HC Deb 22 June 1938 vol 337 cc1194-212

8.57 p.m.

Mr. Barnes

I beg to move, in page 5, line 16, to leave out "increased".

During the discussions we have had on the first three Clauses we have heard the voice of large oil corporations pleading their case to the Committee, and they have not lacked keen advocacy. This Amendment does not raise an issue concerned with wealthy corporations, but it brings to the notice of the Committee the position of wage earners in relation to the additional duty on tea. I do not begrudge the Chancellor of the Exchequer a relief from the arduous duties of sitting on the Front Bench, but I should have preferred to have had his attendance when discussing this Amendment rather than when we were discussing the oil duties. I also noticed that during the previous discussions there was a complete absence of any appeal to the patriotism or a sense of obligation of these large and wealthy companies towards the State and the programme of rearmament, but I observe, on the other hand, that when a particular tax is being placed upon the wage-earners their patriotism is flattered and we have acknowledgments of their high sense of obligation and duty. That was the case when the Chancellor of the Exchequer was imposing this additional 2d. per lb. on tea. He ended his comments in this part of his Budget speech by saying: I believe that there is a sense of willingness and even a pride in the humblest homes to take a share in this rearmament outlay."—[OFFICIAL REPORT, 26th April, 1938; col. 66, Vol. 335.] There was no suggestion that the wealthy oil magnates, whether they are producing power alcohol or oil from coal, take any pride in sharing this national obligation of rearmament, but we get an appeal to the humblest homes in the community. It is one of those vague, sentimental patriotic appeals. What are the humblest homes which are being called upon to accept this additional burden? I presume the Financial Secretary will not differ from this classification. I should say that they are homes where the breadwinner is unemployed, where the old-age pensioner lives, and a widow who is trying to bring up her children on the widows' and orphans' pension. I suppose they would be classified among the "humblest homes." We are all familiar with what we know as the charwoman. My experience has been that if you investigate the lot of the average charwoman you will find that she is very often a woman suffering under a considerable handicap. She may have an invalid husband, she may have lost her husband and have no pension. In any case the majority of women who go out working, having reached a mature age themselves and having to carry on their own domestic work as well, do not do so for the pleasure and the joy, but usually because of difficult circumstances. I suppose that type of person will be classified among the humblest homes in the country.

Then there is the casual labourer, the farm labourer, and others who exist on very low and intermittent wages. These all, I suppose, would come under the Chancellor of the Exchequer's descriptive phrase, and will be proud to pay this additional burden towards rearmament. I want to say in all seriousness that I think the Chancellor of the Exchequer might have left words of that character unsaid. I do not think it improves the public life of this country for persons in prominent positions, even when they are imposing, sincerely as they may think, necessities of this kind on the country, to use language which I can only describe as cant and humbug.

The Deputy-Chairman

I do not wish to restrict the hon. Member unduly, but I think I ought to point out that if we have a general discussion on this Amendment it must not be repeated on the Clause standing part of the Bill.

Mr. White

Further to your Ruling, Captain Bourne, will you allow a discussion on the question of the preference to take place in the general discussion?

The Deputy-Chairman

The Amendment in the name of the hon. Member for East Wolverhampton (Mr. Mander) and the hon. Member for East Birkenhead (Mr. White) clearly cannot be moved unless the word which it is now proposed to leave out is deleted. Therefore, it is obvious that any discussion on that should take place on this Amendment.

Mr. Barnes

I was presuming, Captain Bourne, that following the precedent that had been established on previous Clauses, we should have a wide discussion on the first Amendment—

The Deputy-Chairman

If the hon. Member will forgive me for interrupting him, I wanted to make quite clear that he realised that.

