§ Sub-section (2) of Section three of the Finance Act, 1920, shall have effect as if for the words "nineteen hundred and twenty" "nineteen hundred and thirty-four" were substituted, and as if for the words "three pounds twelve shillings and sixpence" "two pounds ten shillings" were substituted.—[Sir A. Baillie.]
§ Brought up, and read the First time.
§ 8.23 p.m.
This new Clause is intended to reduce what we believe to be a savage and monstrous tax to more reasonable proportions. I believe I could commend the new Clause better to the Financial Secretary if I confined myself to his own territory, that of revenue. It is at least on the ground of protecting or safeguarding the revenue that the Chancellor of the Exchequer used staunchly to resist the attacks from those who desired a reduction in the Beer Duty. It was only yesterday that the protection of the
revenue was given as a reason for not accepting an Amendment in regard to the Entertainments Duty, and only this afternoon it was given as one of the reasons for resisting a proposal to reduce the Oils Duty. As regards the Beer Duty, with which this has some possible prima facie connection, last year the Chancellor was finally convinced that the arguments which he had previously used were no longer tenable, and a reduction in the duty on beer was made. So far as I know, the results have been satisfactory to all concerned, and not least of all to the revenue and, therefore, to the Financial Secretary. I would like to quote a few words used by the Chancellor of the Exchequer last year in regard to the Beer Duty. He said:
Every tax has to be kept under constant supervision, so that the Chancellor of the Exchequer may judge how far it is able to stand an increase of the rate, or how near it has come to the point at which the law of diminishing returns begins to operate."—[OFFICIAL REPORT, 25th April, 1933; col. 55, Vol. 277.]
§ In the case of beer he found that a source of revenue which had brought comfort to many of his predecessors had been seriously undermined, the figures showing a drop of 33 per cent. If those figures are correct it seems to me that the Chancellor of the Exchequer must feel even greater concern in regard to the source of revenue from spirits, because I find this source of revenue has not only decreased by 33 per cent. but by somewhere in the neighbourhood of 100 per cent. There is one more important and relevant phrase in a speech made by the Chancellor of the Exchequer on the Second Beading of the Finance Bill, in which he said that if relief happened to be given to people who drank beer that was only incidental to the main purpose, which was to see that we should not have to impose further taxation in future owing to the contraction of the revenue from the beer duty.
§ I quote that because we are not in this case thinking of what happens to the consumers of whisky but are thinking of all those who are employed, directly or indirectly, as a result of the distillation of spirits, and also thinking of the Chancellor's main purpose, which is to safeguard his source of revenue. I will quote a few figures which, though possibly unfamiliar to Members of the Committee, 1631 will be regrettably familiar, I am sure, to the Financial Secretary. As the duty on whisky has been raised so has the revenue from that source diminished. In 1919–20, when the duty was 50s. per proof gallon, the revenue from whisky amounted to £58,804,000 approximately. In the following year, when the increase in the tax, which had been raised to 72s. 6d., was first felt, the revenue increased; but that revenue has now decreased from, again approximately, £71,048,000 to £34,925,000 in the year 1931–32. With this downward trend in the revenue it must be manifest that the Chancellor is viewing with some concern and apprehension the decline in this source of revenue, which is a very find example of the law of diminishing returns. All we desire is to bring this matter once more to the notice of the Chancellor of the Exchequer and of hon. Members, and to ask the Financial Secretary if he will at least be with us in the spirit of the Amendment, and do something to amend what I know the Chancellor of the Exchequer will agree is a savage and monstrous tax, devastating in its effects on certain industries in Scotland and elsewhere, and devastating, also, on a source of revenue to the Chancellor of the Exchequer.
§ 8.30 p.m.
§ Mr. JAMES STUART
I rise to support the new Clause. The hon. Baronet who has just spoken has dealt with the revenue side of the matter, and I will not go over that again, serious though the position undoubtedly is. I would like to call attention to the agricultural side of the question, and to agricultural employment as affected by this tax. The Secretary of State for Scotland recently appointed a committee composed of farmers and representatives of the distilling trade and they presented a report called the "Report of the Committee on Scottish barley for use by Scottish distilleries, 1934." If the hon. Gentleman looks into this report he will see in Appendixes 4 and 5 that in Moray alone the acreage under barley in the year 1907 was 11,896 acres, and in the year 1933 had fallen to 3,828 acres. If we take the total production of malt whisky in Scotland, in the years 1921 to 1925 the average production was more than 10,000,000 gallon's per year. Since 1925 there has been a steady decline in 1632 the production; in 1932 it was only just over 2,000,000 gallons, and in the year 1933 it had fallen to 285,000 odd gallons. That means that the farmer in the barley-growing districts of Scotland has lost a market for his produce, and I would like to call the attention not only of the Chancellor of the Exchequer but of the Government to the very serious position that arises as a result.
