HC Deb 11 June 1934 vol 290 cc1365-75

(1) The customs duty chargeable on tea shall cease to be charged. (2) This section shall be deemed to hare had effect as from the twenty-fifth day of April, nineteen hundred and thirty-four.—[Mr. D. Grenfell.]

Brought up, and read the First time.

3.43 p.m.


I beg to move, "That the Clause be read a Second time."

The duty on tea has been a subject of very frequent controversy in the House of Commons, and is probably one of the subjects which his received the most attention in past Budget Debates; but its importance has shrunk considerably in recent years, because other new duties have come into operation, and the amount involved, having regard to our considerably enlarged Budgets, is not so important as it was in former years. It will be no information to the Committee that tea was regarded as a luxury in bygone days, and that at one time it was only a very small proportion of our people who consumed this refreshing and pleasant beverage; and during the earlier years of its advent into this country tea was subject to a proportionately heavy rate of duty. I think that the duty commenced almost with the appearance of tea in this country, about 300 years ago.

The tax remained continuously until a very few years ago indeed, when the right hon. Gentleman the Member for Epping (Mr. Churchill), if I remember rightly, repealed it. The amount of duty chargeable has varied from time to time. It has been 8d. and 4d. and 5d., the variation being confined within those figures until the time when the Chancellor of the Exchequer of the day, in 1929, repealed the duty altogether. Tea produced within the Empire was subject to a preferential rate, being given a rebate which itself varied from one-sixth on occasion to one-half, the rate of preference which stands at the present time. The rate of duty now is 4d. per lb. on foreign-produced tea and 2d. per lb. on Empire-produced tea. The average rate of duty is a very much lower figure than the 4d. per lb. which is the full duty, because five-sixths of the tea consumed in this country, or almost exactly 80 per cent., is produced within the Empire, and only about 20 per cent. is produced in foreign countries. The average rate of duty, therefore, is only a fraction over the 2d. per lb. which is the preferential duty imposed upon 80 per cent. of our total annual consumption.

It will not be urged that this rate of duty has had a prohibitive effect upon the consumption of tea. To the satisfaction of most people in this country, and especially those who recognise the social value of tea, the consumption of tea has gone on increasing year by year, so much so that we have now reached a record figure of consumption—about 10 lbs. per person per annum. In previous Debates we have been told the exact number of cups of tea represented by each pound of the tea leaf, and I think that our total consumption of tea, measured in cups, now runs to something like 2,000 cups per person per annum. Therefore, an enormous quantity of tea is being consumed, but no one who knows the harmlessness of the beverage and the pleasure that it gives will complain because the quantity consumed has shown a tendency to increase. It is not because we desire to see a greater consumption of tea that we wish to abolish the present duty, but because we believe that the imposition of the duty upon an article so widely consumed adds a direct charge to the burden of taxation which is placed upon the mass of the people. Although the aggregate figure involved is only £4,000,000 per annum, that £4,000,000 is borne mainly by people with small incomes and people who are in a hundred other different ways paying beyond their share towards the revenue which is collected from the people of this country.

I will give the Committee some examples to show how the incidence of this duty bears unfairly as between different classes of people. The first example that I wish to give is that of a man who is in employment at a small wage, and whose income is £100 per annum, that £100 having to supply the household requirements of five people. One finds that if that family of five—the man, his wife and three children—consume, their normal share of the tea consumed in this country, they will spend from £4 to £5 on tea every year, and on that expenditure they will have to pay a duty of about 11s. That is for a family with an income of £100 a year. If you take a family of the same number with an income five times as large, their tea consumption will be approximately the same. They may drink a rather more expensive kind of tea, but they will pay almost exactly the same contribution in respect of the tea that they drink as will the family with an income of £100. Similarly, in the case of a "family with an income of £1,000, their contribution in the form of Tea Duty will be the same as the contribution paid by the family with only £100 to spend.