Mr. Barnes

The next point I wish to make with regard to the statement of the Chancellor which I have quoted is that the wage-earners generally are already contributing very heavily to the cost of rearmament. They are paying revenue taxes, on many of the necessities which they consume. They are paying through imposts under the Import Duties Act, levies on imported meat, subsidies in connection with wheat and sugar beet, and artificial prices arising from the marketing schemes. Therefore, it appears to me that there is no point in the Chancellor's statement that a contribution of this kind is equitable in any way in connection with rearmament. In the near future the same category of people will very likely have to pay a further 4d. a gallon on milk, penalised because of the fine weather. In making this case against the Tea Duty, I do not do so because I fail to recognise that other sections of the community are also paying heavy taxation at the present time. I recognise that completely, but there is a difference. The 3,000,000 persons who come within the Income Tax schedules, however difficult or onerous may be the burden of that taxation, are not individually or economically distressed as a result of it, and no hon. Member would dare to argue that they are. But the Committee should recognise that the people to whom the Chancellor referred when he spoke about the humblest homes in the community have a genuine, day-to-day and continuous struggle to make ends meet and to obtain the bare necessities of life. Therefore, it does not seem to me to be relevant to argue in favour of the Tea Duty by saying that all classes in the community are bearing heavy taxation.

I urge the Committee to accept this Amendment for the following reasons. The Tea Duty is too heavy in proportion to other commodities. During the lifetime of the present Government there have been three imposts; first 4d. a lb., then an additional 2d. a lb., and now a further 2d. a lb. While the Tea Duty is one that it is easy for the Treasury to collect, it is unequal in its incidence in relation to the prices. The sum that it will yield on this occasion, namely, an additional 3,000,000 in round figures, is not a material factor in a Budget of £1,000,000,000. I submit that if a further £3,000,000 is necessary, it could be obtained with less hardship than is caused by placing the additional tax on tea. I have never considered that it is the responsibility of any hon. Member of the Opposition to say how taxation should be levied; that is the responsibility of the Government. However, I think I am entitled to make the general point that we are certainly living in a period in which there is expanding expenditure on all forms of pleasure, recreation, entertainment and luxuries. There has in recent years been a phenomenal growth in expenditure on all forms of competitions, pools and other exciting ventures. I feel that if public opinion could be consulted on a tax of this description, the vast majority of wage-earners would consider it more equitable that sources of this nature should be tapped, rather than there should be an additional tax on tea. Again I recognise that Income Tax is high, but the Financial Secretary cannot say that to raise another £3,000,000 from the Super-tax payers would reduce any of them into the category of the humblest homes of this country.

Further, there is the question of prices. The prices of the bulk of the tea that is sold in this country range from 1s. 10d. to 2s. 6d. a lb., and not a great deal of tea is sold much beyond the prices of 3s. or 3s. 6d. a lb. I draw the attention of the Financial Secretary to the following percentages of burden. On tea at 2s. a lb., the percentage of the burden of the tax amounts to 33⅓ per cent. of the price of foreign-blended tea, and 25 per cent. of the price of Empire tea; at 2s. 6d. a lb., 27 per cent. of the price of foreign-blended tea, and 20 per cent. of the price of Empire tea; at 3s. a lb., 22 per cent. of the price of foreign-blended tea, and 16.6 per cent. of the price of Empire tea. On tea at 5s. a lb., the tax burden is 13 per cent. of the price of foreign tea and 10 per cent. of the price of Empire tea. It will be observed that the cheaper the price of tea, which the lower paid people are compelled to buy, the higher the percentage of tax.

Captain Wallace

I apologise for interrupting the hon. Member, but I would like to make one thing clear. The hon. Member is quoting various figures, which are correct; but I think the Committee ought to realise that go per cent. of the tea which is purchased by everybody, including the working classes, is Empire tea, and that it is really only the lower figures that are relevant.

Mr. Barnes

That may be the case, but it does not alter my main point, which is that the higher percentage falls on the lower-priced teas. I am quoting the two extremes. I thought the consumption of Empire tea was in the neighbourhood of 80 to 85 per cent., but even accepting the right hon. and gallant Gentleman's figure, I would point out that on tea priced at 2s. per lb. the percentage on Empire would be 25 per cent, or a quarter of the price, whereas taking the other extreme of tea at 5s. a lb., it would be only 10 per cent. or one-tenth of the price. I think I am entitled to make the point that the fact that this duty is easily collected by the Treasury does not justify the imposition of a heavy burden like this on such a commodity—a burden which works out so unequally in its incidence.

