|Tea not being an Empire product||the lb. 8d.|
|Tea being an Empire product||the lb. 2d.|
§ (2) This Section shall be deemed to have had effect as from the twenty-seventh day of April, nineteen hundred and thirty-nine.— [Mr.Barnes.]
§ Brought up, and read the First time.
§ 9.48 p.m.
§ Mr. Barnes
I beg to move, "That the Clause be read a Second time." The purpose of the Clause is to reduce the tax on Empire tea from 6d. per lb. to 2d. per lb. I desire to ask the Committee now to switch over from considering the rather nefarious practices of the counting house designed to evade taxes to consider a tax that falls on the conditions of the people in a form that they cannot possibly evade. Although the present Bill does not impose any new burden upon the consumers of tea, I think it is still appropriate that we should use this occasion to call attention to the burden on the average working-class household that this duty represents. In last year's Budget the Chancellor, justifying the imposition of another 26. per lb. on tea, said:I believe that there is a 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.]I must confess that that appeared to me to be rather offensive to one's sense of pro portion in considering the problem of equity in the field of taxation. Which are the humblest homes in the community to which the Chancellor referred? Obviously in the financial sense he was referring to the poorer homes, the homes of the old age pensioners, of the unemployed, of the widow struggling to keep her home going after a breadwinner has been taken from her, the homes of young sons and daughters trying to maintain a family, or invalids, or younger children. I think we might have been spared excuses of that description, at least from the Treasury Bench, when they were bringing up the high taxation on tea. Contrast that attitude with what we have experienced 765 during the stages of the present Finance Bill. We have witnessed highly organised and powerful sections of industry using to the full their capacity to influence Members of the House to evade or to defeat or to avoid any fresh impost on their particular industry. I do not take the view that there has not been some case for their demands, but I compare the influence which a highly organised industry like the film industry— with its capacity through publicity to reach the community and to influence public opinion, and the rapid effect that it can produce in this House— with the inability of the great mass of the consumers in this country ever to express an effective voice to the Treasury Bench when matters of this description are under consideration.
The second experience that we have had with regard to this Finance Bill has been the influence which the chemists, aided by the medical profession, have been able to exercise on a Budget decision, rightly or wrongly, as the case may be. Whatever the merits or the demerits of those particular tax issues may have been, I certainly claim that the demand for a reduction in the Tea Duty is based on grounds equally as strong as the demand for the abolition of the proposed film duty and for the re-imposition of the Medicine Stamp Duties. I recognise that the incidence of taxation at the present time is heavy in all directions, but it appears to me that when one looks at commodities like tea, sugar, tobacco, beer, and petrol, here we have a range of consumable commodities that unfortunately represent an easy method of collection for the Treasury, and they become too easy game when the problem of additional taxation confronts this House. I think there is too ready a disposition and too great an acquiescence on the part of Members of Parliament to permit the Chancellor to turn to this type of articles and to place heavy burdens upon them, whereas I think public opinion, and certainly opinion in this House, ought to compel the Treasury to devote its attention to devising a system of taxation based on the ability to pay of the whole community. While we continue to acquiesce in certain commodities being taxed because of their convenience of collection yielding an undue contribution to the national revenue, I do not consider the Treasury will direct its attention to a change in the taxation law that will raise 766 the necessary revenue on a basis of equity over the whole community.
I am not approaching this problem from the angle that the Chancellor of the Exchequer must not have the money. I accept the position that the money is necessary, but I am challenging the distribution of the burden. In regard to the 3,000,000 persons who pay Income Tax, I readily admit that their burden is a heavy one, but one cannot argue that those people are distressed to the extent that it represents personal physical hard ship in their budgetary position in the domestic sense. The imposition of the Tea Duty does represent actual distress if not to the majority of the citizens of this country, at any rate to a fairly considerable proportion. Not only that, but when you impose a duty of this description, by weight, on an article that varies in price, determined by quality, the incidence of the tax becomes increasingly aggravated.
