CLAUSE 22.—(Person accountable for, and accruer of, tax.) (Hansard, 8 August 1940)

§ Mr. R. C. Morrison
I wish to move that this Clause be deleted.

§ The Chairman
That is not an Amendment which can be moved. I thought the hon. Member knew that. If he wishes to oppose the Clause, he may do so.

§ Mr. Morrison
It occurred to me, Sir Dennis, that if there was a short discussion now, it would obviate a discussion later on with regard to the new Clause which stands in my name on page 114: Tax chargeable in respect of any purchase shall become due at the time of the retail sale. With your permission, Sir Dennis, I would only say that a large number of people hold the opinion, rightly or wrongly, that if we were to have a Clause of this kind, it would be simpler to have a stamp tax which would be placed on the articles at the time of sale by the retailer. That would have been much less objectionable, and it would not have been open to the fear, which many business people have, that between the imposition of this tax on the wholesaler and its reaching the customer, a great deal may be added to it. Also, as the Bill stands, the tax will have to be paid by the retailer, irrespective of whether the goods are sold or not. Many retailers will have in their shops seasonable goods on which the tax has been paid, but which, because they are unable to sell them during the season, they will have to 555 put away until the next year. That applies to such things as women's clothing and men's overcoats, which, if they are not sold before the end of the winter, are put away till the next winter, when they are brought out again as "new season's goods." Although I do not wish to argue the matter at length now, I think it is a pity that the Government did not pay more attention to exploring the possibilities of a simple Stamp Duty on sales.

§ Mr. Barnes
If your Ruling, Sir Dennis, is that we should make our contributions on this Clause, there are two points—

§ The Chairman
I do not wish to be misunderstood. If an hon. Member puts on the Order Paper a Motion to omit a Clause, it is a well-known procedure that that is not called as an Amendment.

§ Mr. Barnes
The Amendment was not handed in in the form in which it appears on the Paper. It has been split up into two sections.

§ The Chairman
I do not understand the hon. Member. Perhaps he is under some misapprehension. There is no Amendment down on this Clause. If this Clause is passed, it is true that the proposed new Clause of which the marginal note is Time at which tax to be chargeable, would be out of Order, because it would be contrary to something that we are passing in this Clause.

§ Mr. Barnes
That is what I am raising. I understood that it was put in originally as an Amendment. It appears on the Paper in two parts, as I have indicated. However, there is no value in stressing that point. I am merely taking this opportunity of submitting two points upon which I should like the Chancellor's comments. We have had no indication yet as to what the Government's attitude will be in regard to the operation of this tax in relation to the operation of the Prices of Goods Act. The Chancellor knows that under the Prices of Goods Act any increase, particularly in this range of goods, is very severely governed. Once or twice I have made the point that the retailer will be called upon here to find a considerable additional sum of capital for purchasing his stock. When 556 we talk in terms of one-third and one-sixth, we ought to take into consideration that there will be additional charges to go on those goods, above the amount of the tax imposed.
The second point that I want to put is the effect of Clause 22 and the proposed Amendment that my hon. Friend the Member for North Tottenham (Mr. R. C. Morrison) has raised on the export of goods. I observed in the "Manchester Guardian" a day or two ago a reference to the pledge which the late Chancellor of the Exchequer gave when the original Purchase Tax was introduced that he would take steps to safeguard the export market in these goods against any handicap of the tax. The Federation of British Industries have pointed out that in the Customs Regulations both in the United States of America and several of the Dominions the export price should be based on the market price of the same article in this country. Therefore if, with regard to the Purchase Tax, we impose the price at the wholesale end, I wonder whether that particular point will be met.
Everyone recognises to-day the additional importance of exports in relation to our war economy. I am not interested in that angle of the problem, but the broad problem of exports does appeal to me. It is a point of some importance, and I have not yet noticed any reply. If the tax is to affect exports, then the Treasury ought seriously to consider the Amendment implied in these suggestions.

§ Mr. Glenvil Hall
I would like the Chancellor of the Exchequer to be good enough to explain the Clause to us before we attempt to pass it. In addition to the questions already asked by my hon. Friends, there are one or two questions that I would like to put to the Chancellor of the Exchequer. I will take the simple illustration of books. It says in the Bill: Tax chargeable in respect of any goods shall become due…on the delivery of the goods. I take it that it means the delivery of goods from wholesaler to retailer, and that in the case of books, it will be the bookseller. The Chancellor of the Exchequer, who is a great reader of books and has a great library himself, must know from his own experience that booksellers frequently have certain books on their shelves for a large number of years.
557 It may be that this war may not last for eternity, and there will come a time when these books will still be on the shelves, and he will have obtained the Purchase Tax on them. By that time I assume that the tax will have come to an end. What provision does he provide for that bookseller to recoup himself for the Purchase Tax he has paid to the wholesaler, and which he will not be able to get from the persons to whom he sells the books? There is the case of remainders. As the Chancellor of the Exchequer knows, the book trade is a peculiar market. I use the book trade as an example, but this difficulty arises in other directions. Sometimes a book does not go too well, and a large proportion of the edition is left on the hands of either the publisher or the middleman, who has perhaps bought up the books at a cut price and puts them on the market. Is the price of the wholesaler the full price, or has some other figure to be discovered and passed on to the consumer?
Those are some of the queries that arise in my mind and I would be very glad if the Chancellor of the Exchequer could find it in his heart to explain to us, quite briefly, how this tax can be passed on in the way suggested in the Clause we are now debating.

