§ 4. "That—
- (a) the duties of Customs charged by Section seven of the Finance Act, 1925, for a period of four years beginning on the sixteenth day of August, nineteen hundred and twenty-five, on hops and extracts, essences or other similar preparations made from hops, and the additional duty of
650 Customs charged by the said Section for the said period on beer, shall continue to be charged for a further period of four years from the date on which the aforesaid period expires, except that hop oil shall, as from the said date, cease to be chargeable with duty as a preparation made from hops and in lieu thereof a duty of customs at the rate of twenty shillings the ounce shall be payable on hop oil during the said further period; and
- (b) the additional excise drawback payable under the said Section for a period of four years beginning on the sixteenth day of November, nineteen hundred and twenty-five, in respect of beer shall continue to be allowed for a further period of four years from the date on which the aforesaid period expires; and
- (c) Section ninety-eight of the Customs Consolidation Act, 1876 (which relates to the charging of duty on the quantity of goods ascertained by weight, measure, or strength at the time of the actual delivery thereof), shall apply to hops when cleared from a warehouse for home use."
§ First Resolution read a Second time.
§ Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."
§ Mr. WILLIAM GRAHAM
The Resolution which has been read to the House covers the Income Tax and Surtax—by which latter name the Super-tax is now described—for the new financial year, and I understand that on this occasion a review of the position of the Income Tax and Super-tax in this country is in order. In fact, from many points of view, this will be almost the last opportunity we shall have of discussing a question of this kind prior to the General Election. Already on the placards of Great Britain notices are appearing to the effect that, if we succeed at the coming General Election, taxation will be substantially increased, and there is no doubt that a large part of the appeal of Conservative opponents will turn on an argument of that kind. Accordingly, it is important this afternoon to look at the strict position of our national income, at the actual burden of Income Tax in this country, and at other important considerations, because the cold facts of the situation very seriously modify statements of the kind which are now offered to the public.
What is the income of the British people? We have, as regards the year 1924—the last complete year for which an effective analysis has been made—the view of two distinguished economists, who place it at rather more than 651 £4,000,000,000; and, in an address to a learned society a short time ago on problems of this kind, Mr. A. W. Flux, a distinguished civil servant, placed it at about £3,800,000,000. For our purpose this afternoon it will be sufficient to take the round figure, in post-War conditions—because, as between 1924 and the present day, there has been no substantial alteration—at about £4,000,000,000. The next point is to ascertain what proportion of that great amount of national income comes under the actual review of the Inland Revenue authorities. Fortunately, we are in possession of the last Report of the Board of Inland Revenue, to the 31st March, 1928, and hon. Members will find that the total gross income, as it is called for this purpose, is round about £3,000,000,000, or just a little less than that sum. That is £1,000,000,000 short of the total income of the British people, but, of course, it is much in excess of the actual sum on which Income Tax is strictly applied in Great Britain.
When we turn—and this, of course, is vital to the Resolution before the House—to the actual analysis of the Board of Inland Revenue, we find that, by a series of deductions for reliefs and allowances, and the ordinary provisions of a long series of Acts of Parliament, the actual taxable income is boiled down to about £1,300,000,000. In other words, it is far less than the gross amount which is reviewed for Income Tax purposes in this country. Of course, I do not suggest for a moment that there are not other phases of this question, such as the extent to which the tax is passed on. Problems of that kind we shall notice a little later in this Debate; but, in any event, out of the total of £4,000,000,000, and the gross total for Income Tax purposes of £3,000,000,000, tax falls on a little more than £1,300,000,000.
A few days ago, in defending our position as regards the Budget as a whole, I tried to compare the broad distribution, in existing conditions, of the income of the British people, to illustrate what a very large and very real sacrifice is being made by the overwhelming majority at the present time. We saw that what is called the wage field in British income is not very much more, according to some authorities, than 652 £1,600,000,000. The rest of that vast sum of £4,000,000,000 goes overwhelmingly to a smaller and highly influential section of the community. I do not suggest that it goes to them entirely, but that is the broad, general division. Those are the plain facts with regard to the total national income and the tax burden on it at the present time.
Let us notice the numbers of the people who are affected. The Ministry of Labour tells us that in Great Britain there are about 21,000,000 or 22,000,000 people in gainful occupations; but the number who come under the review of the Inland Revenue Department is not much more than 5,000,000, or under existing conditions, about 4,500,000; and, of those 4,500,000 people, approximately one-half, according to the latest Report, or 2,250,000, are direct payers of Income Tax. I imagine that this number would include also Super-tax payers. Of course, there is no validity in the argument, which is sometimes suggested by those who are opposed to our views, that this small section of the community is carrying the greater part of the annual taxation. We shall show later that that is very far from being the case; but, in any event, this is not numerically the urgent matter that it is sometimes suggested to be, having regard to the fact that there are 22,000,000 people in gainful occupations, and an electorate of 27,000,000 people.
There is, however, another test which we should like to apply when emphasis is laid on the great burden of Income Tax or of direct taxation as a whole. Let it be remembered that what we have to keep in view is not the nominal burden of 4s. in the £, which is the standard rate, but the effective rate—the rate that actually falls on an acknowledged ability to pay, after the allowances and reliefs have been taken into account. It is a rather striking fact that, during even the extraordinary conditions following the War, the effective rate in Great Britain never exceeded, as this Annual Report of the Board of Inland Revenue shows, about 34d. per taxable £, that is to say, a little less than 3s.; and at the present time the effective rate stands at just 2s. in the £, or half the standard rate. We all know the qualifications which attach to the standard rate.
653 There is one further point as regards the large-scale incomes of this country, which I think justifies a great deal of the argument from these benches. In the times of artificial prosperity, during the War, and for the two years immediately after the War, it is not surprising that there should have been a marked increase in the number of Super-tax payers; that is those paying in excess of the old £2,500 limit now reduced to £2,000 per annum. But if there was to be anything like a proportionate sacrifice in the years of depression we should have expected to find either a marked arrest of that tendency in that period or indeed a definite diminution. While the yield from Super-tax did not come up to expectation in the past financial year, taking a review of the experience of recent years the number of Super-tax payers—and I am not forgetting the reduction in the limit—
§ The CHANCELLOR of the EXCHEQUER (Mr. Churchill)
Is that making allowance for the alteration in the value of money?