When the Chancellor was imposing an additional 6d. in the £ on the Income Tax, we saw one of those instances of financial jugglery, if I may so call it, in the proposal to increase the wear-and-tear allowance to machine industry. I would end on this note—that we ought to consider the wear and tear suffered by the average housewife in carrying out her rather toilsome duties, especially when she is bringing up a large family. All who are familiar with working-class life know that it is to the cup of tea that the worn-out mother very often turns for a little quiet solace. I am not inclined as a rule to stress points of this description, but when I listened to the Budget statement, in which the country was asked to raise nearly £1,000,000,000 in taxation, and took into account all the increases in taxation which were proposed, I felt ashamed to be a Member of a House which could not find an additional £3,000,000 without putting an added duty on the cup of tea.

9.18 p.m.

Mr. White

We have already had a number of discussions on this duty and I welcome this further discussion as it will afford an opportunity to hon. Members opposite to explain, vocally, their support of this proposal which hitherto has displayed itself exclusively in the Division Lobby. I think, with one exception, the only speeches in defence of this tax have been delivered from the Front Bench. Those discussions have been extremely useful, and the speech to which we have just listened was an excellent summary of the grounds for the opposition to this tax, which is a wholly bad tax. There is nothing to be said in its favour from the point of view of the consumer, the taxpayer or the producer, whether in the Empire or elsewhere, and I hope no one will allow himself in future to make use of the phrase quoted by my hon. Friend about the pride which would be felt in the humblest homes in paying this tax.

It is, of course—although the fact is not recognised by the Chancellor of the Exchequer—a partial tax. It is one of those "partial affections" from which, at the beginning of our proceedings, we pray daily to be delivered. The people who are certain to pay are the poorest of the poor. They will pay in a higher proportion than anybody else. They cannot escape because there is no cheaper tea to be obtained, and they use more of it. The right hon. and gallant Gentleman the Financial Secretary in an earlier discussion said that the average consumption was only 9¼ lbs. per head of the population and that consequently the tax would only amount to 1s. 6d., or some such amount. That is an average for the whole country. But there are many households, where pride is supposed to be felt in the payment of this tax, in which the only drink, excepting cold water from the tap, is tea, and the average consumption in those cases is very much above 9¼ lbs. per head. Therefore, from the point of view of the consumer it is a bad tax. It is unjust in its incidence, and no defence can be made for it on that ground.

It is bad from another point of view. A few years ago the price of common tea at auction was 4½d., 5d. or 6d. per lb. When it was proposed in those days to put on a tax of 2d., arguments could be brought against it—no doubt the same arguments as we are using to-day—to show that it was a very serious matter. But to follow up that imposition with a further addition at this time when the price of common tea at auction is over is. per lb. is a much more serious matter. Hon. Members should bear in mind that when the last impost of 2d. was placed on tea, the price of common tea was less than it is to-day. The necessity for producing cheaper blends then concentrated buying upon cheaper qualities of tea and those qualities of tea were gradually forced up in price until, on top of the advance of 2d. per lb. in duty, there was a further advance of 2d. per lb. in the retail price. There was, in effect, a rise of 4d. per lb. It remains to be seen what will be the effect of this further increase in duty upon the price of the tea.

The imposition of the duty this time was followed by an immediate rise of about ½d. per lb. in the price of tea at auction. Subsequently, the price fell away again and it is now, I think, somewhere about where it was when this additional duty was imposed or perhaps ½d. less. We have to remember that in these days the tea market is under control and the prospect of the release of further supplies may prevent a rise in price such as took place two years ago when the duty was raised by 2d. I hope the Chancellor of the Exchequer and the Financial Secretary will look into this matter and keep a watch on the situation, and if it is found that the price of common tea is being raised to an extent which may cause a further rise in the price of packet and blended tea, that they will consult with the control committee and take steps to see that supplies are released which will prevent any increase in price.

