HC Deb 26 April 1934 vol 288 cc1906-12

9. "That for the purposes of paragraph (d) of sub-section (1) of section two of the Finance Act, 1894, where an annuity or other interest has been purchased or provided by the deceased, either by himself alone or in concert or by arrangement with any other person, the extent of any beneficial interest therein accruing or arising by survivorship or otherwise on the death of the deceased shall be ascertained and shall be deemed always to have been ascertainable without regard to any expectant interest the beneficiary may have had therein before the death."

First Resolution read a Second time.

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

3.53 p.m.


I hope the right hon. Gentleman the Chancellor of the Exchequer will be good enough to explain what this Resolution does. He told us earlier that it was to readjust certain difficulties between the West Indies and Canada in the operation of Empire preference, but to follow exactly how it does it by the mere reading of this document is difficult, and I am sure he would not like the House to pass anything without a full understanding of what it is.

3.54 p.m.

The CHANCELLOR of the EXCHEQUER (Mr. Neville Chamberlain)

I thought this was one of those Resolutions which would be thought to be self-explanatory, but I will very gladly add a few words to what I said on the subject in my Budget statement. There is no question of principle involved here. It is a change of form of the existing Colonial preference, and it is designed to meet a difficulty which has arisen in connection with the depreciation of the Canadian dollar. The original form of preference was intended to make no change in the destination of sugar exported from the West Indies, which largely was taken in Canada, but, owing to the depreciation of the Canadian dollar, the effect has been that the Canadian preference has become less valuable than the British preference, and the result of that has been that a constantly increasing amount of West Indian sugar, instead of going, as formerly, to Canadian refineries, has come to this country. That has been embarrassing both to us and to Canada, and we desire now to free the preference from any bias of that kind and to leave it in such a form that the West Indian sugar can go freely to Canada or to this country, according as the normal trade demands require. That is the explanation of the purpose of the Clause, and if the hon. and learned Gentleman needs any further explanation, I shall be happy to see if I can give it.

Question, "That this House doth agree with the Committee in the said Resolution," 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."

3.57 p.m.

Lieut.-Colonel ACLAND-TROYTE

May we have an explanation of what the Hydrocarbon Oils Duty does? Some of us spent a long time last night trying to understand it, but we could not make head or tail of it. Is it an extra tax on oil?

3.58 p.m.


Paragraph (a) of this Resolution deals with the use of hydrocarbon oils in refineries otherwise than for refining in the ordinary sense, and ancillary purposes. Except in one or two cases, the paragraph does not alter the existing practice for duty purposes in regard to any oil refinery or other undertaking. It merely stops a leakage, which is at present small, but which might easily become more serious. As the law now stands, in the case of a bonded refinery, only oil delivered from the refinery is chargeable to the Oil Duty, so that any oil used inside a refinery and not delivered from a refinery as oil is exempt from duty. It has been found that certain refinery concerns are treating crude oil by a kind of refining to produce not oil but gas, and new processes are in sight for manufacturing various chemical products from gases obtained from oil. Therefore, as matters now stand, in these cases the oil used in making the gas goes free of duty, and that is the leak that we desire to stop. The effect of paragraph (a) therefore is, that oils used in refineries are to pay duty except when, as set out in the proviso, they are used for refining in the ordinary sense.

Paragraph (b) enables the case of the refinery which produces gas and not oil to be dealt with in the simplest and most obvious way, by providing that the duty shall be paid on oil before it comes into the refinery, instead of, as is now the case, the duty being paid on oil leaving the refinery. Paragraph (c) alters the basis of assesment of duty on heavy hydrocarbon oils which are artificially heated from actual gallons, as now, to gallons of a standard temperature of 60 degrees Fahrenheit. Artificial heating, of course, increases the bulk of the oil, with the consequence that duty has to be paid at a higher rate than is conceived to be just. The fixing of the rate upon a standard temperature will remove a slight grievance and will make the duty conform with trade practice. The House will see that these are merely machinery Clauses, for preventing certain anomalies that have become apparent in the administration of the Oil Duty.


With regard to what the hon. Gentleman said as to paragraphs (a) and (b), is not the burden of it to extend the duty on hydrocarbon oils to the gas used from the oils?


No, the oils used in making the gas.


Then it extends the leakage to the product of the oils?


That is not the case. The tax will be upon the oil used in making gas. Under the present law the duty is only payable when oil leaves the refinery, but it has been found that certain refiners use oil not merely for the purpose of refining but for making gas. If they were not refiners, they would have to pay the Oil Duty, and consequently all producers using oil for making gas are put on exactly the same footing.

Lieut.-Colonel ACLAND-TROYTE

It is quite clear that the fear that this Resolution will add a penny tax on a gallon of oil is quite unfounded?


Quite. The Resolution goes no further than the description I have given.

Question, "That this House doth agree with the Committee in the said Resolution," put, and agreed to.

Third Resolution read a Second time.

4.4 p.m.


I beg to move, in line 5, to leave out "5s. 0d.," and to insert "1s. 1d."