§ Mr. GRAHAM
I am not dealing with the value of money at the moment but with the actual numbers of Super-tax payers. The number of Super-tax payers increased from 80,000 in the year 1919–1920, to a figure between 95,000 and 100,000 people enjoying these incomes in existing conditions. There is no doubt that the bulk of the income which is covered by that number is something between £500,000,000 and £600,000,000, and I suggest, on the cold facts of the situation, that our case is justified, that in those years of loss and sacrifice a section of the community contrived to maintain and in some cases to increase undeniably their financial power and strength. Those are the broad features of the Income Tax position. The House will naturally turn to a comparison of the actual amount paid in pre-War taxes and what we are likely to pay in times to come. We have always argued, and we do today, that we stand for direct as opposed to indirect taxation. The worst form of indirect taxation is that which falls on the food-stuffs of the people and, accordingly, it is part of our case to see it entirely removed. Luxuries and comforts are in a different category, but in minor comforts there is ample room for a con- 654 siderable reduction. In any case we rest our appeal on the fundamental test of ability to pay, and there can be no doubt that a direct tax comes much nearer to that than any indirect tax can ever achieve.
What are the actual facts of the case? I have no doubt hon. Members will recall the glorious days before the War when an Income Tax of 1s. 2d. in the £ did not produce more than £41,000,000 or £42,000,000 per year. It produced large sums during the artificial prosperity of the War, as it was bound to do. So far as we can judge, and this is the important consideration, it has apparently settled down at some figure between £235,000,000 and £240,000,000 per annum, and if the Surtax is taken into account we are getting from these two sources an amount of about £300,000,000 a year. If that is to be the total I am going to suggest that it is part of our duty—and here we are entirely in the field of administration—to see that the tax is faithfully collected, and in a Debate of this kind the Chancellor of Exchequer should tell us what steps he has taken in the administrative field to attain that result. The House will agree, whatever it thinks of recent Acts of Parliament, that it is singularly unfair to the masses of our people and to the bona fide Income Tax payers if a certain class year after year are able by one device and another to escape their just contributions to the State. What are the facts in this problem? The Royal Commission on Income Tax in 1919—I always regret that many parts of its programme have not been passed—reported that evidence had been taken that in four War years there had been a loss to the National Exchequer of about £100,000,000, due to evasion of one kind and another, but it was only fair to point out that that included an element of Excess Profits Duty. The more cautious figure which was taken and not seriously disputed was that we were losing between £5,000,000 and £10,000,000 a year by evasion or by the inability of a restricted staff to overtake fully a very large and very complicated field. I should like to pay a tribute from this Box to the manner in which the officials are doing their work.
Certain steps have been taken in this field of Income Tax and Super-tax, yielding about £300,000,000 a year, to deal with evasion, but I am afraid they must 655 be much more faithfully applied. In the Finance Acts of past years we have tried to reach that evasion of Surtax and Super-tax by failure to distribute an adequate proportion of company profits. We have noticed the position of people who sell cum dividend and immediately afterwards purchase ex dividend, again for the purpose of evading tax. I think it is the duty of the Chancellor of the Exchequer to tell us in reply to this Debate, how far the steps taken in quite recent times have been effective in preventing leakage under these heads and how far he contemplates; other administrative devices to see that everything is collected. I have indicated that we shall press for a faithful collection of revenue by every device calculated to stop that leakage or evasion, and we shall certainly resist the argument that this is merely another encroachment of bureaucracy in our midst. On every occasion in this House in my recollection since 1918, when steps have been proposed for the effective collection of Income Tax and for the purpose of preventing evasion, all the arguments of anti-bureaucracy have been called into play. That was a marked feature of the discussion on the Revenue Bill some years ago, and it has been revived on every occasion since. I must not in a Debate like this indulge in literary references, but I remember some years ago reading a pamphlet of an Oxford scholar entitled, "Fresh Light on Roman Bureaucracy," and, oddly enough, the very arguments used in this House, especially since 1918, were in substance the arguments used all that time ago in opposition to the tax gatherer, never a popular job, and I suppose they have as much validity now as then. But, in any case, the tax must be collected, and evasion prevented.
I come to another question which, no doubt, will figure largely in the coming Election. Many hon. Members will suggest that the burden of an Income Tax of this kind is, in effect, a penalty on industrial enterprise in this country, and more particularly on that part of enterprise which is conducted by joint stock companies and others. They will suggest that some kind of concession should either be made in the law or in the administration of this part of the tax. 656 We are fortunate in having the detailed view not only of the Committee on National Debt and Taxation, but also the Balfour Committee on this subject. These Reports do not justify the contention of many hon. Members opposite. But on the mechanism of the thing there is a great deal of misunderstanding in public debate. Many seem to suggest that these reserves of profit are directly taxed, whereas, of course, what actually happens is that a company pays tax upon the whole of its profits, and then recovers at standard rate from the debenture, preference or other shareholders in the distribution to which they are entitled, leaving the tax assessed on this reserve in the company's care. The other side of the House has urged that that is a penalty on development of business, or progress, or actually on the provision of employment. I do not want to fall into the error at this Box of suggesting that taxes are not burdens. That is no part of my case.
Comparisons have been made of the amounts put to reserve in Great Britain in pre-War and post-War conditions, and it was part of the criticism of the existing industrial order that it actually put less in normal times to reserve than was done in Germany or America: in other words, they made a more conservative distribution of their profits. It was about one-third in Great Britain before the War, but the latest evidence suggests that it has been increased to one-half. In any event, a recent review of a very large number of industrial undertakings with a profound bearing on unemployment and other important effects, showed that sums of £164,000,000 or more per annum were in fact being put to reserve in this way. The fundamental difficulty in a matter of this kind is that it is quite impossible down below in the principles of this taxation to draw any real distinction between what individuals put to reserve for saving, progress, development or whatever it may be, and what these companies achieve. All real authority has never disputed the fact, that if any concessions of this kind were made, other than such concessions as are in force, it would be virtually impossible to prevent widespread abuse. That view is supported both by the National Committee on Debt and Taxation, and more recently, although more generally, by the Balfour Committee on British Trade.