In the past some of us have agitated continually for steps to be taken to assist the barley industry, but up to date little or nothing has been done in that connection. Id paragraph 27 of the report to which I have referred, under a summary of recommendations, we find that this Committee, composed of farmers and also of distillers, said that if at any time the position of the pot still industry should be stabilised owing to an adequate reduction in the duty on whisky, or to any other cause, then the distillers on their part would undertake to satisfy their whole requirements of malting barley or malt from Scottish barley suitable for distilling, and to pay a reasonable price therefor. If, therefore, the Chancellor of the Exchequer can grant a reduction in the duty it will provide a solution for a great part of the problem facing the growers of barley at the present time. Under existing conditions we see men thrown out of employment and land going back to grass, and in the north, as I think is understood, or as I hope is understood, the position is very serious in connection with barley, oats and so on, which are not receiving assistance from other Measures which have been passed by the Government, and it really is of very great importance that something should be done to assist the barley-growing districts.
§ 8.35 p.m.
§ Mr. MACQUISTEN
A day or two ago when the Tea Duty was under discussion I pointed out that when there was no duty on tea we got very bad tea. A moderate duty secures quality both in tea and whisky. Scotch whisky can only be made in Scotland. I know that some whisky is made in Ireland, but for Scotch whisky you need Scottish water and the Highland air which goes into its making. You can distil alcohol in other places, but you cannot make what we call "Scotch" whisky or aqua vitae, as it was called by the monks who invented it. The clergy invented all good 1633 drinks, and they called Scotch whisky the "water of life." It was really made by them and dispensed by them as a medicine, and it should be used as a medicine. If we were prepared to hand the dispensing of this medicine to the medical profession, it might make the National Health Insurance Act popular.
I am supporting this new Clause in the confident belief that the Chancellor will lose no money by it. The figures which have been adduced by one of my hon. Friends show how drastic is the taxation upon whisky. The Chancellor of the Exchequer is actually losing money in the present state of the taxation. The actual value of the contents of a bottle of whisky is something like one seven-thousandth part of the tax. There is not a halfpenny worth of barley in a bottle of whisky and there has never been such a grotesque taxation upon any commodity. It is the cruelest and harshest taxation of a trade which has provided millions of money to the British revenue. In Campbeltown there were at one time 18 distilleries, and now there is only one. All the decent fellows who have helped to build up the finances of Chancellors of the Exchequers in the past are unemployed and are wondering why their industry should be made the subject of such a savage duty.
We know what happened in the United States, and why the authorities there cannot put a tax upon liquor. The gangsters have such a grip that if a tax of more than a few shillings is put on liquor the bootleggers step in and supplant the legitimate traders. We have had an illustration of that in the discussion in regard to the drinking of methylated spirits. What a horrible thing that is. Because of the taxation on whisky, those poor wretches get into habits of drinking methylated spirits. The taxation prevents them from getting what is really a medicine and a much better medicine than people recognise. The man who takes whisky purely as a' drink finds that it does him no good when he is ill because he is acclimatised to it. If the total abstainer in normal times takes it when he has influenza he derives great benefit, as any intelligent and rational doctor will testify. The doctor will also say that the extravagant price is having a bad effect on the habits of all kinds of perfectly reputable people leading them to drugs of various kinds. 1634 I urge the Chancellor of the Exchequer to repeal this savage taxation. There were two old ladies in Windsor who communicated with me and said it was very hard lines that the little nightcap which they took, and which was the sole pleasure which they had left—[Laughter]—t is not a very laughable matter to those who realise what old persons are like and how few are the pleasures that are left to them. It was not a laughing matter at all, and I was very sorry for the old ladies. [Interruption.] Some people never drink whisky, but when they interrupt idly you would think they had had a lot.
§ Mr. MACQUISTEN
Yes, but it is rather hard on the hearers. I know far-more about whisky than most hon. Members are ever likely to. In my constituency are more distilleries than in almost any other. It is a typically Scottish industry. One of the penalties we pay for the Act of Union is that this typically Scottish industry which benefits the British Exchequer, is being destroyed. The distillers pay huge taxation bringing in enormous revenue. There is no portion of agricultural land which yields so much revenue as the Island of Islay, whose industry is penalised and taxed to this fantastic height. If there were anything in Scottish Nationalism, this is a question that the Scottish nationalists ought to take up.