As I am dealing only with a reduction of duty on Empire teas, I will not take the percentage of the incidence of the tax on foreign-blended tea. Let me take the percentage of incidence on the differently priced teas of Empire blend. On tea sold at 2s. a lb. the present tax represents 25 per cent. of the price. On tea at 2s. 6d. a lb. the tax burden is 20 per cent., on tea at 3s. per lb. it is 16.6 per cent., and on tea at 5s. a lb. the tax is 10 per cent. Hon. Members will observe that the poor type of person who is purchasing tea at 2s. a lb.— and many of them purchase even a cheaper quality of tea than 2s.— is paying two-and-a-half times the amount of tax on a pound of tea that the more wealthy person pays on the higher priced tea. Therefore, my complaint against this type of taxation is not only that it is wrong to turn to these ready methods of taxation, but that in the incidence of the tax itself, based upon weight and not upon value, its unfairness is aggravated.
The Colwyn Committee— it is true that the Colwyn Committee is now rather an ancient body, but I think the particular figure which I shall quote is still fairly accurate— estimated that the average home with a weekly wage of £2 consumed in the course of a year roughly 40 lbs. of tea. If that is the case, then a tax of 6d. a lb. means that type of home, where the wage does not exceed from all quarters £2 per week, is paying, roughly, £1 a year 767 in taxation on tea alone. I think that is a disgraceful state of affairs when we consider a tax of this description. When we were discussing the Sugar Duty the other evening. I emphasised the point that one could not consider these taxes on the breakfast table or the tea table without taking into consideration the definite trends of taxation which have developed in the last six or seven years. As a result of certain political and economic agreements with the Dominions, known as the Ottawa Agreements, other important items of food that were not previously taxed are now added to the taxable food list— butter, cheese, eggs, condensed milk and similar commodities. A whole range of additional taxes has been imposed upon staple foodstuffs. I am repeating myself a little here, but repetition is not entirely new in this House, and I think the Financial Secretary should have this point dinned into his ears as much as possible.
In regard to import duties, other staple foodstuffs like potatoes, tomatoes, fruit and vegetables are also now subject to tax, with the result that, roughly, £50,000,000 a year is raised in indirect taxation revenue on staple foodstuffs. If we also take into consideration the revenue that is raised in a general way by fiscal changes since this Government assumed power, we find that whereas in 1930–31, the last year of the then Labour Government, the receipts from all kinds of Customs and Excise was £121,000,000, last year, under the fiscal changes brought about by the present Government, the amount was £226,000,000. This is a burden imposed upon the masses of the people equivalent to a yield of is. 8d. in the £ on the Income Tax. Whilst the Income Tax has increased by only is. in the £since 1931, we have had this additional burden imposed upon the indirect taxpayer.
My final point is this, that in 1929, when the right hon. Member for Epping (Mr. Churchill) was Chancellor of the Exchequer and he abolished the Tea Duty, he reminded the Committee that the Tea Duty had remained in being since the time of Queen Elizabeth, and he was glad to be the instrument to abolish the tax in the reign of the late King George V. He expressed the view that as this was a burden that fell on the humblest, the old, the weak and the poor, he was wit- 768 nessing the final abolition of this particular tax. Apparently, the present Chancellor of the Exchequer is determined, in the reign of another King George, George the VI, to inaugurate increasing taxation on the comforts of the old, the weak and the poor.
§ 10.4 p.m.
§ Mr. Collindridge
I beg to second the Motion.