657 The real fact arrived at is this: It is not so much a question of these reserves as the effect of the Income Tax in Great Britain on the savings of all sections of the people, and more particularly on that section of savings necessary for our financial and industrial equipment. What is the position of savings in Great Britain at the present time? Within recent times, an analysis has been made of what are called the small scale savings, that is, of millions of our people in the building societies, in the Post Office Savings Bank, in the Trustee Savings Banks, in Co-operation, the trade unions and friendly societies and a large number of other bodies. It is found that the aggregate amount of these small scale savings is about £1,700,000,000 or £1,800,000,000. Of course, that looks a very large sum on paper, but the first calculation we have to make is this: It is a sum attributable to many millions, in fact the great majority of our people in so far as they save at all, or have an opportunity to save. In the next place—and this is a vital point—it is only about 12 per cent. of the aggregate wealth of this country, which is a further indication of the relative economic disadvantage of the position of that great body of our people. Moreover, the whole argument of our economists—and I quote them here not in our own movement but in other movements—is that in a healthy society or community there should be greater opportunity for the mass of the people to save, in other words, a better distribution of this opportunity, and the power and security which come from it. When we remember that in post-War conditions and in the depression since 1920 between 7,000,000 and 10,000,000 of the British people have lost between £700,000,000 and £750,000,000 a year in income, we see that their chance of effective saving must have been seriously affected.
All these considerations ought to be taken into account in the optimistic picture with which the Chancellor of the Exchequer tried to introduce his Budget statement. The other side is the side of industrial savings, that is, the amount which is available to-day for all kinds of industrial development calculated to increase employment. That was estimated by the Committee on National Debt and Taxation as something between £350,000,000 and £400,000,000 before the 658 War, and it was thought that if allowance were made for increase in population and the rise in prices, the figure to-day should be perhaps about £600,000,000 and that the actual amount that we were saving in Great Britain was probably £150,000,000 per annum short of that total. We need not be surprised by that. We have had eight years of industrial depression. We have lost 2 per cent. of our place in the world export trade. We have enormous burdens from many points of view, in deadweight debt and in the taxation attendant upon it. All these things are perfectly true, but as industry and commerce recover, these savings will increase. It is no argument at all for failing to impose upon those sections of the community well able to pay an appropriate contribution. And, in any case, it is quite reconcilable with our claim that the savings should be distributed over a much wider field. In this quite brief summary this afternoon, I have tried to outline our position towards this Income Tax problem. We do not dispute that it is a large amount, but we plead, that direct taxation as opposed to indirect taxation is entirely in the national interest.
§ Mr. GRAHAM
£230,000,000 Income Tax or £300,000,000 Income Tax and Surtax together per annum. We do not dispute that these items are £100,000,000 in excess of the total pre-War Budget in this country. We have to look at the other side, however, in the load which Great Britain has to carry, and we will seek every method of genuine economy, and while we have no desire to increase the total burden on the people, it will be invariably our aim to see that it is adjusted to the shoulders of those undeniably able to bear it.
§ Question put, and agreed to.
§ Second Resolution read a Second time.
§ Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."
§ Mr. SNOWDEN
There is a strange reluctance on the part of the Treasury Bench this afternoon to make any explanation of the important Resolutions they are submitting to the House of Commons. One would have thought that 659 when a proposal was made to repeal a tax which has aroused so much trouble and public interest, the Chancellor of the Exchequer would have taken the first opportunity to put before the House some reason to explain this sacrifice of revenue. I suppose that the right hon. Gentleman is waiting for a later opportunity in the course of this Debate. A few days ago he invited me to read some of my old speeches upon a particular subject. Well, I paid the Chancellor of the Exchequer the compliment of spending half an hour this morning in reading some of his speeches about the Betting Duty. I had hoped that I might be able to entertain the House by reciting the hopes and expectations with which this bantling was born into the fiscal system of this country, but the reading of those speeches touched a tender spot in my heart, and I thought it would be cruel, in view of the present apparent feelings of the right hon. Gentleman, to remind him of his high expectations and his disappointed hopes. He stated, when making a brief reference to this matter in the course of his Budget speech, that, when it was first introduced, it was received with enthusiasm and acclamation by practically the whole country and by newspapers so wide in their character as the "Morning Post" and the "Church Times." I remember no new tax proposal in my time which was so opposed on its introduction by all sections and all classes, and especially by those who are interested in the moral and religious welfare of the country, as the right hon. Gentleman's Betting Duty. It was opposed by a considerable number of the Members of his own party, and it is certain—and I am quite sure that the statement will not be contradicted—that had it not been for loyalty to their party and the fear of the party Whip, the opposition to that tax would have manifested itself in the Tory ranks to a still greater extent.
The duty underwent considerable modifications before the proposal reached the stage of the Finance Bill. I am not sure whether in all subsequent Budgets, but certainly in some of them, the right hon. Gentleman has still further modified and changed the tax. Now he comes forward with a proposal to abolish the duty on bets altogether, because it has been, not only a failure from a financial 660 point of view, but, to use his own words, "something of a fiasco." When the right hon. Gentleman first proposed the duty-he estimated a revenue from it of £6,000,000 a year. I am not blaming the right hon. Gentleman for being out with his estimates, because there was no very authoritative material upon which anything approaching to a correct estimate could be made. We had the report of the Committee on betting over which the hon. and learned Gentleman the Member for East Grinstead (Sir H. Cautley) presided, and, if I remember rightly, it was stated in evidence before that Committee that the turnover from betting was something like £25,000,000 a year.
§ Mr. SNOWDEN
The right hon. Gentleman, when proposing the tax, took, I believe, an estimate of £170,000,000. He was wise to discount the figure of the Committee, but the right hon. Gentleman was not content with basing the estimate of this tax upon a turnover of £170,000,000; he made, I believe, a further reduction of something like £50,000,000, and it was upon an estimated turnover so reduced that he expected to obtain his revenue. It has failed. Why has it failed? In view of what I said just now about the absence of any reliable material for estimating the amount of betting transactions, I was one of those, because I accepted the evidence given by the hon. and learned Gentleman's Committee and the figures supplied by the revenue authorities, and indeed, I believe, I said it in this House more than once, who believed that the right hon. Gentleman would get his revenue. He did not. Why? Probably there were many reasons, but the chief reason, I think, has been one which I stated at the time, namely, that of all taxes which ingenuity could have proposed, no tax was so liable to variation or had so many loopholes as one of this character. Betting is a thing that can be carried on secretly and without any very effective measure of public control. It is undoubtedly the fact that the yield of the revenue falling so far short of what was estimated upon the turnover is due to the wholesale evasion of the duty. That fact, as I stated at the time, is the strongest condemnation that can be brought against any public tax.