When a man buys a bottle of whisky he has broken so far into a £l note that it is almost gone. The reduction for which we are asking will reduce the price to 10s. The psychological effect of that decrease will be very great. If the Chancellor of the Exchequer gives us this reduction, his revenue will not fall off, but, if anything, will tend to increase. A man who now buys one bottle of whisky for 12s. 6d. will spend 20s. for two. I was once told by one of the policemen in this House whose home was in Ross-shire, 50 miles from a doctor, that all that was kept as medicine in the house by a careful mother was a bottle of whisky, and only when anyone was ill did they get any of it. Then they got well. I had the same experience on a large property of which I take charge, and we lost many natives from influenza. We lost no Europeans, for we had whisky for them, but none for 1635 the poor black boys. If the price of the bottle of whisky is reduced to 10s., I am satisfied that the revenue will be increased—not by the people who indulge in whisky, but purely by people who want some form of stimulant and who will rejoice that they can buy two bottlee for £l instead of one bottle for 12s. 6d. The Chancellor of the Exchequer will lose no money, and I therefore ask that this proposal should be favourably considered.
§ 8.44 p.m.
§ Mr. T. SMITH
The Chancellor of the Exchequer has missed a very great opportunity. We have heard the unemployment problem abolished about three times this evening. We were told that 5 per cent. reduction on lager beer would cure unemployment, and now we are informed that if the proposed new Clause is adopted unemployment will become Johnny Walker. I am wondering whether all the Scottish advisers of the Chancellor of the Exchequer sit on the back benches. This appears to be a simple Clause. It aims at reducing the duty on whisky from 76s. 6d. a gallon to 50s. Frankly, I am surprised that hon. Members who have gone into the Lobby, as they have during the last two days, to vote against every Amendment put from this side of the Committee, should now come along and say that the unemployment problem and all other problems would be solved if the price of whisky were reduced by half-a-crown a bottle. I would like to ask the Chancellor of the Exchequer what such a reduction would cost the State in the course of the year. It would be very interesting to know.
I quite appreciate the point of view of the hon. and learned Member for Argyllshire (Mr. Macquisten). His point of view is that, if the pric,e of whisky were reduced, there would be more of it drunk, and, if there were more of it drunk, more of it would be manufactured. If that be so, why stop at half-a-crown a bottle? Why not aim at abolishing the lot? Why not go on until everyone in the country is drinking whisky in order to solve our industrial troubles? The same argument could be applied to everything that is taxed by the State. In my opinion, hon. Members have lost all sense of proportion in bringing forward a Clause like this. Whisky may be good or may be bad; I do not know; I leave that 1636 to the hon. and learned Member, who knows more about it than the Chancellor of the Exchequer, and certainly more than I do. I know what it tastes like, but personally I do not like it. Scotch whisky appears to be so good that I am wondering why Scotsmen allow it to drift below the Border. Why do they not keep it all for themselves, if it is so good?
I only rose for the purpose of asking the Chancellor of the Exchequer what this proposal would cost, in order that we might see what hon. Members opposite are seeking from their own point of view. We were arguing yesterday, and have been arguing for some days, that certain concessions ought to be given in other directions, but the Chancellor has said that he could not do it. Last night he made a very clear and I believe sincere speech with regard to the Entertainments Duty. He told the Committee that he would like to see the Entertainments Duty constructed differently, and he went on to say that he hoped to be in a position at some time in the future to alter it and to give some relief to the industry, but he had to oppose a reduction of the tax on the ground that it would take too much from the revenue. Here we have quite a modest proposal brought forward by six or seven very canny Scotsmen. They are asking for a very slight concession, and I sincerely hope that the Chancellor of the Exchequer will not give it. Indeed, I believe that hon. Members opposite would be astonished if they did carry such a proposal at this time of the country's history. If we have sufficient money to give a concession like this, we have sufficient money to use in directions which would be more beneficial to the State than ever this proposal could be, and I hope that the Committee will not pass it.
§ 8.50 p.m.