The effect of this Resolution, apparently, has not been noticed by the vast majority of Members of the House. It very nearly escaped my attention. I had assumed that it was merely a variation, and not likely to affect any of the great industries of the country, but, during the last two or three days, I have been approached by a number of people who are dependent, almost for their existence—anyhow, for the prosperity of their industry—on this article which it is to be subject to the prohibitive tax which is to be imposed by this duty. They have asked me—I need hardly say I have got no personal interest in the matter—to put their case, which, I think I shall be able to show the House, is an unanswerable one, for the abolition of this extra duty. I think that the House and country have a real grievance that no explanation is thought to be necessary either to the House or to the country, no White Paper, no public inquiry—I do not think that it was even mentioned by the Chancellor of the Exchequer, or, if so, only in a few passing words. I can only excuse that by the many calls upon the Chancellor's time.

I think that when I have stated my case the right hon. Gentleman will see that, at any rate, there is a case to be reconsidered. Let me say that I do not want to raise the larger problem of Free Trade or Protection. After all, we are now living in a tariff country. For better or for worse, we have the elaborate machinery of tariffs both for revenue and for protectionist purposes, and the various interests concerned are not challenging the larger issue. Of course, this is not a new duty. It dates back to the old key industries of 1921—to those ancient times when the Financial Secretary, no doubt, was a severe critic of this kind of duty. But in 1921, in the interest of national defence and national safety, certain duties, it will be remembered, were imposed on a scale of 33⅓ per cent. Our present system of dye duties owe their origin to that policy. In 1926, there was a very able Departmental Committee under the chairmanship of no less a person than Sir Burton Chadwick which applied its mind particularly to these electric carbons. They recommended that, in order to make these duties more effective in connection with these important industries, they should be changed from an ad valorem duty to a duty on a weight basis, and the result was that the duty was fixed at 1s. a pound. For 13 years the industries have had protection. I would remind the House that when the duties were originally imposed it was in order to establish the industries on a basis which, it was hoped, would, in the long run, be firm enough to enable them to stand alone. They have had 13 years of Safeguarding to enable them to stand alone.

The duty, as originally imposed, was 33⅓ per cent., but on the new basis imposing the duty on weight, the duty on the high intensity grades came to something like 70 per cent. and on the cheaper grades to 120 per cent. But if you add the effect of going off gold, it is not unreasonable to say that since 1926 these articles have had protection equivalent to 150 per cent. on the cheaper grades and 100 per cent. on the higher grades. What are these proposed duties? They have been described by the interests concerned as a sledge-hammer being used to crack a nut. If it were thought desirable, in the public interest, to stop the importation of this article, 2s. 6d., I am assured, would be quite effective, but under these new duties, which have been slipped through by the Resolution without comment or explanation, these articles are to be subject to a duty of 7s. 6d. In the case of the lower grade costing 1s. 6d. or the higher grade costing 2s. 6d. the same duty of 7s. 6d. is applied, so that it is not an excessive estimate to say that the cheaper article is to be subject to a duty of 500 per cent. and the higher grade article to a duty of 300 per cent.

Would it not be simpler and more honest to prohibit the importation of the article altogether? If it is a case of showing that it is in the public interest that electric carbons should not be imported into this country, surely the most obvious action to take in preference to a duty on this scale would be to prohibit importation. I am assured that the importation is completely stopped. It is not a question of dumping or price-cutting. The Government know very well that this foreign article for the last 10 years has been at a higher price than the home-produced article. In fact, there has been a price ring or understanding between the various interests concerned, and it is understood that the foreign article, because of its quality and efficiency, is always sold at a higher price than the home-produced article. Therefore, it is not a question of protecting the home industry from unfair competition.

This little article, as is no doubt familiar to some hon. Members, is made from soot. An essential article in the manufacture of electric carbons is soot, and it goes through a very high process of chemical treatment. The industry on the Continent dates from 1870. It, no doubt, had an immense advantage in an early start, and our English manufacturers have had to make up lee-way. No doubt, too, the manufacturers in Germany, France and the United States of America have an advantage in that they have discovered some secret process of production which makes the article efficient.

This particular electric carbon has become an article of general commercial use. First, it is essential in the cinema trade, both for the purpose of manufacturing films, and, secondly, of course, for projecting on the screen in the theatre the film after it is produced. It is vital in order to get a clear effect. Anybody who visits a picture house knows the difference between the good, steady, bright light and the inefficient and unsatisfactory carbon, because where you get the projection on a satisfactory basis, you get steadiness and clearness of effect, and one of the reasons for the remarkable progress made in the cinema during the last few years has been the progress made in the manufacture of these electric carbons. I am told—I await the Minister's explanation—that the association representing the cinema industry has agreed to this tax. I am assured, on the other hand, by a great number of the exhibitors, that it by no means represents the majority of the interests concerned. On the contrary, now that this new tax has been made public, it has taken the trade entirely by surprise, and the whole of the industry are up in arms. They say that this will be a serious tax which will handicap them, and interfere with the efficiency of this gradually growing and expanding industry in this country. They were not consulted individually, and they were not conscious that the Minister was taking advice from various persons when he imposed the tax. There has been a great deal of discontent during the last few months—

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