This is also a bad tax from the point of view of the grower of tea, because the consumption of tea at the present time, unless possibly in the Indian market and to some extent perhaps in America, is not expanding. A considerable publicity campaign has been set upon foot, costing a very considerable sum, in order that the decline in consumption of recent years may be checked and, if possible, expansion brought about. So far that campaign has not led to anything more than retarding the decline. Tea has to compete in a way that it did not some years ago with an immensely costly and effective campaign of advertising in favour of all sorts of competing beverages, and there is no doubt that, from the point of view of the producer of tea, the increase in the tax is a very unfortunate circumstance. I should like to ask if any representation has been received from the Government of India with regard to it. I notice that meetings have been held in Calcutta and in Ceylon on the subject. It is not calculated to increase the enthusiasm between ourselves and tea-growers abroad that this increase, which is felt not to be fair or reasonable, should be placed upon this article.

I have placed on the Paper an Amendment designed to equalise the duty as between Imperial and foreign-grown tea. There is a growing inclination and desire to do away with the disadvantage that accrues from the preference upon teas grown in India and Ceylon. It is an assumption to which everyone agrees at first sight that if you give an article a preference it must help it, but in the case of tea it is quite clear that to many growers and dealers there is a positive disadvantage arising from the preference. Several chairmen of companies in London have at their annual meetings expressed dissatisfaction with it, and have said it was time that the disadvantage put upon Empire tea by the preference should be done away with. I agree with them, because all that has happened is that the tea that has been displaced in the London market by the preference has displaced tea grown in India and in Ceylon in the Australia, American and other markets. I have had taken out figures showing the direction of tea from India and Ceylon since the preference was introduced. In 1929–30, the last year in which there was no preference, India and Ceylon tea almost monopolised the market in Australia and had a very much larger share of the United States market. Now they have not got those markets because they have been replaced by tea from Java and Sumatra and cheaper tea from Formosa and China. I have here a report on the working of the season 1937–38 with regard to the effect of Imperial preference and the direction of the exports from India and Ceylon. Referring to the Australian and New Zealand market it says: Exports to these markets show a further slight shrinkage. India suffers under a crippling disadvantage in Australia as compared with Java through the effects of Empire preference in the United Kingdom, while the development of the export market to New Zealand is impeded by the continued preferential treatment in that Dominion in favour of Ceylon. Turning to the United States, it goes on: Although exports to this country from India direct show a falling off, the total imports of tea into the United States show a useful increase as compared with the previous year. Here, again, the Empire preference in the United Kingdom adversely affects the expansion of India's tea trade with America. With regard to Egypt: Being essentially dependent on low-priced tea, the Egyptian trade goes to the market offering tea at the cheapest rate. With the incidence of Imperial preference India has to a large extent lost this trade, and her exports to Egypt this season were almost negligible. The conclusion to which I come, after reading the opinions of those who grow and sell tea, is that the matter calls for further examination. I get the impression that the Treasury is imperfectly acquainted with the nature of the trade and the effects of the tax. If it is wished to place a tax upon tea which shall affect the whole community equally fairly and justly, it can only be done by taking control of the whole trade and see that one quality is sold at one price. For these, and other reasons, I support the Amendment.

9.28 p.m.

Mr. Silverman

I intervene only in order to deal with references subsequently made to my own speech in the discussion that we previously had on this matter. The hon. Member who has just addressed the Committee said that Members opposite have not spoken in support of this Duty. I think that is not quite the case. Two Members on that side who followed me made speeches and, if it is true that they did not advance many arguments in support of the Duty, at any rate they made some references to those who spoke from this side. I am sorry that neither of them is in his place to-night, but that is no fault of mine. I think the Committee knew very well that this matter would be debated again to-night, and I am afraid that I assumed in my innocence that those who had taken the trouble to refer to others on that occasion would be here on this occasion.