There is, perhaps, one other reason to explain the failure of the duty to yield 661 the expected revenue. It may be, and doubtless is, that the estimate made by the hon. and learned Member's Committee as to the amount of betting transactions was altogether exaggerated. I hope that is the case, because, if it be so, the magnitude of the betting evil is not so great as was assumed. Whatever may be the reason, as a tax-raising instrument this duty has failed lamentably. The hon. and learned Member stated more than once, I believe, in the course of our discussions that he strongly supported this child of his and that in no country where a betting duty has been introduced has it ever failed as a revenue-raising instrument; the revenue upon it was an expanding revenue. The hon. and learned Member looked to the experience of such a tax in this country as being likely to repeat the experience of the Dominions and elsewhere where such a tax is in operation. He, like the Chancellor of the Exchequer and like myself, with regard to the yield of the tax, has been disappointed.
What are the other reasons which the right hon. Gentleman has stated for making this proposal which the House is now asked to confirm? He said that he was doing it not only, or not altogether because the tax had proved such a fiasco, but he was doing it in order to remove temptation out of the path of the Labour party. Sometimes strange bedfellows are brought together, and we had, it is quite true, at recent by-elections, respectable and very wealthy bookmakers giving what support they could to the Labour candidates, definitely under the impression that the Labour party when it came into office after the General Election would not repudiate the pledges it had given in regard to the repeal of this duty. The right hon. Gentleman realised that the repeal of the duty was inevitable. He has proposed it in this Budget with the expectation, I suppose, of withdrawing from the Labour party very valuable election support. I need hardly say that I never courted the support of the bookmakers. I opposed the introduction of the Betting Duty for reasons which I often stated, and sometimes at great length, when the proposal was before the House of Commons, and those of us who opposed the Betting Duty not merely on its fiscal side but on the ground of our moral objections to the State being in any way interested in such a thing have 662 had to submit to an association with those with whom, I am quite sure, we have not, upon most political questions, any sympathy or anything which would make a real alliance.
However, the right hon. Gentleman is going to repeal this tax, but he is going to raise, he told us, a monument which will perpetuate the remembrance of the right hon. Gentleman's unfortunate incursions into this possible sphere of taxation. He has left the totalisator, and I understand that we shall later be asked to agree to a very small duty upon the bets which are made through this mechanical device, but I would like to say, that I do not think that it will be wise for those who are now putting capital into the erection of totalisators to assume that that is an institution which is going to be permanent. The continuity of policy does not apply to domestic legislation, and it would be perfectly open to a succeeding Government to repeal an Act of Parliament, which, let it be noted, was carried in the teeth of the most strenuous opposition in the House of Commons. The Bill only passed its Second Reading by a majority of two. It never would have passed the House of Commons had it not been that the Government neglected other important legislation in order to find time for the passing of this Measure.
§ Mr. SPEAKER
The right hon. Member must not lead the House into a discussion upon the totalisator policy.
§ Mr. SNOWDEN
I had no intention of doing that. I was replying to a statement that was made by the Chancellor of the Exchequer in dealing briefly with this proposal in his Budget speech. He is retaining the totalisator, and he proposes to impose a small tax upon bets which are carried through that instrument. As a main substitute for the repeal of the Betting Duty he proposes to impose upon the bookmakers a telephone charge of £40 a year, retaining the £10 bookmaker's certificate. I am not sufficiently acquainted with the business side of the betting industry, I believe it is so-called, as to be able to estimate the incidence of this proposed telephone charge, but it seems to me that it is going to work out very unfairly as between bookmaker and bookmaker. I can well understand that a very wealthy firm of bookmakers can afford to pay this charge, 663 but it must be a very heavy charge upon the one-man bookmaker, doing a comparatively small amount of business. I have not heard the views of the betting men upon this matter, but it may be that the right hon. Gentleman has been in communication with them and has received from some of the bookmakers an assurance that this proposed change will not be altogether objectionable. I do not think the right hon. Gentleman has been in communication with the men who are most likely to be hard hit by such a charge.
He proposes, or he expects, shall I say, to raise about £500,000 of revenue by this telephone charge, and the bookmaker's certificate. He told us the other day when announcing the repeal of the Betting Duty, that it had been found that it was not worth while. I told him that when he first introduced it. It would not have been worth while If the tax had realised the original estimate of £6,000,000 a year. It would not have been worth while because of the outrage that the proposal committed upon the consciences of hundreds of thousands or of millions of people in this country. The right hon. Gentleman in the present proposal, for the sake of a paltry half million pounds a year, is perpetuating this very close association between the State and the evil of betting. I say to the right hon. Gentleman that it is not worth while. Why could not the right hon. Gentleman come down to the House this afternoon in a white sheet and admit the complete failure of his Betting Duty? Why could not he in penitence and as an atonement have wiped the whole thing off the Statute Book? That was the only right thing that the right hon. Gentleman could have done, but he has not done it. I suppose it will be left to somebody else to repair the moral mischief which the right hon. Gentleman has done. I said that I was not sufficiently acquainted with what the operations of this proposed change will be; but our objections are of a more general character. They are based on the grounds which we have stated fully in the numerous debates that have taken place in past Sessions, when this Betting Duty has been under consideration. The right hon. Gentleman's tenure in the high office which he has held will be remembered for many things, but this fiasco in his 664 financial career, in addition to the totalisator, will be one of his monuments.
§ Mr. CHURCHILL
Everyone, I am sure, will be pleased and relieved to see and to hear the right hon. Gentleman disporting himself in a sphere where he is not likely to do any serious harm; in a sphere in which he can use that beloved word, which so readily leaps to his lips, "repudiate," without carrying such far-reaching echoes throughout the world. For my part, I should be the last to begrudge him any momentary satisfaction which he may enjoy by gloating upon the failure, upon what I myself called the fiasco, of the Betting Duty. He is entitled to say: "I told you so." He is entitled to claim from the House of Commons the respect and admiration which it should rightly extend to those who have proved to be true prophets. But, of course, in his general attitude towards the taxation which it has been my duty to propose during this Parliament, he has placed himself in a position where in the event of any failure by any chance he certainly would be able to say: "I told you so," because there has been no tax of any kind that has been proposed about which he has not made the most confident prediction of failure. It was not upon the Betting Duty that I would particularly advise him to read his previous speeches; it was upon the Silk Duties that I would advise him to consider what he has said in the past.