§ Mr. TEMPLETON
It is not often that I speak in the House, and, as a matter of fact, I have seldom spoken at all. I rise now, not as a representative of any constituency where whisky is produced, nor as one who holds any shares in any whisky distilling concern. I want that to be thoroughly understood. I have no personal interest at all in the liquor trade. But I have a tremendous personal interest in my own country of Scotland. There is only one absolutely national monopoly that dear old Scotland has got, 1637 and that is the production of that delectable beverage which the hon. Member opposite has tasted and does not like. There is no accounting for taste flow could anybody imagine that men in all parts of the world could have the same tastes in drinking, or eating, or anything else? I have known a man who did not like pie, but that man was not an enthusiastic opponent of the removal of duties from pie because he did not like it. My hon. Friend opposite, however, does not like whisky, and, therefore, he hopes that the Chancellor of the Exchequer will not accept this Clause.
I am standing here to support the proposal because I believe that, among all the industries of Scotland, and they are many and great, the one that conduces most to the spirituality of 'Scotland—[HON. MEMBERS: "Oh!"]—perhaps hon. Members will wait to hear all that I have to say—that is the one great Scottish monopoly. There is nowhere else on earth where you can produce whisky but Scotland. I have been assailed time and again in the purlieus of this Chamber by people who wanted me to support reductions of the duty on beer or on other things, because somebody is making a living from them, but this industry, which I once had the honour to represent in the House in a large way, has been left out in the cold. I was then Member for the County of Banff—I am sorry that the present Member is not in his place at the moment—in which there are 36 distilleries, and in the North of Scotland I know that there are at least three towns whose people are absolutely dependent for their very life upon the production of whisky.
It is unfortunate that this subject should be treated as a joke. After all, when anybody speaks about beer in the House, he is listened to with respect. All Englishmen drink beer, or at least we Scotsmen have that idea. An old friend of mine in the North of Scotland used to say, "No wonder these Englishmen are so strong, because they drink so much beer and eat so much beef." But we Scots are left among the mother-in-law jokes and the red-nose jokes; we are left among all the jokes that belong to the music hall and to the lighter moments of the people of this country. Although in my constituency we have nothing to do with the production of whisky, in the North of Scotland it is a 1638 vital industry, not only to the distiller, but to the farmer and those who are associated with the farmer, and there the production of this beverage is absolutely necessary. It is the one big monopoly that belongs to the nation of Scotland, and a British Chancellor of the Exchequer who refuses to acknowledge the claims of that industry is doing much to forward the case of that Scottish Home Rule which I desire not to see brought in in this House or passed into law.
§ 8.54 p.m.
§ Mr. TINKER
In this discussion we find ourselves, so to speak, meeting ourselves coming backwards. Last night the hon. and learned Member for Argyllshire (Mr. Macquisten) took part in the Debate on the Tea Duty. I did not see any reason why he should, because we were only arguing for taking off the duty on a beverage which we claimed was used by everyone. The hon. and learned Member objected to that, and said that to remove the tax would make for a bad quality of tea. Then I asked whether, if the taxation were taken off beer, that would make for a bad quality of beer, and the hon. and learned Member said "Certainly." Does not the same thing apply in this case?
§ Mr. MACQUISTEN
The hon. Member does not understand the difference between reason and unreason. A reasonable tax is one thing and an unreasonable tax is another thing.
§ Mr. TINKER
That depends upon the point of view. We claim that the tax on tea is entirely unreasonable, because tea is something that people almost have to use, while whisky is a luxury. [An HON. MEMBER: "A medicine."] If it be a medicine, it is well worth paying for for the benefit that you get from it. I claim whisky to be a' luxury. I am prepared, when I take it, to pay the tax on it thinking that I am getting full benefit. If it be taken as a medicine, again I am prepared to pay the tax for the benefit that I get from it.
§ Mr. TINKER
If you have no money, you have to do without or trust to Providence to find someone else who will pay. When we were discussing tea, the hon. 1639 and learned Gentleman did not talk about having no money, although the same thing applied. You cannot get tea without money. We are trying to get back the cuts that were put on in 1931. We claim that they are the first things to be put back. This tax has been on since 1912, and it cannot have any claim at all on our finances until all the cuts have been restored. Last night the Chancellor of the Exchequer told us that the Entertainments Duty and other things would be dealt with as soon as he could get the money. If this taxation were to be remitted, the other things that we tried to get last night would have to take a back seat unless the money could be provided in other ways.
§ Sir A. BAILLIE
I do not suggest that the remission of this tax would cost anything. Our point is that the law of diminishing returns has begun to operate. We want to safeguard the Treasury and to make it possible for the right hon. Gentlemna to restore all the cuts, which we believe he may have difficulty in doing if he does not give us our new Clause.