One Member, the hon. Member for Elland (Mr. Levy), said that I had previously made contributions to the Debate and that I appeared to make my appeal, not to reason, but to passion and emotion. The hon. Member for Bolton (Sir J. Haslam), later in the Debate, said that it was always a poor thing in support of a case to overstate it, and that I had appeared to lead the House to believe that the imposition of this duty would cause the heavens to fall. I do not think the heavens will fall, and I do not think I said anything to lead anyone to believe that I thought the heavens would fall. With regard to the statement of the hon. Member for Elland that I was addressing my appeal to passion and emotion, to what else can you address your appeal in a matter of this kind? I most pro- foundly believe that this tax is a thoroughly mean and despicable thing. I do not know whether anyone thinks that that is an appeal to passion and emotion, or that it is possible to weigh up nicely, in terms of arithmetic or logical finance, whether or not a matter is mean and despicable. I think people are so constituted that they either recognise the meanness of a thing at sight or do not recognise it at all, and if there are people who do not think that to go to the poorest people in the land and take some of the very few coppers out of their pockets, and to cover that by some appeal to their patriotism or some statement that they are very proud that their destitution should be rendered still more destitute—if there are people who do not see how mean and despicable that is, I am afraid I cannot help them.

I have no apology whatever to make for expressing my own view that it is in the highest degree a mean and despicable thing, for which no rational justification can be advanced or has yet been advanced. Ex hypothesi, you are dealing with people who are not merely poor, but who are either over the borderline of destitution or just upon it. You are asking them, in a Budget of £1,000,000,000, to find an extra £3,000,000 by an extra tax upon an article which is at one and the same time an article of food to them and in many cases their only luxury. You are charging it in a manner which makes the poorest pay most, which makes the lowest grade and quality of the article pay the highest tax, and which makes the charge greater in inverse proportion to the quantities which are bought; that is to say, those who must buy their tea in ounces and two ounces will pay more than those who are able to buy their tea in quarter-pounds, half-pounds, and pounds. These, I think, are facts; they are not an appeal to passion or to emotion, and they are not, I think, an overstatement of the facts as they are admitted to be. If those are indeed the facts, is there anyone whose social experience is so inadequate that he cannot realise that what is being done here is to impose an extremely heavy burden upon backs that are already overloaded and upon people who will find it a very great hardship indeed to add to those hardships which already they undeservedly bear?

While dealing with that point, may I deal with one argument or, if not an argument, a piece of controversy that was used, I think, by the Chancellor himself, and which he thought to be conclusive against the opposition to this tax? He went back into the previous history of the tax, to an occasion on which the tax was reduced, and he quoted from speeches then made on this side of the House to show that that reduction in the duty was not received with gratitude but that people on this side regarded it as a very small thing indeed. With that kind of cold logic which loses all its appeal by being a purely formal logic, divorced of all reality, a kind of logic which appeals to the Chancellor and is his political stock-in-trade, he said that because on that occasion a reduction of the duty was not received with gratitude, an increase of the duty to the same extent must necessarily be a small thing. With the greatest respect in the world to what I admit to be an intellect higher than my own, I think that was the purest nonsense in the world.

I have not the gift of the right hon. Gentleman's lucid expression, but I hope I have made myself clear. It may well be that if you already have an overburdened back, a very small increase will break it, whereas to take a very small amount off will make no appreciable difference, and that is the point. It is quite true that if you were to reduce the Tea Duty by 2d., you would not have introduced a great deal of improvement into the lot of the poorest and humblest people in this land, but if you add a further burden to it, you do an amount of harm that is greater, by reason of the heaviness of the burden which you are inflicting, than would be the corresponding relief if it were removed. It is Mr. Micawber's proposition all over again, that 6d. in the pound is a very small item, but 6d. above your pound of income is enough to put you in very great difficulty, whereas 6d. just under the pound leaves you very much where you were. I hope that, in whatever reply is made to-night to this discussion, that argument at any rate will not be used, that because a relief of 2d. in the pound was not thought to be a very great thing, it therefore follows that an increase of 2d. in the pound may not be a very great additional burden.

