§ As regards tobacco, I propose to increase the duties by a further 6s. per lb. on the unmanufactured leaf, with a corresponding increase in the duties on imported cigars, cigarettes, etc. In connection with the Tobacco Duties, I made it clear in my Budget speech last year that the preference on Empire tobacco would be reviewed in the light of the undertaking given in the 1938 Trade Agreement with the United States of America, whereby His Majesty's Government agreed to consider the possibility of reducing the margin 972 of preference on Empire tobacco when the 10 years guarantee under the Ottawa Agreements expired in 1942. A Sub-section was included in the Finance Act, 1942, extending the period of guarantee under this Bill to April, 1943, at the latest, in the expectation that by then a definite decision would be reached in the matter. It is now proposed to reduce the present preference margin of 2s. 0½d. per lb. on tobacco leaf by 6d., and proportionately on other tobacco, and the reduction will be effected by an increase in the Empire rates of duty. All these changes will take place from to-morrow. They will, I understand, amount to an extra 4½d or 5d. per ounce of pipe tobacco, according to the quality, and an extra 1½d. on a packet of 10 cigarettes now sold retail at 9d., and an extra 2d. on those now sold for 1s.
§ The Committee will remember that when the Tobacco Duties were increased last year special arrangements were made whereby members of the Armed Forces in this country and their associated Women's Services were allowed to purchase cigarettes and tobacco at pre-Budget prices at N.A.A.F.I. and certain other canteens. I propose to extend this concession to the present increases in duties. That is to say, tobacco and cigarettes sold under the 1942 canteen arrangements will continue to be available, under the same conditions as last year, at the prices which have operated since the 1941 Budget.
§ The gross gain to the revenue from these changes in Tobacco Duties is estimated to be £58,000,000 in a full year, and £57,000,000 this year. The net gain to the Exchequer will be less than this, because of the concession to the Services, but for obvious reasons the cost of that concession cannot be disclosed.