactions follow which are or ought to be corrected by the course of the market; but in any case the Exchequer cannot accept responsibility for anything beyond the exact amount of the duty which has been imposed.

Lieut.-Commander KENWORTHY

Did the right hon. Gentleman get any assurance from the companies as to not putting up their price over and above the duty?


I have stated in my answer that the companies informed me that they would require to make an addition. I have no responsibility for that.


In the event of the Budget Resolution being defeated, can the right hon. Gentleman say what steps I can take to get my money back from the petrol companies?


Should such a disaster occur, I should be very glad to see in what way a lifeboat could be sent out to the hon. Member.


In regard to the question of evaporation, are we to understand that there has been greater evaporation since the duty was put on?


No, but such evaporation as takes place, is on the basis of a commodity which has 4d. added to its value.

50. Viscount SANDON

asked the Chancellor of the Exchequer whether it is proposed to admit Empire hydrocarbon oils free or on a reduced scale of duty; and, if so, what will be the amount of the duty?


Careful consideration was given to this point, but the practical benefit of preference in the case of hydrocarbon oils would be negligible, while the complication which it would introduce into the working of the tax would be great. I have therefore decided not to propose a preferential rate of duty.

52. Lieut.-Commander KENWORTHY

asked the Chancellor of the Exchequer whether he has received a resolution, passed unanimously by the Seed Crushers' Committee of the Hull Incorporated Chamber of Commerce and Shipping, protesting against the proposed application of Excise duties on hydrocarbon oils on the grounds that it will increase the cost of production for cattle-feeding cakes where much petrol is used; if he is aware that Hull is the largest centre in the world for this industry; and whether he will consider exempting from duty oils used in extracting cattle-feeding stuffs?


I have already received representations on this subject from the hon. Members for Darwen (Sir F. Sanderson), Kingston-upon-Hull (Mr. Lumley) and Howdenshire (Major Carver). I regret that I cannot agree to exempt any particular industry from the operation of the tax on light hydrocarbon oils. Moreover, as regards this particular case, I am advised that the effect of the duty on the cost of the manufacture of cattle feeding cakes should be negligible as the petrol used as a solvent in the extraction process can be and is recovered, and is available for further use with but a very small percentage of loss. I understand that the price of cattle cake as supplied to the farmer is from £8 to £13 10s. a ton. The additional cost of manufacture due to the duty on solvent lost should not, I am advised, exceed about 4d. a ton.

Lieut.-Commander KENWORTHY

Is the right hon. Gentleman aware that a number of the leading members of the trade in my own constituency—which is a great centre of this trade—put the extra price at a great deal higher than 4d., and is he aware that the competition from abroad is exceedingly keen and that, if our raw material is taxed, it will simply mean that orders will go to Denmark or Germany, with loss to this country?


When the rating relief scheme is in operation, the manufacturers, who reside in the hon. and gallant Member's constituency, will probably receive a substantial relief which will more than offset this extremely small addition to the cost which is contemplated.


Is the right hon. Gentleman aware that one firm in my constituency alone uses 10,000 gallons of petrol a week, and that this is a very considerable increase on the cost of production?


That increase on the cost of production must be considered also in relation to the very wide variations in the price of cattle cake as supplied to the farmer, which ranges between £8 to £13 10s. a ton. It must also be considered in relation to the substantial relief to productive industry which it is the object of the policy of His Majesty's Government to procure.


Is the right hon. Gentleman not aware that on a previous occasion when a tax was placed upon petrol, a rebate was given; and is he also aware that the cost per ton of manufacture is in fact between 4s. and 5s. a ton, and, inasmuch as the extractors work for a profit of 2s. 6d. a ton, it will not only increase the cost of foodstuffs in this country to the farmer, but will also have the effect of sending business to Germany which also supplies the Scandinavian countries?


I am well aware that the old petrol tax of 6d. was ruined as a fiscal instrument by the introduction of an enormous variety of exceptions of this kind and that kind, each exception leading to another, and many of them leading to evasion and leakage in connection with the tax. I am quite sure, whatever other opinions the House may form of the Oils Duty, no evasion of the integrity and sanctity of the petrol tax can be admitted.


asked the Chancellor of the Exchequer whether his attention has been drawn to the fact that some retailers have increased the price of benzol mixture by the same amount as pure petrol; and whether he has made any estimate as to the amount of duty actually paid per gallon of this mixture?


The answer to the first part of the question is in the affirmative. As regards the second part, if the benzol is imported or derived from imported materials it is liable to the same rate of duty at petrol. Only benzol produced from indigenous materials is free of duty. It follows that if the benzol in the mixture is imported or derived from imported material, the mixture will have paid the full rate of duty, but that if the benzol is derived from indigenous material, the duty paid on the mixture will vary with the proportion of duty-free benzol contained therein. I understand that benzol mixtures contain about one-third benzol, so that if all the benzol is duty-free the amount of duty paid per gallon of the mixture is 2⅔d. as compared to 4d. per gallon in the case of mixtures containing dutiable benzol.


What steps is the right hon. Gentleman taking to prevent this unjustifiable increase in the cost of indigenous benzol?


I set out to offer some encouragement to the production of home developed oils, including benzol, which is a most important subsidiary product of the scientific process, in which progress is being made, of extracting oil from coal. I accept, as the basis of the policy, that there should be an incentive both upon consumers to buy and on producers to produce those commodities which are extracted from coal. Of course, if the House takes a different view as to the assistance to this development in the coal industry, then, I agree, my argument is invalid.


Does the right hon. Gentleman consider that it is an inducement to the consumer to buy to have 4½d. a gallon put on as the result of this tax?


Well, Sir, I think that the present relation between benzol mixture and ordinary petrol is likely to give the turn of the market to the benzol producer, and if, of course, the House deliberately considers that we ought not to give these incentives to the liquefaction of our coal deposits, that would be another matter, but that is our policy for good or ill, and, as a matter of principle, if you have a decision of that kind in principle you must face the reactions which result therefrom, whether they be pleasant or unpleasant.

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