We think that to continue a tax which bears so heavily upon people with small incomes is grossly unfair, because in the aggregate the number of people who have small incomes is considerably greater than the number of those who have large incomes, and, if the amount of this taxation were apportioned among the incomes spent in this country, one would find that the 90 or 92 per cent. of the population whose incomes constitute two-thirds of the annual income of the country bear proportionately a very much larger burden as a result of this kind of taxation than the 8 or 10 per cent. among whom the remaining third of the country's total income is divided. Well-to-do people always get off lighter than people with small incomes when taxation of this kind is imposed. Tea is now recognised to be a social and dietary necessity. No one will deny its great value, its indispensability and its cheapness compared with other beverages. While I may seemingly be arguing against my own case when I say that this cheap beverage is being widely consumed and that the consumption is growing, I urge the Financial Secretary, who has a just and sympathetic outlook on all these subjects, to consider the question from the standpoint of the tax imposition of £4,000,000 upon the consumption of this simple, indispensable diet of the poorest of the poor. I ask him to exercise his ingenuity and scan the Budget once again to find a means of raising £4,000,000 in a way which will inflict less hardship and deal more justly with those who are called upon to pay.

3.52 p.m.


I am very glad that this Clause has been moved, though I am not very hopeful that the Financial Secretary to the Treasury, especially in the absence of the Chancellor of the Exchequer, will be able to make a very sympathetic reply. The Mover built up an unanswerable case which the Financial Secretary will find it very difficult on its merits to meet. The point which I think will appeal most to the Committee is that this is an emergency tax. It was put on to meet the special circumstances of the financial crisis. It was never suggested that it was to be a permanent part of our financial system. The taxation of tea was deliberately abolished as part of the programme of the right hon. Gentleman the Member for Epping (Mr. Churchill) when Chancellor of the Exchequer in 1929. It was only revived because the financial position of the country was such that every channel had to be explored in order to meet the deficit. When the Chancellor of the Exchequer said the policy of the Government was to restore the cuts and to put every one back, as to 50 per cent. of the position, where they were in 1931, it is unfortunate that he forgot this very simple and easy way of raising revenue, but a way which undoubtedly hits hardest the poorest in the land.

It was originally argued, as it may be still, that tea was a luxury, that people could live without it, and it was because it was regarded as a luxury in the nineteenth century that it became a very convenient means of raising money by indirect taxation. But it has become, after years of experience, part of the ordinary diet of almost every home in the country. When people are down on their uppers, when they are really hard hit by poverty, when they are on the dole and have to scrape to keep things together after they have paid their rent, bread and tea are considered necessaries and not luxuries.

I hope the Financial Secretary will be able to make it clear that this is not part of the permanent fiscal system. It is a big revenue to collect and, therefore, a big revenue to sacrifice in these days, but, the poorer the family, the more the tax burden, and, the cheaper the tea, the lower the quality that people are driven by necessity to consume, the higher the percentage of tax. To the lower-paid sections of the community, the agricultural labourer, the old age pensioner, the widow with a small pittance, it is a very serious burden. One knows enough of the finances of the country to realise that at this stage the Government are not going to sacrifice £4,000,000 of revenue, but I hope they will make it clear that it is not the policy of the National Government to retain this Duty and that at the earliest opportunity, they will go back to the precedent set by the right hon. Gentleman the Member for Epping and sweep it entirely away.

3.57 p.m.


I support the Clause. This duty was only brought forward to meet a special emergency. We have now somewhat got over that difficulty and the Government are saying to the country, "We are going to get back to the position that we occupied before we put these taxes on." One would think that they might have turned to the Tea Duty, because it would be giving something to every household, and in many cases something material. Tea is probably used more in the poor man's home than in the rich, and the duty comes harder proportionately on the poor man. We know what an important part tea plays at every meal in the poor man's home. The two staple things than a poor man wants are tea and bread and butter. If he can get that, it means a meal. I would appeal to the hon. Member to view it in that light. At a time of so-termed "returning prosperity," as some argue, and when so much is said about the cost of living coming down, let the Government say, "We will prove it by taking off taxation." That is why we are making this appeal, although I do not suppose that we shall succeed this afternoon. I would like to be honest with the hon. Member, because he likes candour. If we do not succeed this afternoon, I would like it to be borne in mind for the next Budget, so that we can start off with at least one commodity which does not bear taxation.