§ Mr. TINKER
If the hon. Gentleman's optimism did not come to pass and the Chancellor found himself with a deficit because he had given way on this, who would find the money for it? I cannot imagine that there would be any more whisky consumed if the tax were remitted, and I take my stand on that in opposing the Clause. It is not that I desire to increase the taxation on any commodity, but, if taxation has to be put on, I want it to be on non-essentials before it is put on essentials. I am more bitter against the hon. and learned Gentleman the Membere for Argyllshire than I should be but for the stand that he took last night. I could not believe in him trying to stop the reduction of the Tea Duty and trying to-night to get this tax remitted. I have spoken just to show him that my chief reason is that I want tea cleared of all taxation before we turn to whisky.
§ 8.59 p.m.
Captain A. RAMSAY
There is an essential difference between the taxation of tea and of whisky. The tax on tea does not affect the whole tea supply but only a fraction of it. The best part of our tea comes from India and is not affected by the tax. I wish to support 1640 my hon. Friends who have put the case for the remission of the Whisky Duty both in a serious and a jesting way. We have put it year in and year out. We base it on all sorts of solid grounds which I believe can be easily proved. We feel that one last method remains to us and that is the method of the importunate widow. She, it will be remarked, had to deal with a judge who feared not God neither organised man. If her importunity scored such a remarkable success in dealing with him, we, having a very different person to deal with in the Chancellor, shall continue to press our case in the justifiable hope that it will elicit something equally favourable. Although this subject may not arouse a great deal of interest here, north of the Tweed it is a serious matter. I regret the speech of the hon. Member for Normanton (Mr. T. Smith). The gist of it was that he did not care about whisky, and he did not care much what we said about it, and he was therefore in favour of keeping on the tax.
I am very glad to have got that admission. That improves what the hon. Member said a good deal. But it was a pity that he went on to produce a kind of reductio ad absurdum argument to the effect that you had only to take off the tax on whisky to cure unemployment. Ours was a reasonable argument in the beginning, but to follow it to that absurd conclusion was treating the matter in a way that will not be appreciated North of the Tweed even though it may be in the hon. Member's own constituency. If the right hon. Gentleman would make the venture, the sentimental effect in Scotland would repay him even if the trade effects that we have prophesied did not materialise.
§ 9.3 p.m.
I gather that my hon. Friends from the other side of the Tweed who have put down this Clause have done so rather with a view to keeping alive the claim that has so frequently been made in the past for the reduction of what they consider to be an unreasonable 1641 tax than with any very lively expectation that I should find it possible to accept their Clause. My hon. and learned Friend the Member for Argyllshire (Mr. Macquisten), I believe, is of the opinion that, if the price of whisky could be reduced from 12s. 6d. to 10s. a bottle, the consumption would be doubled. I believe it is one of the exhilarating results of drinking whisky that you see things double, but they are not double for all that. I am afraid I have to take a more considered view of the actual fiscal effect of such a reduction as my hon. Friends desire me to make. I have had to make some sort of estimate of what it would cost in the immediate future if this reduction were made. I have assumed that it would result in the diversion of a quarter of the quantity of spirits at present imported into this country to homemade spirits, and the consumption of spirits would then increase by 15 per cent. In saying 15 per cent. I think I am taking certainly quite as venturesome an estimate as I ought to do. In that case, if that were so the concession would cost me nearly £6,000,00 in a full year, and £5,500,000 in the present year, assuming that the reduction was dated back as is proposed. Of course, it will be seen that to provide that £6,000,000, I could not do it this year, but even next year it would seriously diminish my resources for the purpose of carrying out a principle which I have so many times repeated as the one which must guide me in the present circumstances. Therefore, my hon. Friends will see that, on the calculations which I have made to the best of my ability, it is not possible for me to accept their Clause.
At the same time, I do not mind saying that, in my view, the tax on whisky is too high. I think that it is unreasonably high in modern conditions. It was fixed at a time when the sources of our indirect taxation were very much more limited than they are now, and I do not suppose that it would ever have been raised to that height if we had been a protectionist country in the days when the tax was increased. I have to take things as I find them. I have not only to consider the revenue as I find it, but the expenditure as I find it and expect it to be and, therefore, while I say that in my view, if I started afresh, I would not tax whisky 1642 at the present rate, I think that when conditions are such as would allow of a fair reconsideration of the circumstances the claims of whisky for some reduction of the very high rate of duty now imposed upon it certainly ought to be considered. I am afraid that I cannot at this stage promise my hon. Friends that I can make any commitment for the future or, indeed, that I can prophesy the time when it will be possible to go some way in the direction they would desire.
§ Question, "That the Clause be read a Second time," put, and negatived.