This is the first time that I have taken part in any discussion on a Finance Bill in this Chamber. I have sat through the Debates that have taken place during the last few days, and I say with respect that I have been a little worried in hearing so constantly the views of big business. By hon. Members on the benches opposite an amazing amount of time has been spent in looking after the interests of people who can very well look after themselves. On this occasion we are voicing the cry of the poorer section of the community, which constitutes the mass of the nation. We have in this proposal the voice of the breadwinner who is unemployed, of the injured worker in receipt of compensation, the old age pensioner and the widow endeavouring to bring up her family on a meagre pension. There is also in the appeal that we make to the Government the cry of the recipient of public assistance. In my constituency last week-end I conversed with a widow who in her early days lost her father and a brother in a mine explosion. She is now in receipt of the old age pension and at the age of 72 has to go out charing. The tax that was inflicted last year weighed heavily on people of that kind. In mining districts there is a large consumption of the beverage which we are told cheers but does not inebriate. A miner often consumes two quarts of cold tea in a shift. The infliction is much greater on working-class folks than on the well-to-do, who can take some other stimulant and are able to pay a greater tax than these poor people. I do not want to introduce a too sentimental note but I think I ought to put this over. Accidents occur in mines and factories, and generally, after a few words of sympathy extended by kindly neighbours when the worker is brought home fatally injured, the stimulating effect of a cup of tea helps to alleviate the sorrow occasioned by the accident.
I have heard hon. Members opposite suggest that, when heavy rates are im- 769 posed, the ratepayers should be told the amount of the rate for certain services. If they are sincere in that argument, they themselves ought to have placed on the packets of tea the amount of the tax that it bears. The burden does not fall only on the consumers. In the Barnsley district in the last 12 months the number of old age pensioners who have to apply for public assistance because of the meagre pension that the Government gives has increased by 13 per cent. The taxation on tea reduces the purchasing power of these people and so inflicts a loss on the trading community. In my youth I used to read the speeches of prominent statesmen, including the present Chancellor of the Exchequer. I am proud to say that I never shared his political beliefs but I did subscribe to a phase of his political activity when he suggested a free table as far as taxation was concerned. I am wondering where that forgotten past has gone. It makes me wonder whether the right hon. Gentleman, who supported the free breakfast table, has not now transferred his affections to the free medicine chest.
The argument has been used that the poorest of the community may well be proud to bear their share of the expense of rearmament for their protection. I wonder how that strikes our potential enemies. If it is broadly quoted that the poorest of the community have to help in making big guns to protect them, that will not strengthen our moral. I hope that in these days, when tension is becoming more acute and the need for national unity is stressed from all sides, and not least from the Government side, we shall consider this tax from two points of view. The first point is that the main burden of the tax falls on the masses of the poor, and the second point is that the people who are paying the tax are in need of support rather than of the oppression which comes on them by way of this tax. I hope that for the sake of national unity the Government will throw out a gesture to the people by saying, "We recognise that you are unable to bear this tax." It may be said that the money must come from somewhere, and we on this side support that view, but we say the issue is between people who are bearing nearly intolerable burdens and the rich, who, though they also have to bear the tax, will only have to economise to the extent of having, perhaps, a less 770 high-powered car or taking a little less champagne or living a little less extravagantly. The burden can be borne better by those people than by the poor people on whom it is being imposed.
§ 10.17 P.m.
§ Mr. R. J. Taylor
I wish to support the reduction of this duty, and I would take the opportunity of telling the Chancellor that he was not the first to say that he felt sure that the people in the humble homes of this land want to play their part in rearmament. I remember the present Prime Minister making the same statement in 1937. I have told a large number of the people in my constituency what was said, and it left them absolutely cold. They showed no signs of emotion. They felt that it was unnecessary to make an appeal to them on those grounds. An added burden in their already straitened circumstances was something which they were not asking for. They take the view that for a long time they have been playing their part in helping to build up and strengthen this nation but that the statesmen of this and other countries have misused and wasted their opportunities. Those elderly people down in the shadows at the latter end of their lives feel that this increased tax is a burden that is un warranted and should not have been placed upon their shoulders, and I assure the Chancellor that if he could see his way to remit the burden it would be greatly appreciated.