4.2 p.m.

Lieut.-Colonel Sir WALTER SMILES

I hope that, whatever the Financial Secretary considers on this proposed new Clause, he will not consider abolishing the preference on Empire tea. I am sure that those who have been connected with the growing of tea in all parts of the Empire have benefited considerably since the preference was given to Empire-grown tea. There are many companies which shut down completely, and, unfortunately, it was the Indian companies which most felt the slump. Most of the European companies which have their offices in London, have reserve funds to carry on in a slump, but the Indian-owned companies registered in Calcutta generally paid out the full amount in their dividends, and when the slump came along, a considerable number went into bankruptcy, and several of my Indian friends lost nearly all their money. For that reason, whatever happens in regard to this Clause, I do hope that the preference for Empire-grown tea will be continued.

It must be remembered that when a British company or an Indian company buys its machinery, it probably buys its internal combustion engines from Crossley's, of Manchester, or from Tangyes, and its tea machinery from either Marshall's, of Gainsborough, or Davidson's of Belfast, and the slump in tea which occurred about five years ago had considerable repercussions in this country, because I believe that at one time about 50 per cent. of the turnover of Marshall's, of Gainsborough, was in engines, boilers and tea machinery. They have recently had to go in for reconstruction through the slump in tea. I hope that, just as the better prices and the preference given to Empire tea have helped our friends in India, they will also be of assistance to the greatest industry in Gainsborough. I hope that people will be able to carry on now, although, if we look through the list of dividends it will be found that many companies registered here have not nearly made up profits to put back in their reserve funds the losses they have suffered during the past four or five years.

4.6 p.m.


It generally falls once a year at this appropriate hour that we discuss the Tea Duty, and when the discussion is initiated by the hon. Member for Gower (Mr. D. Grenfell), it is always a friendly, genial and, I might almost say, gossipy Debate. The hon. Gentleman anticipated the result of his Motion, and, indeed, was good enough to inform us that he could not call attention to any deleterious effects that had followed upon the re-imposition of this duty. He was bound to admit, indeed, that the consumption had reached a record level. Naturally, if the duty were having any adverse result upon the consumption, the Exchequer would, in its own interest, reconsider the duty. Since the reimposition of the duty in 1932, however, the price of tea is actually lower to-day than it was after the duty was taken off in 1929. Consequently, there is no ground in logic and argument for the repeal of the duty, which is bringing the Exchequer a revenue of £4,000,000 a year.

My hon. Friend the Member for South-West Bethnal Green (Sir P. Harris) referred to this duty—and was, I thought,

about to introduce a new point—as one of the emergency measures. It is with considerable reluctance that I have to correct his recollection, for this duty was not reimposed in 1931 with the other emergency measures, but in 1932. Nor was it imposed for any temporary purpose. The object was twofold, as my right hon. Friend said at the time—first, that we might have the money, and, secondly, in order that we might give the preference, and thus assist the tea-growing parts of the Empire, of which my hon. and gallant Friend the Member for Blackburn (Sir W. Smiles), who has just addressed us, has such great experience. I do not think that I need detain the Committee in rebutting a case which has not been put. I cannot recognise, as I was asked to do, that the case is either fair or just, but what I do recognise is that, from the lips of the hon. Member for Gower, it has been both fairly, and justly stated.

4.9 p.m.


Was it not the case that when the Tea Duty was taken off entirely, the market was flooded with cheap rubbish, mainly from the Dutch East Indies, the cheapest, nastiest tea you could get, and that it was' almost impossible to buy a pound of decent tea in the market? When a duty has to be paid on tea, it does not pay to import rubbish, and duty was really in the interests of consumers, because it very much improved the quality of the tea. Everyone in the tea trade, except those interested in importing cheap rubbish, would say that that was the case.


I always recognised that my hon. and learned Friend was an authority on whisky. I am glad to know that he is also an authority on tea.


If the duty were taken off whisky, would it be detrimental to its quality?