§ Captain Crookshank
I do not want to repeat myself so I will say to the hon. Member for East Ham, South (Mr. Barnes) who said he was interested in the export trade problem, that I dealt with this question at considerable length on Tuesday, as he will see in column 164 of the OFFICIAL REPORT—

§ Mr. Woods
That statement left it that negotiations were proceeding. There is no guarantee that we shall have a satisfactory arrangement. It is left in the air.

§ Captain Crookshank
I said that representations of a suitable sort were being made. Things move quickly in these days but I cannot say that they move as fast as the hon. Member seems to suggest. The second point the hon. Member for East Ham, South, raised was the position in relation to the Prices of Goods Act. Here again, I made a considered statement, on the advice of the President of the Board of Trade, on 25th July, as will be seen in column 1057 of the OFFICIAL 558 REPORT.I will not repeat that either, but if the hon. Member thinks the statement was not sufficient perhaps he will let me know privately. Perhaps the hon. Gentleman was so busy preparing his speeches for this occasion that he was not able to be here on that occasion.
The hon. Member for Colne Valley (Mr. Glenvil Hall) asked for an explanation of what the Clause does. It describes, first of all, the person who is accountable for the tax—in Sub-section (1) in very big letters—and, secondly, when the tax chargeable is due—in Sub-section (2) in equally big letters. The person chargeable is, in ordinary language, the registered person who is selling the goods. That is the person who will have to pay to the Exchequer. The tax itself is due on delivery of those goods under purchase. The value of the goods upon which the tax will be assessed is the value of the goods at the date of the delivery. These are the essential points—value, date and the person accountable.
The two hon. Members who wanted this Clause removed suggested an entirely different plan. They wanted the tax to become due at the time of the retail sale, but that is a suggestion which is, of course, completely impracticable. The wholesaler selling goods to the retailer expects payment of his account within some sort of limited period. How in the world can he know when to collect the tax from the retailer, because the retailer, having got the goods from the wholesaler does not sell them all in a day. Indeed, the hon. Member for Colne Valley was worried about the retailer ever selling his goods. The wholesaler will not know whether the retailer's goods are sold or not. The suggestion is so impracticable that I have a suspicion that it is a wrecking proposal because hon. Members are not in favour of the tax.

§ Mr. Glenvil Hall
What the right hon. and gallant Gentleman is saying, in essence, is that you are going to tax a purchase which in fact may never be made.

§ Captain Crookshank
No. The purchase is all right—purchase by the retailer from the wholesaler. What happens to it afterwards, whether it is sold or left in the library till the war is over, is another matter. It is the actual moment of sale when it passes out of the hands 559 of the wholesaler for a consideration to the retailer.

Sir Joseph Nail (Manchester, Hulme)
There are two distinct issues and it is unfortunate that one of them should have been pressed so strongly. One issue that is important is that of the export trade. That ought to be settled before the tax is finally carried through. The other matter, of the retailer having to buy goods and stock them against future sale, has been over-argued and over-stated. The difficulty which is distressing a lot of retail shopkeepers is that the precedent is there. Sugar goods, tobacco, liquors, petrol, oil—all these things are taxed before distribution. Every grocer, toffee-shop keeper, tobacconist and confectioner has to carry a stock which is duty paid, and the position of booksellers and those who, in future, stock goods which under this provision will be duty paid, will be no different from the grocers, tobacconists and wine-sellers. There is nothing in that. That point ought to be stressed in order to disabuse the minds of a good many retailers who are being made to think they are being subjected to something quite new, whereas the principle contained in the Bill is strictly in accord with precedent and causes no trouble to the trades already concerned.

§ Mr. Woods
I should not have intervened but for the suggestion that my hon. Friend had introduced a wrecking proposal in seeking to omit the Clause. The articles mentioned by the last speaker are not in any sense in the same category as the articles which will be covered by the Purchase Tax. [Interruption.] The hon. Member has his experience. Some of us have had ours. Directly you come to dry goods, the drapery section, especially fancy goods, which are all carrying a high rate, there a considerable percentage of the purchases have to be sold at sale prices. There is a considerable volume of sales in which goods under this scheme will actually have to be sold over the counter at a smaller figure than has been paid by the retail buyer. The tax will not be covered by the sale in a number of commodities. This is different from the routine business of buying so many packets of cigarettes and so forth.
Some of us are concerned about the day when the tax will end. We are hope 560 ful that we shall arrive at the stage when taxation will be direct and there will be an opportunity for some future generation of British people to say that the present system is iniquitous and to bring it to an end. Difficult as may be the starting of the tax, there will be a much stronger argument for continuing it, once it is there, because of the difficulties of ending it. Many shopkeepers will be left with stocks on which they have paid the tax, and those who start de novo and get new stocks, without the tax, will be in an advantageous position. One of the reasons for considering the proposal to leave out the Clause is that it would hold out some hope of ending the tax expeditiously and in a manner that would be equitable.