The right hon. Gentleman, in winding up on that occasion, dealing with the point about the pride with which these destitute people will increase their burden in order to increase the amount of armaments in the world, which will spell their own destruction, said he thought they took a very great pride in their country. Of course they do. Who should take a pride in their country more than the people who make it? Certainly they do. They make the clothes that we wear, the houses that we live in, the factories in which our goods are produced, the ships which carry them to the four corners of the world, the docks; they provide the service behind the shop counters, the work in the factories, the laundries, the bakeries, the dressmaking establishments, the haircutters' shops. All the people who make life possible and decent, who for the best years of their lives have contributed to what measure of civilisation this country possesses, and who at the end of those years are left destitute with 10s. pension, which is not sufficient to relieve their destitution—certainly they are proud of their country. Is it for us to be proud of picking their pockets in those conditions? The question is not whether they are proud to make the contribution, but whether this House ought to allow them to make the contribution, and whether any self-respecting community would not without the slightest hesitation raise this paltry £3,000,000 in some other way which would leave no sting or shame behind it, and which would enable us to balance our Budget without feeling that the lot of the hardest-hit people in the country had been made a little harder.

9.47 p.m.

Mr. Barr

The case for a decrease in this impost has been so well stated -by my hon. Friend the Member for East Ham, South (Mr. Barnes), the hon. Member for East Birkenhead (Mr. White), and my hon. Friend the Member for Nelson and Colne (Mr. Silverman), that I do not propose to detain the Committee long. There is an element of unreality in those of us here who know so many of the comforts of life, and know so little of the distress with which every day the poorest of the poor are confronted as to supplies for their tables, trying to estimate what it means for them. The Chancellor of the Exchequer himself paid a tribute to this aspect of the problem when he said: I well understand that even an extra halfpenny per week is a material and appreciable addition to the expenses of those with the smallest incomes."—[OFFICIAL REPORT, 26th April, 1938; col. 66, Vol. 335.] I do not think, however, that the Chancellor, or any of us, fully realise the meaning of a new impost like this on these poor people. Reference was made by my hon. Friend to a charwoman. I knew a charwoman, one of my congregation, who on a Saturday afternoon was left with two halfpennies of which she said she would spend one halfpenny on tea and one halfpenny on sugar. It is a common proverb that "nobody knows where the shoe pinches but he that has to wear it," and we should realise that the poor have a struggle, the awful severity of which is known only to themselves, and that the smallest impost might be an almost intolerable burden to them.

Reference has been made to the statement of the Chancellor as to the pride with which this impost would be received among the poor when they realised that they were making this contribution to the rearmament programme. I think of some of my poor people—and I have in some respects one of the poorest and most poorly housed constituencies in the country—I think of them now as they are going to drink their tea if not with toast, at least with a toast in these terms: "Here's to the health of the Chancellor of the Exchequer; here's to the Minister of Defence; here's death to Hitler; here's death to Mussolini." But now they are not so sure that there is death in the cup for Mussolini. They would drink their tea and eat their bread with more gladness if the Government had given them occasion to say, "Here's death to unemployment; here's death to poverty; here's death to this house in which we are obliged to live." It is argued that tea is a luxury. It is a commonplace to say that the luxuries of one age become the necessities of another, and that is the position to-day.