Question put, "That the Clause be read a Second time."

The Committee divided: Ayes, 43; Noes, 265.

Division No. 275.] AYES. [4.10 p.m.
Adams, D. M. (Poplar, South) Batey, Joseph Cove, William G.
Attlee, Clement Richard Brown, C. W. E. (Notts., Mansfield) Cripps, Sir Stafford
Banfield, John William Cocks, Frederick Seymour Daggar, George
Davies, Rhys John (Westhoughton) Harris, Sir Percy Salter, Dr. Alfred
Edwards, Charles Janner, Barnett Smith, Tom (Normanton)
Evans, Capt. Ernest (Welsh Univ.) Jones, Morgan (Caerphilly) Thorne, William James
Evans, R. T. (Carmarthen) Lunn, William Tinker, John Joseph
Gardner, Benjamin Walter Macdonald, Gordon (Ince) Williams, David (Swansea, East)
George, Major G. Lloyd (Pembroke) McEntee, Valentine L. Williams, Edward John (Ogmore)
Grenfell, David Rees (Glamorgan) McGovern, John Williams, Thomas (York, Don Valley)
Griffith, F. Kingsley (Middlesbro, W.) Mainwaring, William Henry Wilmot, John
Griffiths, George A. (Yorks, W. Riding) Mason, David M. (Edinburgh, E.) Wood, Sir Murdoch McKenzie (Banff)
Grundy, Thomas W. Maxton, James Young, Ernest J. (Middlesbrough, E.)
Hall, George H. (Merthr Tydvil) Rathbone, Eleanor
Hamilton, Sir R. W.(Orkney & Zetl'nd) Rea, Walter Russell TELLERS FOR THE AYES.—
Mr. John and Mr. Groves.
Acland-Troyte, Lieut.-Colonel Denville, Alfred Lewis, Oswald
Adams. Samuel Vyvyan T. (Leeds. W.) Despencer-Robertson, Major J. A. F. Liddall, Walter S.
Albery, Irving James Dickie, John P. Lindsay, Kenneth (Kilmarnock)
Allen, Sir J. Sandeman (Liverp'l, W.) Dixon, Rt. Hon. Herbert Lindsay, Noel Ker
Allen, Lt.-Col. J. Sandeman (B'k'nh'd) Dower, Captain A. V. G. Lister, Rt. Hon. Sir Philip Cunliffe.
Allen, William (Stoke-on-Trent) Drewe, Cedric Little, Graham-, Sir Ernest
Amery, Rt. Hon. Leopold C. M. S. Drummond-Wolff, H. M. C. Llewellin, Major John J.
Anstruther-Gray, W. J. Duckworth, George A. V. Lloyd, Geoffrey
Applin, Lieut.-Col. Reginald V. K. Duncan, James A. L. (Kensington, N.) Locker-Lempson, Rt. Hn. G.(Wd. Gr'n)
Apsley, Lord Edmondson, Major Sir James Lockwood, Capt. J. H. (Shipley)
Aske, Sir Robert William Elliot, Rt. Hon. Walter Loder, Captain J. da Vere
Astor, Maj- Hn. John J.(Kent, Dover) Ellis, Sir R. Geoffrey Loftus, Plerce C.
Atholl, Duchess of Eillsten, Captain George Sampson Lovat Fraser, James Alexander
Baillie, Sir Adrlan W. M. Etmley, Viscount Lumley, Captain Lawrence R.
Baldwin, Rt. Hon. Stanley Emmott, Charles E. G. C. Mabane, William
Baldwin-Webb, Colonel J. Emrys-Evans, P. V. MacAndrew, Lieut.-Col. C. G.(Partick)
Balniel, Lord Erskine-Boist, Capt. C. C. (Blk'pool) MacAndrew, Capt. J. O. (Ayr)
Barclay-Harvey, C. M. Everard, W. Lindsay McCorquodale, M. S.
Beauchamp, Sir Brograve Campbell Fermoy, Lord MacDonald, Rt. Hon. J. R. (Seaham)