I frankly admit that the Betting Duty has not succeeded. What are the reasons? I am not going to embark upon a lengthy discussion of the tax.I come to bury Caesar, not to praise him,or to dispraise him. I have only risen because I did not wish it to be thought that the Government were affording any opportunity for complaint by not sufficiently participating in this tranquil and even lifeless Debate. The main reason why I have felt that we should revise this tax has been the fact that it was honeycombed with evasions. There is no doubt whatever that the bookmaker, the betting fraternity, if I may use such a term in that connection, have been more elusive, less capable of being drawn into the meshes of our fiscal regulations than any other similar body of citizens upon whom it has been sought to lay a burden. Great unfairness arose in regard to 665 the reputable man who had premises, a fixed and definable and recognised position or pitch, which is the expression used in this connection, I think. By the way, the right hon. Gentleman's word "bilked" might really come in here, and might more appropriately have been applied to the bookmakers who have succeeded in evading a tax than to the Government of a friendly country. Undoubtedly, great injury was inflicted upon the reputable bookmaker who paid the tax, because he was actually undercut by his less identifiable rival. Therefore, from that point of view I have felt that it was very difficult to defend the continuance of a tax on turnover.
The right hon. Gentleman said that we ought to make a total repeal of the Duty because it attacks a great moral and conscientious principle which, apparently lays it down that on no account must any fiscal discouragement be placed upon an evil like betting. I never felt myself that there was any sound valid good sense behind that argument, although I admit that it has played its part in public thought. When the tax was first introduced, it was extraordinary to me what little part that argument really played in the opposition to the tax. On the contrary, I received deputations from the Free Churches and other religious bodies who were, undoubtedly, protesting against the tax but who, at the same time, did not conceal from me the dilemma of thought in which they found themselves. It was apparent to me that there was a strong religious and moral feeling which felt that if the total volume of betting could be diminished as a result of an impost placed upon it, the matter was one which was well worth considering in a cool and dispassionate spirit.
These Licence Duties, which will, of course, be the subject of full discussion when we meet again after our excursions in the country, will be easy to collect. I am quite ready to discuss their details if I should still be responsible for them. I am not necessarily absolutely adhering to the exact form of the Clause which will appear in, the White Paper, but in principle all the inquiries which we have been able to make from a very large section of the betting industry have led us to believe that this revised form of Duty can quite easily be collected, and without undue hardship. Take the case 666 of the bookmaker who deals with very small sums of money and uses a single telephone for that purpose. That question has been raised, but for the present I rest myself upon the Duties, as they are set out in the White Paper, and I have no doubt that the revenue that I have mentioned can be raised in this way.
As to the totalisator, the right hon. Gentleman is going to repudiate that as well as other things. He has endeavoured to throw, as far as possible, that element of uncertainty over the initiation of this new instrument which he is so ready to cast over so many spheres of our daily life and of our fiscal law. We all know how he has declared that there is a whole series of duties which I shall not mention, which he is going to repeal if he has the chance. Industries are kept in a state of uncertainty as to their development because of his indulgence in pure political partisanship; and no doubt in those few words he has done the best he can to do as much harm as is possible in impeding the introduction on our racecourses of an instrument which undoubtedly will have a most cleansing and healthy effect upon the whole life of racing in this country, and also upon the conditions and the character of our racecourses. It is only a small blow that he can strike, and a blow at only a small object, but he strikes it, with that universal malevolence which seems to have taken hold of him at this moment—and quite unaccountably, for he tells us that he believes he will soon be in a place of power and authority, and one would have thought that he would have been mellowed by the prospect and put into a good humour, and also restrained by a sense of approaching responsibility. Notwithstanding that, he chooses to cast this universal web of malevolence, prejudice and uncertainty over a wide field, and in that wide field he has not ignored the smallest as well as the greatest things.
§ Mr. SCRYMGEOUR
I want to make reference to a point which has been made on the moral aspect of the question. The Chancellor of the Exchequer has referred to the fact that certain religious organisations have made protests against this duty, but he said that at the same time they had some consideration for the possibility of the duty perhaps restricting 667 the evil. My recollection of the protests which were made is that the strength of the protest rested on the argument that the duty was a departure from a great moral principle, and that to adopt the duty would be in a large degree rather to establish this unfortunate power for evil in the country than in any way to restrict it. The Chancellor of the Exchequer, as I expected, followed up what right hon. Gentlemen had said from Opposition benches by pointing out the possibility of the Opposition falling into the same unfortunate depths as he himself has fallen into.
I should have liked to hear from the right hon. Gentlemen on the Opposition benches not only that they would support the repeal of the duty, but also that they would oppose the proposed alterations in the charges to be made, and that they would go further and declare that, if they came into office and power, the Opposition would proceed, as the Government of the day, to adopt a line of action which the Chancellor of the Exchequer has himself admitted in this House could easily be taken, namely, to bring in and pass through the House a Bill for the complete prohibition of the whole gambling and betting business in the country. The truth is that the departure made by the Government has gone along such lines as to establish, not only the totalisator, but also the Government Control Board, whereby in very direct fashion, by the ministerial appointment of representatives on that Board, we have direct and conclusive proof of criminality arising in the country through betting and gambling, and that by the direct incentive of the Government of the day. That situation, I feel, has to be emphasised far more emphatically than has yet been done in this House. The present question of whether the proposed duty itself will be an improvement on the old duty is unimportant; the real point is the far greater tragedy that the Government, particularly a Government with the designation of Conservative, has sunk so low as to adopt a plan which goes down to the very lowest depth of profligacy by the encouragement of, and the extraction of money from, that which is known to be to the working classes a formidable force, bringing them into great disaster, and then, taking it into a diff- 668 erent level of society, going to the Stock Exchange, with immeasurable results, the effects of which will be seen to be prevalent in many phases of society.