I would emphasise what has been said that the consumer, and especially the poorest of the consumers, pay not only the tax but something more. Here I would like to adduce the testimony of one who is very familiar with the subject, Provost James Paterson, Provost of Milngavie, who is in the tea trade, and who was the Scottish representative on the Tea Control Committee of the Ministry of Food during the War. He wrote to me after the Budget was introduced: During 1929 to 1932 one customer of mine was retailing tea at 6¾d. and 8d. per lb., but these were abnormal prices. In the spring of 1932 tea was being regularly retailed at 10d. and is. per lb., these being the retail standards of the lowest priced teas. To-day the relative prices of these are 1s. 10d. and 2s. per lb., or an advance of is. per lb., showing a percentage increase of 120. This before the present Budget advance. This increase falls particularly hard on the poorer classes as teas in grades above this have not risen in the same ratio, many of them being only advanced by the increased rate of duty, that is, 4d. We object to this tax because it is an addition to the imposts on food, and is an indirect tax added to those which are causing a rise in the cost of living.

We can defend this Amendment with a sense of consistency and loyalty to our own programme. We had an old cry, almost before the days of the advent of the Labour party—"A Free Breakfast Table." It has been loyally pursued by the Labour party from first to last. I should have had more satisfaction if we were advocating the abolition of the tax entirely. It is one of the objects of our movement, and one of those things about which no taunt can be thrown against us. There are very few parties in the State but are guilty of inconsistencies from time to time; at any rate, when we were in office we swept away entirely this impost on food in the Labour Budget of 1929.

9.54 P.m.

Sir Arthur Salter

I would like to state a few reasons why the Government should reconsider this proposal from a rather different point of view from that from which most Members have spoken. I do not propose to emphasise the weight of the burden of this increase, because naturally the Government would reply that in a Budget which included taxation on the scale and magnitude of this Budget a tax producing as little as this does cannot constitute a very heavy burden. I suggest the Government should reconsider it, not because the burden it imposes is very high, but because the tax in itself is open to serious objections. I ventured to congratulate the Government last year—and I do so again this year—upon introducing a Budget in which, for the first time for a long period, the proportion of indirect to direct taxation had fallen, and fallen considerably. It is a great improvement upon earlier Budgets, and I think it is a great pity that this Budget should have been marred by an exception which is so unimportant as this from the point of view of producing revenue.

It is obvious that in comparison with direct taxation indirect taxation operates as an Income Tax inversely graduated, and that is specially true of an indirect tax upon a commodity when the consumption of it, as between rich and poor, is in quantity so nearly equal as in the case of tea, and when the tax is a quantity tax and not an ad valorem tax. The effect of that tax is an inversely graduated Income Tax, with the graduation becoming very steep indeed in the case of the poorer taxpayers. From the point of view of revenue I suppose that this tax was added as a kind of token tax; so much direct taxation having been added, it was necessary to put on this small addition to indirect taxation. I am all in favour of token taxes when the principle to be maintained is a good principle, but in a case like this, where the principle is open to very serious criticism, such a token tax is most objectionable. It is an additional irritation to the taxpayer—the indirect taxpayer—if he feels that he is being taxed not so much to provide revenue as to ensure that he does pay something in view of the very much greater payment—as I admit—to be made by the direct taxpayer. This tax being one which is to a rather exceptional extent even among indirect taxation one that operates, with an inverse graduation, most heavily on the working classes, I earnestly ask the Government to consider whether it is really worth while to persist with it, considering the small amount involved.

9.59 P.m.

Mr. R. J. Taylor

I want to add my protest against this tax. I listened to the hon. Member for Oxford University (Sir A. Salter) giving a very involved and intricate description of the difference between indirect and direct taxation, and I am not going to follow him in that, because while the ratio of indirect taxation to direct taxation has to some extent fallen it has not decreased to the extent it ought to have done. We are living in a time when profits are being made at an increasing rate, and the Chancellor could have found the money for armaments by the direct method much more easily than by an impost such as this. Reference has been made to the Chancellor of the Exchequer speaking of the pride that our people would feel in making a contribution towards rearmament. The previous Chancellor of the Exchequer, when he introduced the 2d. duty, though he did not use exactly the same words—because I do not think he would be capable of using the same words as the present Chancellor—used language which meant the same thing. He said that he had placed the 2d. on tea so that the poor people could feel that they were playing their part, doing their duty as regards the rearmament programme for the Defence of the country and of the Empire.