For the last week or two we have been discussing our remembrances of the last War, discussing how to find ways and means of stopping the holes through which the profiteers may get away. I admit that it is a big job, and I shall be satisfied that the holes have been stopped only when I see results from the efforts made by the Chancellor. But I must return to, the more humble topic of tea, though I would add that if the Chancellor has effectually stopped the holes he ought to get a considerable amount of money. In getting that money, and in view of the added burdens which the Government have placed on the backs of these people, including the old age pensioners, the compensation men, the widow, the man who happens to be 65 years of age and his wife aged 60, unable to get a pension and forced to have recourse to the Poor Law system. [Interruption.] The Financial Secretary to the Treasury may get a con- 771 siderable amount of joy out of that picture, but I hope that his wife will not be in that position when the time comes. In looking into the future, as the Chancellor has been trying to do in order to stop profiteering in armaments—
§ The Deputy-Chairman
The hon. Member is dealing with a subject which is not part of the proposed new Clause.
§ Mr. Taylor
I feel that we are entering a new period when the rise in the cost 01 living will probably be fairly steep. The Government are not preparing to give old age pensioners some increase in their pensions.
§ Mr. Stephen
Surely the hon. Member is in order in showing how heavily the Tea Duty bears upon the old age pensioners who have only 10s. a week.
§ Mr. A. Jenkins
Surely he is entitled to point out that old age pensioners are unable to buy the same quantity of tea as they would if the duty were lower.
§ Mr. R. J. Taylor
I want to show that 10s. does not go as far as it did seven years ago and that the cost of living is rising. If the Chancellor of the Exchequer would make the remission that we suggest it would be a counter-balancing factor and would enable our aged people and old age pensioners to keep pace in some measure with the increasing cost of living.
§ 10.23 P.m.
§ Captain Crookshank
It is always interesting in a Debate upon the Tea Duty to see what new points are raised in support of the reduction or the abolition of that duty. The case this year is a very simple one. Listening to the speeches of hon. Members one would have thought that this duty would be removed by the enactment of the proposed new Clause which we are discussing— but this is not so. The Clause leaves the Tea Duty, and it can surely be argued that it thereby 772 admits by inference, at least, that at any rate it is a right thing that some part of the money which is required for the National Exchequer this year should be derived from that source. I could have understood it better if the hon. Gentleman had proposed abolishing the duty altogether—
§ Captain Crookshank
As I say, I could have understood the logic of that. Let me first say that as no one has yet explained what the Clause would do, I would ask the Committee to consider its effect. The Clause proposes to leave the existing duty on foreign tea as it is, and to reduce the duty on Empire tea from 6d. to 2d. I do not make any point of the unwork ability of the second paragraph of the Clause, which as regards the past would have the effect, if it were carried, of making this concession operate not for the benefit of the consumer but for the benefit of the trader. I do not suppose that that was the object which the hon. Gentleman had in mind, but the Clause proposed would have that result. The effect would be to reduce the duty on Empire tea from 6d. to 2d., and that would have very serious consequences on the Exchequer. At present something like 94 per cent. of the tea retained for consumption in this country is Empire tea, and no doubt, if the existing preference, which is considerable, was increased to that extent, there would be practically no foreign tea used at all, and therefore the price would be greater than it is on the present basis. The estimated cost of this concession would be £5,750,000 this year, and £6,500,000 in a full year, and the hon. Gentleman will realise perfectly well that a concession of that magnitude is one which cannot, in present circumstances, be considered. [Hon. Members: "Why not?"] Because of the needs that have been explained over and over again during the passage of the Finance Bill, and the general plan for financing the expenses of the year as outlined by my right hon. Friend in opening his Budget. Hon. Gentlemen opposite had, I am sure, no expectation that I should be able to recommend this Clause to the Committee in view of the present financial situation, as they admit themselves by not having moved to abolish the Tea Duty, but only to reduce it in this way.