§ Mr. SCRYMGEOUR
So far as opposition in this House is concerned, I did my share in opposing the duty, and, if I am returned to the House of Commons, I shall certainly do my best in the future if the Government bring forward any such measure. Indeed, I am doing it now; I am endeavouring to give an incentive to the Labour party, so that, it they come into office, they will not only proceed with the repeal of the proposed alteration in the duty, but that they will stand as a Government, as they ought to stand, for the carrying through of a measure for the prohibition of the whole gambling and betting evil in the country.
I want the Labour party to take cognisance of the fact that the Chancellor of the Exchequer has himself challenged the Labour party on this score. While they were going into the Lobby with the present speaker in opposition to the duty, the Chancellor of the Exchequer said, "I challenge the Labour party that they are not really going to take the logical stand which the Member for Dundee has done, by actually proposing and going forward with the prohibition of the evil." Upon that occasion, the Chancellor went further and answered the expected point as to the impracticability of the proposal. He said: "I say you can do it," and he proceeded there and then to explain exactly how it could be done: by stopping it in the Press, stopping it in the post, and laying down quite clearly what should be done, "if," he said, "you have the courage to face it."
I do maintain that if there is an issue of moral importance to be submitted to the country at the coming General Election, this is that issue. The whole of the moral forces of our country have a great opportunity. The Churches, and the general forces which stand for the propagation of the moral interests of the nation, ought to enter the arena with an emphatic demand to the politicians who claim their votes that this thing shall be faced with courage, with determination, and with the application of principle, not 669 simply to exact revenue from it, but to cut it out. I do not agree that the Government propose this in any way to restrict the evil, and I am sure that the Chancellor of the Exchequer does not put forward that contention. He had the expectation of raising at any rate about £6,000,000. He admits that that is found to be impossible, but that was his proposal. If you are going to sink to such depths for political profit, you have another system in the country known as prostitution. Is the Conservative Government going to deal with that evil on a similar basis?
§ Mr. SPEAKER
May I remind the hon. Member that the Resolution before the House is simply to repeal the Betting Duty?
§ Mr. SCRYMGEOUR
Yes, but at the same time the Chancellor of the Exchequer, as well as the right hon. Member for Colne Valley (Mr. Snowden) has made reference to the totalisator, and to the Control Board.
§ Mr. SPEAKER
I interrupted the right hon. Member for Colne Valley immediately he raised that question, and I told him that he must not deal with it.
§ Mr. SCRYMGEOUR
That is quite true, but the Chancellor of the Exchequer paid no attention to your restriction, and went on to deal with it. [HON. MEMBERS: "Order, order!"] It is the Chancellor of the Exchequer who is out of order, not I.
§ Mr. SPEAKER
The Chancellor of the Exchequer only replied to the points to which the right hon. Member for Colne Valley (Mr. Snowden) had already referred, and nothing more. If he had gone any further, I should have stopped him at once.
§ Mr. SCRYMGEOUR
The discussion of the proposal to repeal the duty has proceeded, from both the Opposition Front Bench and from the Government Front Bench, on the footing that the tax has been a failure, and that there is to be the substitution of fresh proposals. I am taking that line. Fresh proposals are to be put forward. I assume now from your definite ruling, Mr. Speaker, that I cannot proceed with the line of argument as to what sort of fresh proposals may be made nor even to deal with the actual fresh proposals, so I confine myself to 670 this, that the repeal of this duty is not a departure from the course previously taken by the Government because of any immorality involved in the thing itself, but that there has been a failure so far as the amount of money produced is concerned, and now there is a substitution of certain charges which will produce a very much less amount. I submit that the Government are still in the pillory; the Government have still to face this indictment, that a Conservative Government which makes such extravagant publication on political platforms and from the political hustings about evils which they have abolished, is guilty of such conduct as this. The Chancellor of the Exchequer is seeking to get some hundreds of thousands of pounds out of that which is producing the degradation of our country among all sections of society, and, if there is anything which shows the absolute humbug of the whole situation and what a travesty is that which we call our political business in this country, that is it. You do not put that upon the hustings as developments which you have achieved; there is nothing on the great posters in the country telling us about the raising of the standards on the racecourses, or the machine which the Chancellor of the Exchequer says is for cleansing them. God help us! The totalisator—
§ Mr. SPEAKER
I have already told the hon. Member that he must not raise the question of the totalisator.
§ 5.0 p.m.
§ Mr. SCRYMGEOUR
I am sorry to have raised that standard in any way at all. I will leave it at that. I am sorry to be under a difficulty about getting at it in the proper way, but I simply want to emphasise that no opportunity of this kind should be missed, when a Conservative Government with a powerful majority makes an acknowledgment that so far as monetary results are concerned, this tax has been a failure, but they have still got to endeavour to extract something out of this iniquitous source of evil in the country. I was just on the point of submitting that, if proof were wanting, this was proof of the abject cowardice of the Government on a great moral issue. You ought to have special posters all over the country showing what the Government have done regarding gambling and betting, so that the people can really 671 understand what a Conservative Government means, and what it has come to. Talk about Primrose Day celebrating the memory of Beaconsfield! Beaconsfield did have some records, and remarkably good records, of helping the interest of the working-classes in the years between 1874 and 1880. That is true. I should be very much surprised if any-one who wished to honour the memory of Beaconsfield would say that he would have descended to the position to which the Conservative Government of to-day have sunk by proceeding to the racecourse to carry through the system, while failing to grapple with the thing from the logical point of view. The Government are only playing to certain class elements—a common procedure for a Conservative Government—and that in itself constitutes a powerful argument why the Conservative party should receive a smashing blow at the General Election.
§ Sir FRANK MEYER
This time I do not think that I can honestly repeat the congratulations that in the past I have offered to the hon. Gentleman who has just spoken, for his sincerity. On this occasion I think he has completely stepped over the border-line. He has followed the example of an hon. Gentleman who sits on the Front Opposition Bench—I think it is the hon. Member for Caerphilly (Mr. Morgan Jones)—by dragging in a loathsome practice known all over the world—I shall not mention the name—and trying to insinuate that because the Conservative party has tried to draw a revenue from the taxation of betting and the diminishing of betting, it would be likely to try to draw a revenue from that loathsome practice, the traffic in women. I appeal to the hon. Member to control not only his tongue but his mind before he makes such a disgraceful charge across the Floor of the House.