I notice that those Liberals who have broken away from the old tradition had a conference the other day. The Chancellor was there, and so was the Secretary of State for War. The Secretary of State for War said that we were getting on beautifully with rearmament, that we were spending nearly £1,000,000 a day, though in our opinion it does not necessarily follow that we are getting the goods at that rate.

At that same time that he was speaking about the humble people of this country feeling that they would want to do their duty, the previous Chancellor of the Exchequer was introducing the National Defence Contribution, and at that, I remember, the spokesmen opposite of the vested interests went On strike. They compelled the Chancellor of the Exchequer to withdraw his National Defence Contribution. They compelled him to make concessions to building societies, to make concessions to every vested interest, but not to any interest in which the working classes were concerned. There was no concession to the cooperative societies nor to any of the other humble people. If my memory serves me aright, the Chancellor only wanted to raise a few millions by National Defence Contribution—I think it was £15,000,000, but never mind the figure—but Members opposite protested that it would produce £100,000,000, and so that National Defence Contribution was withdrawn and a new National Defence Contribution substituted. The present Chancellor estimated that he would get £25,000,000 under it, but he has received only £20,000,000.

This duty on tea is to raise £3,000,000, and I say that £2,000,000 or £2,500,000 of that will come from the poorest of the poor. Why did not the Government screw up National Defence Contribution? You would not need to have this impost then, because of the difference between the £20,000,000 and the £25,000,000. This point may not seem much in itself, but we go home every week and mix with our people, meeting the old age pensioners who tell us a most pitiable tale of how, after a long life of service to this nation, they are receiving 10s. a week. They tell us of their struggle to appear respectable in the eyes of their fellow-citizens. We also meet the man of 65 whose wife is not yet 65 and who has only the 10s. a week, and goes to the public assistance committee for the rent. There is the man who served through the War; the medical board always find that his trouble is old age, but he struggles along in most adverse circumstances. This is a heavy burden for such people.

I have been looking at the Budget income which the Chancellor gets, and I find that he gets £7,000,000 in respect of tea. The outstanding item is sugar, £11,000,000. I turn to another duty, imposed by this Government upon beef and veal; the figure is £3,500,000. If I remember rightly, that money is raised by Import Duty upon chilled meat from the Argentine.

The Chairman

I would remind the hon. Gentleman that we are discussing the duty on tea.

Mr. Taylor

I have made my point, Mr. Chairman, which is that if you go through all the items comprised in the enormous sum of £221,000,000 which is raised, you find that the bulk is passed on to the working class and to the poorest of the people. It is a mean and miserable thing for the Chancellor of the Exchequer to raise £3,000,000, and to try to awaken some feelings of patriotism in people who have not a darned thing to fight for. The first time I was in this House, some years ago, the present Chancellor of the Exchequer sat on the Liberal benches, and I remember when he was lambasting the then Chancellor of the Exchequer the right hon. Gentleman the Member for Epping (Mr. Churchill), for raiding the Insurance Fund. My, how you have departed from those Liberal days. When I listen to you, you are now raiding the last penny from the poorest of the poor. I could understand the late Chancellor of the Exchequer introducing a proposal like this. To me, he always looks as cold as the fish for which he fishes, but I cannot understand you, Mr. Chancellor of the Exchequer—[HON. MEMBERS: "Order!"]—leaving your Liberal tradition.

The Chairman

Less of the "you," please. The hon. Member will recollect that he is addressing the Chair.

Mr. Taylor

Well, Sir Dennis, thinking of the right hon. Gentleman the Chancellor of the Exchequer, away back in the days when he was not in that position, I should have imagined he would have more kindly remembrance of those whose claims he used to advocate on the Liberal benches.

10.11 p.m.

The Parliamentary Secretary to the Treasury (Captain Margesson)

I beg to move, That the Chairman do report Progress, and ask leave to sit again. I do so in view of the announcement which the Prime Minister made to-day at Question Time.

Committee report Progress; to sit again To-morrow.