773 I do not think it is necessary to go through all the arguments that have been so often used on this subject. The hon. Member who moved the Clause made a most interesting series of statistical calculations, about which I would only say this, that, while it is no doubt of interest to contrast the revenue from Customs and Excise in the year 1930–31 with that of this year, we have, of course, changed our whole fiscal system, to the great advantage of the country, during the intervening years, and therefore it is no use arguing on that basis. But when the hon. Gentleman says that the Tea Duty—which, incidentally, is not being increased this year, though some of the phrases used in the speeches would make a casual hearer think that it was—when the hon. Gentle man goes so far as to say that the existing Tea Duty causes actual distress up and down the country, I venture to suggest that he is really rather exaggerating the case. Personally I have never heard, and I should very much doubt whether anyone else has heard, of a case of what might be called actual distress as a result of the duty. While no doubt, as the Chancellor has pointed out on previous occasions, all taxation is an imposition and a burden, as we are all perfectly well aware, to carry it to the extent of saying that it causes distress is, I think, to use the language of exaggeration.
Mr. J. J. Davidson
Is the Minister totally unaware of the fact that a very great proportion of the people of this country, because of poverty, buy the cheapest possible tea on the market; and is he aware that that cheap tea causes, in a few years' time, very grave distress to the physical health of those people?
§ Captain Crookshank
I have not heard of any medical evidence to that effect. But there are a number of other new Clauses in which hon. Gentlemen opposite are interested, and, having made their case—such as it is—on this, and having heard that it is quite impossible for us to make a concession of this kind, they may be prepared to go to a Division.
§ 10.31 p.m.
§ Mr. Stephen
I am sorry that the Financial Secretary has given such an un sympathetic answer on this important Clause. He said that this was a hardy annual and suggested that there was nothing serious in this proposal, because 774 the Opposition had not proposed the complete abolition of the tax. It is very difficult to deal with the Minister. If we had proposed the abolition of the tax, he would have started to tell of the tragic state of the country, and how the rich people were being threatened with such poverty that they would soon be going about in rags. All that the Opposition did was to propose a reduction of the tax—and a reduction that might have met with the favour of hon. Members opposite, who profess such a love for the Empire, since it would tend to develop friendly relations with different parts of the Empire. But there is no pleasing the Minister. He has simply said that the concession would cost in a full year over £6,000,000, and that the Government, therefore, in present circumstances, could not dream of accepting the Clause.
I wonder whether the Government would not reconsider their attitude, and whether, if they are not prepared to accept this Clause, they might not be induced to apply the same principle to this tax as they have to the Armament Profits Duty. If we could get that principle applied to this tax, so that the tax on tea would be simply an eye washing tax, as the Armament Profits Tax is, it would be to the advantage of everybody. For example, the Chancellor of the Exchequer might arrange that the tax would apply only after a certain amount of tea had been bought by any person. Why should we not apply to the poor people who are hit by this tax the same principle as we do to the profiteers and the armaments industry? The Financial Secretary does not know of any people who are distressed by the operation of the tax. I could refer him to some pas sages in some of the former speeches of the Chancellor of the Exchequer in which he showed eloquently how this tax bore heavily on the poorest members of the community, and how important it was to free the breakfast table from this tax. The Financial Secretary evidently thinks that there was no substance in all that long series of speeches which helped to make the reputation of his distinguished colleague, the Chancellor of the Exchequer. Another point which he made is that it is impossible to give up the tax, because of the circumstances of the country and the heavy expenditure in which it is engaged at present. Evidently it is necessary to get this money, although 775 it means, as the Chancellor of the Exchequer recognises, a good deal of hardship.
In the circumstances of the country and of the large expenditure in connection with armaments and of the tremendous responsibilities of the Government at the present time, they are completely misinterpreting the mind of the people of the country with regard to the willingness of the ordinary people to bear the extra amount of taxation involved in the tax on tea. I do not believe that the slogan with which the Government are evidently going to the country at the general election, namely, "Vote for a tax on tea and security for the Poles" will make an appeal to the great mass of the people of this country. I do not think that the ordinary people of this country are so full of sympathy for Poles, Greeks or Turks as to ask that a tax should be put on their tea in order that things may be right in Danzig. I am very disappointed that the Government did not go any distance at all to meet the Opposition, who were very modest in asking not for the abolition of the tax altogether, although it would be thoroughly justified in justice and in logic, but only for a certain amount of remission, and yet the Government have turned a deaf ear to their appeal. I hope that the country will realise that the Government, in all their schemes of taxation, are providing loophole after loophole in order to allow the profiteers to get away with their profits, while they refuse any lightening of the burden of the ordinary poor people in the community.