§ Sir F. MEYER
I am sorry that any man's mind should sink so low as to make such a charge and even to believe it. The hon. Gentleman has tried to encourage all those who sit around him to adopt as an election cry the suppression of betting altogether by every possible legislative enactment. The number of 672 people sitting around him is evidence that that particular movement is not likely to have very great success. There is a challenge which I and others have thrown out to the Labour party on many previous occasions when they have adopted the high moral attitude with regard to this tax. Obviously if hon. Members do not believe that it is right to draw a revenue from the taxation of betting, although they are prepared to do so from the taxation of drink, they should go into the highways and byways and say, "We will prohibit betting and make it illegal. We will stop the publication of betting odds in the papers; we will prosecute people in every possible way under the present law, and if we get into power we shall amend the law to make betting impossible." I know very well that the Labour party will never do any such thing. However sincere the hon. Member who has just spoken may be on that topic, when the Labour party adopts the high moral tone about betting it is talking mere cant and humbug. We have heard from the hon. Gentleman that the tax is degrading the whole Empire. I advise him to pay a visit to some of the outlying parts of our great Empire, to Australia and India and other countries. He will find the same source of revenue there. He will find Governments and very often Labour Governments—there have been several in Australia in the last 20 years—drawing a revenue from what he calls "this loathsome vice." I advise the hon. Gentleman to be a little more careful before talking about this Government being the first to degrade the Empire.
§ Sir F. MEYER
That may be true, but at present we are discussing betting, and I should be out of order if I discussed anything else. The right hon. Gentleman who opened the Debate was anxious to disclaim any association with the bookmakers of this country. He did not want their help; the help that he got had come to him against his will. It seemed rather strange, for one who was anxious to be dissociated from this wicked fraternity, that he held out very considerable inducements, in the course of his speech, to that same fraternity not 673 to withdraw from their present and more recent allegiance to the Labour party. He told us in effect, "It is quite true that the Chancellor of the Exchequer is doing away with the turnover tax, but is still maintaining a licence duty and is putting on a telephone duty. If we are returned to power we will do away with all that." He went further. He knows that a certain section of bookmakers, not the most reputable or the most intelligent, are averse to the introduction of that machine the discussion of which Mr. Speaker has ruled to be out of order. But the right hon. Gentleman definitely said that if the Labour party came to power they would do everything that was possible to prevent the erection of these machines. So it seems to me that the theorists of the Labour party, much as they regret the unasked-for assistance of the bookmakers, are still angling for their support in a less direct way, and are still grateful for the motor cars and assistance that the bookmakers give.
I have taken a small part in every one of the Debates on the Betting Tax since the Chancellor of the Exchequer first introduced it. It is a source of gratification to me that for the first time I am able to thank the right hon. Gentleman for what he has done rather than to blame him. Without undue elation I can remind the House that four years ago, when the tax was first introduced, I was the only one, in spite of the claim of the right hon. Member for Colne Valley (Mr. Snowden), who pointed out that this tax, although in theory it might be excellent, was impossible of collection. I actually explained then the exact process by which I believed the dishonest bookmaker would evade the tax. I was laughed to scorn. The Chancellor of the Exchequer said that his Customs officials were up to a dodge like that, and that every clerk in every bookmakers' office would he a potential spy. It has turned out as I prophesied, and not as the right hon. Gentleman said. I am very grateful to him for so honestly and candidly admitting now that the tax was a fiasco. But what a pity that at that time the right hon. Gentleman was not prepared to take the advice of those who were frank enough to inform him that they had some practical knowledge of this detestable practice—I am not ashamed to admit 674 it, and there are hundreds of people in this House who would be humbugs if they said they were ashamed to admit it—rather than the advice of people like my hon. and learned Friend sifting behind me, whose knowledge of this subject was purely theoretical and was obtained from hearing evidence and examining witnesses and so on.
§ Sir F. MEYER
I do not say that this scheme is the one that the hon. and learned Gentleman recommended, but he told the Chancellor of the Exchequer to go ahead, and that if he went at it hard enough he could force the bookmakers to pay and could catch the defaulters. I am saying that if the Chancellor of the Exchequer had taken the advice of practical people rather than of theorists, he would never have found himself in the unenviable position in which he finds himself to-day, of having to revoke the tax. The question has been raised whether the bookmakers can afford to pay this telephone duty. I was very glad to hear the Chancellor of the Exchequer say that he would be quite open to persuasion and discussion on the matter. I certainly think the principle of the substitution of the telephone tax is a sound one, and that it would be difficult to find a reputable bookmaker with an office who, if he could not pay £40 a year, would be certain to pay his clients after he had had a bad meeting. There are some small bookmakers, honest, dealing with small bets, to whom a charge of £40 a year, plus £10 for a licence, is so heavy as to make it impossible for them to carry on their trade, but if they have been proved to be honest in the past I hope the Chancellor of the Exchequer will be prepared to consider their case and to make the necessary modifications to meet it.
§ Mr. SNELL
I would not have risen had not the hon. Member for Yarmouth (Sir F. Meyer) felt it necessary to introduce into the atmosphere of this discussion a tone which does not help us to agree upon this problem. I do not at all accept the mock indignation which he attributed to certain remarks that have been made during the discussion. We know that at Yarmouth they are rather able to draw red herrings across 675 the track so as to divert people from the real point of view. The thing that strikes me as being important in this matter is just this: Whenever a Chancellor of the Exchequer wants to do something which he thinks will please the country he does something which we on this side want; that is to say, be does something that we have popularised and stood for. I confess with very great humility that it pains me to have to agree with the Chancellor of the Exchequer in what he is doing to-day. We protested before this tax was put on, not when it was on. I have never had "a shilling on" in my life, on anything, not even on the number by which the Conservative Government is to be defeated at the next election. That is a rare temptation, but I shall avoid even that. I have taken that attitude, rightly or wrongly. The hon. Member may think it is hypocrisy or may think it is mere mockery and pretence, but to me at any rate it is a very real thing.
I happen to believe that persistent betting is a very great evil, and I think it is the duty of people in public life to try to set an example, by personal habit, in what they wish the nation to do. So I say that I think the hon. Member had better let that aspect of the discussion alone. The point that induced me to rise was the question of the prohibition of betting. The hon. Member said "If the Labour party does not believe in betting, why does it not prohibit betting or seek to prohibit it?" The reason is perfectly obvious. No legislation can go in advance of what the people of a nation want. We in this House are not in the habit of passing legislation which cannot be enforced, which cannot be administered if we pass it. I have the greatest objection to reducing the moral standard of our laws by passing merely dramatic Acts that cannot be administered when passed. That is sufficient answer. I do not believe in betting but many people practise it and we have to wait until the time comes when we can teach them better. In regard to the totalisator I shall watch the experiment with a great deal of interest.