Beaumont, Hon. R. E. B. (Portsm'th, C.) Fox, Sir Gifford MacDonald, Malcolm (Bassetlaw)
Belt, Sir Alfred L. Fremantle, Sir Francis Macdonald, Capt. P. D. (I. of W.)
Benn, Sir Arthur Shirley Galbraith, James Francis Wallace McEwen, Captain J. H. F.
Bernays, Robert Ganzonl, Sir John McKie, John Hamilton
Betterton, Rt. Hon. Sir Henry B. Gillett, Sir George Masterman Maclay, Hon. Joseph Paton
Borodale, Viscount Gilmour, Lt.-Col. Rt. Hon. Sir John McLean, Major Sir Alan
Bossom, A. C. Gluckstein, Louis Halle Macquisten, Frederick Alexander
Boulton. W. W. Glyn, Major Sir Ralph G. C. Maitland, Adam
Bowater, Col. Sir T. Vansittart Goff, Sir Park Makins. Brigadier-General Ernest
Bower, Lieut.-Com. Robert Tatton Goldie, Noel B. Manningham-Buller, Lt.-Col. Sir M.
Bowyer, Capt. Sir George E. W. Goodman, Colonel Albert, W. Margesson, Capt. Rt. Hon. H. D. R.
Boyd-Carpenter, Sir Archibald Granville, Edgar Mayhew, Lieut.-Colonel John
Brass, Captain Sir William Grattan-Doyle, Sir Nicholas Mills, Sir Frederick (Leyton, E.)
Broadbent, Colonel John Greene, William P. C. Mitchell, Sir W. Lane (Streatham)
Brocklebank, C. E. R. Grigg, Sir Edward Monsell, Rt. Hon. Sir B. Eyres
Brown, Brig.-Gen. H. C.(Berks., Newb'y) Grimston, R. V. Moreing, Adrian C.
Buchan. Hepburn, P. G. T. Guinness, Thomas L. E. B. Morgan, Robert H.
Bullock, Captain Malcolm Gunston, Captain D. W. Morris-Jones, Dr. J. H. (Denbigh)
Burnett, John George Gay, J. C. Morrison Morrison, G. A. (Scottish Univer'ties)
Butt, Sir Alfred Hales, Harold K. Muirhead, Lieut.-Colonel A. J.
Cadogan, Hon. Edward Hamilton, Sir George (Ilford) Munro, Patrick
Calne, G. R. Hall. Hannon, Patrick Joseph Henry Nation, Brigadier-General J. J. H.
Campbell, Sir Edward Taswell (Brmly) Hartland, George A. Ormsby-Gore, Rt. Hon. William G. A.
Campbell-Johnston, Malcolm Harvey, George (Lambeth, Kenningt'n) Patrick, Colin M.
Cautley, Sir Henry, S. Haslam, Sir John (Bolton) Peaks, Captain Osbert
Cayzer, Maj. Sir H. R. (Prtsmth., S.) Headlam, Lieut.-Col. Cuthbert M. Penny, Sir George
Cazalet, Thelma (Islington, E.) Hellgers, Captain F. F. A. Perkins, Walter R. D.
Chamberlain, Rt. Hn. Sir J. A (Birm., W) Henderson, Sir Vivian L. (Cheimsford) Petherick, M.
Chamberlain, Rt. Hon. N. (Edgbaston) Hills, Major Rt. Hon. John Waller Peto, Sir Basil E. (Devon, Barnstaple)
Chapman, Sir Samuel (Edinburgh, S.) Hoare, Lt.-Col. Rt. Hon. Sir S. J. G. Peto, Geoffrey K.(W'verh'pt'n, Bilston)
Clarry, Reginald George Holdsworth, Herbert Pickering, Ernest H.
Cobb, Sir Cyril Hore-Belisha, Leslie Pike, Cecil F.
Cochrane, Commander Hon. A. D. Horsbrugh, Florence Pownall, Sir Assheton
Colfox, Major William Philip Howard, Tom Forrest Procter, Major Henry Adam