§ 10.38 p.m.
§ Mr. Naylor
I was surprised at the comments made by the Financial Secretary to the Treasury. He is usually so precise in his arguments, but on this occasion I think he will recognise that he failed to make a distinction between the incidence of taxation upon the poor and the incidence of taxation upon the rich. The incidence of the Estate Duty is negligible, but if you add anything to the cost of the working class budget it does not merely mean that the man or woman pays more, for that is only half the statement. The real incidence of the tax upon the poorer classes is that they buy less. You restrict their income in the same way as is the case when wages 776 are reduced. They have less to spend upon the necessities of life, and to that extent the incidence of taxation is very different as between one class and another. If you raise the Income Tax you do not necessarily alter the standard of living of those who pay the higher rates of Income Tax, but if you put a tax of any sort, either direct or indirect, upon the workers you immediately reduce their standard of living. Therefore I hope the Financial Secretary to the Treasury will realise that when he reminds us that all classes must share the burden of taxation, he should also re member that the burden falls more severely upon those who have their standard of life affected by the maintenance or the increase of the tax, than on those who have to pay without having any alteration whatever made in their standard of living.
§ Mr. Gallacher rose—
§ 10.40 p.m.
§ Mr. Gallacher
I will certainly try to avoid the behaviour of hon. Members opposite. I want to ask a few questions. I want to know where are the mighty battalions who were fighting so valiantly for a reduction of the tax on films? Where are the heavy weights who battered the Chancellor for the removal of the Stamp Duty? Where are they now, when we are discussing a tax on the food of the people? Where are all those mighty orators who in 12 horse-power speeches tried to get a reduction of the motor car tax? Where are the three Birmingham Members who, when speaking of the steel industry, had the audacity to say they were speaking for their constituents? Where are they now? They have all gone— and they are not drinking tea. Why is it that when a question so vital to the poor is being discussed they are absent? It is no exaggeration to say that a tax on tea causes distress. If wages are low and the price of commodities too high, if you increase the price of tea, they are all contributory factors to the distress which exists in the 777 country. No hon. Member will dare to deny that, and when it is a question of a tax which bears so heavily on the masses of the people how is it that there is not one hon. Member opposite who is prepared to say a word on behalf of the poorest of the people. It is obvious that they arc not concerned about the poor.
Surely some hon. Member opposite will have one word to say? I ask the Financial Secretary whether he will agree to this proposition, that while one section of the people have a surplus there is no justification for taxing those people who are living under the recognised standard of decent life. Is he prepared to deny that proposition? Are hon. Members opposite prepared to deny that proposition? You cannot talk about spreading the taxation over the whole of the community. These poor workers— who are being taxed are already living under the recognised standard as laid down by the British Medical Association as the standard of subsistence. It is said that they have to contribute
§ their share. I have already had occasion to point out that they are the only people who are contributing anything. I see an hon. Member opposite lying back and smiling; I would like to see him stuck into a factory to produce guns. The men who are living under a normal standard of life are the men who are producing the guns, the tanks, and all the armaments that will defend the country. It is presumption for any hon. Member to suggest that a tax should be put on them in order that they should contribute some thing to defence, when they are producing everything for defence. Without them, there could be no defence. It is shameful. Therefore, I ask whether it is possible, out of all that Sodom and Gomorrah that presents itself on the other side of the Committee, to get one just man who will get up and say one solitary word on behalf of his poor constituents.
§ Question put, "That the Clause be read a Second time."
§ The Committee divided: Ayes, 119; Noes, 174.