§ Mr. DEPUTY-SPEAKER (Mr. James Hope)
It has been ruled that the totalisator cannot be discussed on this Resolution.
§ Mr. DEPUTY-SPEAKER
Yes, but immediately on referring to it, he said that he knew he could not pursue the subject.
§ Mr. MACQUISTEN
I am pleased with the remarks of the last speaker because he recognises that there must be sanity in dealing with this question, and that it is a sound principle in legislating, especially on matters where any question of morals emerges, that you must not go too far ahead of the general feeling of the community. I contrast that speech with the intemperate speech made by the hon. Member for Dundee (Mr. Scrym-geour). It is a curious thing that temperance advocates are always intemperate in their language.
§ Mr. MACQUISTEN
No, the hon. Member goes all out for prohibition, but, in that, he is doing what the last speaker warned us against—he is going entirely in advance of public feeling in regard to that particular matter. Like the last speaker, I regard betting as a foolish thing, and I do not indulge in it.
§ Mr. SCRYMGEOUR
May I point out that we must first advocate and carry a proposal in the country before it can be carried in Parliament.
§ Mr. MACQUISTEN
There again the hon. Member makes a mistake. He ought to have learned from the Old Book that, in moral matters, reformation must proceed from within and not by coercion from without. The teaching is as old as the Old Book that the Kingdom of Heaven is within, and it is not to be attained by outward compulsion. When the hon. Member suggests the stopping-of betting by compulsion he is seeking to undermine the moral nature of mankind. The hon. Member has not got away from the view that you can club people over 677 the head for doing what he thinks they ought not to do. He confuses morality with the policeman. He has the moral point of view of a plain-clothes Hyde Park policeman.
§ Mr. DEPUTY-SPEAKER
These seem to be very controversial matters to arise out of a simple proposal for the repeal of the Betting Duty.
§ Mr. MACQUISTEN
I shall not pursue the subject of the dangers of prohibition. I voted against all these betting proposals—including this machine which I must not mention because it is supposed to be out of order. I have no interest whatever in betting but when the Betting Duty was proposed I recognised that there was no half-way house between the complete recognition of betting and leaving it alone altogether. That is what the legislation has done for generations. The legislature has said, "If one man likes to have a bet with another on the colour of somebody's eyes, or on a man's stature, or on the speed of a horse, or on a race between two cockroaches or between a hare and a tortoise or anything else, we cannot interfere; but we shall never allow the law courts to be used for the recovery of debts arising out of such matters." The law courts refused to take cognisance of sponsiones ludicrae, that is, idle games. The courts were not to be used for to decide questions about idle amusements. That is an understandable position. But if we are going to use all the forces of the law to prevent one man making an idle bet with another, we will have one half of the community employed in checking and spying against the other half and as I have said, we will be undermining the moral nature of the people.
The hon. Member for Dundee is logical. He is a prohibitionist. I believe he has said on the platform that he would not allow the Government to have any taxes on excise-able liquor, because they are in partner ship with the devil in exacting such taxes. That is the reason why the hon. Member has been returned for Dundee, a town which persistently refuses to go "dry." They said "We will at least get our liquor cheaper." The hon. Member is, unconsciously, the arch-apostle of cheap drinking. There is no possible way of dealing with betting other than those I have said. There has been a good deal of abuse of bookmakers in connection 678 with this matter but the bookmakers only evaded the Duty because they felt that it was inequitable and the Government did a far more unfair thing to the bookmaker—and a far more dishonest thing—than any bookmaker did in evading the Duty. It was decided in a court of justice that if a bookmaker made a bet of £2,000 and his client failed to pay him, he could not recover the amount but he was, none the less, still bound to pay the Duty to the Inland Revenue. That was a wicked and infamous state of the law and of course the bookmakers felt that they were not getting justice. It was an extravagantly unjust proposal to make. It was like charging a housebreaker with Super-tax on the proceeds of a jeweller's shop which he had unsuccessfully tried to burgle.
That is why the bookmakers set themselves to evade it. Some of them could wholly evade it and others could not. As I have said, however, there is no halfway house between leaving it alone altogether and going the whole hog and making it a completely legalised business, which would be a fearful business and a nuisance to all of us and would keep the law courts very busy. But there again, you would be legislating far ahead of public opinion. We cannot have prohibition of all the things that we look upon as evils. I would like to see a prohibition on the sale and publication of Sunday papers which do more to demoralise the mass of the community than any other form of Sabbath desecration. Why does not the hon. Member for Dundee come forward with a proposal of that kind? There is only one Sunday newspaper I think and that is the "Observer"—
§ Mr. MACQUISTEN
I do not pursue the matter. What has struck me particularly in this Debate is the attitude of the right hon. Gentleman the Member for Colne Valley (Mr. Snowden). He is a very cunning gentleman. I remarked how he washed his hands of this evil and made broad his phylacteries and trimmed the hem of his garments, and thanked Heaven that he was not as these bookmakers and had nothing to do with them. But if ever I heard a bid made for the 679 motor cars of Battersea and for the votes and the assistance of the bookmakers, it was his speech because he said in effect to them: "We will go further than even the Chancellor and relieve you of all the burdens he has laid upon you."
§ Mr. MACQUISTEN
The only thing we have to thank them for is the presence here of the hon. Member for North Lanark (Miss Lee) who got in with the bookmakers' support. Now, having once tasted the bait, and having found how valuable is the support of this sporting section of the community, who are a virile section of the community, hon. Members opposite are making a bid for more of it. It was because they felt that they were not getting fair play that this section turned on the Conservative party and now the right hon. Gentleman the Member for Colne Valley says to them, "We will not only take off any tax but we will destroy this new rival which is coming up against you—this betting machine—but, at the same time, we wish the public to understand that we regard you as people with whom we can have nothing to do." I object to hypocrisy on any of these benches but I think I have never had a more signal example of it than the speech of the right hon. Gentleman the Member for Colne Valley.
§ Question put, and agreed to.
§ Third and Fourth Resolutions agreed to.