Collins, Rt. Hon. Sir Godfrey Hudson, Capt. A. U. M. (Hackney, N.) Radford, E. A.
Colville, Lieut.-Colonel J. Hunter, Dr. Joseph (Dumfries) Raikes, Henry V. A. M.
Cook, Thomas A. Hard, Sir Percy Ramsay, Capt. A. H. M. (Midlothian)
Cooke, Douglas Hurst, Sir Gerald B. Ramsay, T. B. W. (Western Isles)
Cooper, A. Duff Hutchison, W. D. (Essex, Romf'd) Rambotham, Herwald
Copeland, Ida Joel, Dudley J. Barnato Rankin, Robert
Craddock, Sir Reginald Henry Ker, J. Campbell Rawson, Sir Cooper
Cranborne, Viscount Kerr, Hamilton W. Ray, Sir William
Croft, Brigadier-General Sir H. Keyes, Admiral Sir Roger Reed, Arthur C. (Exeter)
Crooke, J. Smedley Knight, Holford Reid, David D. (County Down)
Crookshank, Col. C. de Windt (Bootle) Knox, Sir Alfred Reid, James S. C. (Stirling)
Crookshank, Capt. H. C. (Gainsb'ro) Lamb, Sir Joseph Quinton Reid, William Allan (Derby)
Crossley, A. C. Law, Richard K. (Hull, S. W.) Remer, John R.
Davison, Sir William Henry Lees-Jones, John Rhys, Hon. Charles Arthur U.
Dawson, Sir Philip Lennox-Boyd, A. T. Ropner, Colonel L.
Denman, Hon. R. D. Levy, Thomas Rosbotham, Sir Thomas
Ross, Ronald D. Spender-Clay, Rt. Hon. Herbert H. Wallace, John (Dunfermline)
Ruggles-Brise, Colonel E. A. Spens, William Patrick Ward, Lt.-Col. Sir A. L. (Hull)
Runge, Norah Cecil Stanley, Rt. Hon. Lord (Fylde) Wardlaw-Mline, Sir John S.
Russell, Alexander West (Tynemouth) Stanley, Hon. O. F. C. (Westmorland) Watt, Captain George Steven H.
Russell, Hamer Field (Sheffield, B'tslde) Stewart, J. M. (Fife, E.) Wayland, Sir William A.
Samuel, Sir Arthur Michael (F'nham) Storey, Samuel Wedderburn, Henry James Scrymgeour.
Sandeman, Sir A. N. Stewart Strauss, Edward A. Wells, Sydney Richard
Sassoon, Rt. Hon. Sir Philip A. G. D. Strickland, Captain W. F. Whiteside, Borras Noel H.
Savery, Samuel Servington Stuart, Lord C. Crichton. Whyte, Jardine Bell
Selley, Harry R. Sueter, Rear-Admiral Sir Murray F. Willoughby de Eresby, Lord
Shakespeare, Geoffrey H. Summersby, Charles H. Wilson, Lt.-Col. Sir Arnold (Hertf'd)
Shaw, Helen B. (Lanark, Bothwell) Tate, Mavis Constance Windsor-Cilve, Lieut.-Colonel George
Simon, Rt. Hon. Sir John Thomas, Rt. Hon. J. H. (Derby) Wise, Alfred R.
Smiles, Lieut.-Col. Sir Walter D. Thomson, Sir Frederick Charles Womersley, Sir Walter
Smith, Sir Robert (Ab'd'n & K'dine, C.) Titchfield, Major the Marquess of Wood, Rt. Hon. Sir H. Kingsley
Smithers, Sir Waldron Touche, Gordon Cosmo Worthington, Dr. John V.
Somerset, Thomas Tree, Ronald Young, Rt. Hon. Sir Hilton (S'v'noaks)
Somervell, Sir Donald Tryon, Rt. Hon. George Clement
Somerville, Annesly A. (Windsor) Tufnell, Lieut.-Commander R. L. TELLERS FOR THE NOES.—
Southby, Commander Archibald R. J. Turton, Robert Hugh Sir Victor Warrender and Mr. Bilndell.