Clause 4.—(AMENDMENT OF EXCISE DUTY ON MECHANICAL LIGHTERS.) (Hansard, 6 June 1951)

§ Mr. Nigel Birch (Flint, West)
I think we should like to have a little explanation about this Clause. As I understand it, the object of the Clause is to prevent some form of tax evasion in the assembling or manufacture of mechanical lighters, but what the Clause does seems, on the face of it, to be rather sweeping. Subsection (1, a) says: any prescribed component of a mechanical lighter…shall be deemed to be a mechanical lighter, but incomplete. The Clause first says that anything may be deemed to be a mechanical lighter, but then goes on, in subsection (2), to say that probably the Treasury will say that the prescribed component which is a lighter is the component part or one of the component parts least likely to require replacement. Anyone looking at his lighter might well be in some doubt as to which was the component part least likely to require replacement.
The mischief arises here because subsection (1, b) has a retrospective effect and says that a manufacturer of mechanical lighters shall include a person by whom any such component…has been manufactured…not withstanding that he has not carried on the manufacture at a time when such a component or assembly is deemed to be a mechanical lighter. The net effect of the whole Clause is that any bit of old iron is a mechanical lighter. Not only is it a mechanical lighter, but it always has been a mechanical 1044 lighter. That seems, on the face of it, a very ponderous, and indeed undesirable, weapon to use to try to stop something which may require no such great force to prevent. It is using a sledgehammer to crack a nut. If hon. Members consult the governing Act, the Finance Act, 1928, they will see that in it there are a great many provisions for preventing the fraud of evasion. It says that when a manufacturer of mechanical lighters, sends out from his premises without payment of duty any mechanical lighters, whether complete or incomplete he can be sent to jail, and there are regulations of the utmost detail about who is an authorised manufacturer, and so on. The question of the parts of lighters being sent out is also dealt with.
Before the Committee passes this Clause it is entitled to some account of the fraud it is intended to prevent, and also some justification—for it will need justification—for the retrospective provision which declares that any bit of old iron not only is a lighter but always has been a lighter.

Mr. Hopkin Morris
I wish to support the comments of the hon. Member for Flint, West (Mr. Birch), and his plea for further information. I make this addition. This Clause is a very good illustration of what happens when it is sought to put a tariff duty upon things. What is a lighter, what is a component part of a lighter, or what is the prescribed component part of a mechanical lighter cannot be defined.
I well recall the present Leader of the Opposition, when he was Chancellor of the Exchequer, introducing the duty upon match lighters, because a very interesting thing happened. One night the only occupant of the Government Front Bench was the Financial Secretary, and the then hon. Member for Bradford, North, now Lord Ramsden, moved to delete the countervailing duty provided in the Bill, and the Financial Secretary accepted the Amendment. The result was that the Committee had to be adjourned so that the Chancellor could come to the House next day to restore his own Budget. That was the first difficulty we got into over match lighters. Now we are in another difficulty over match lighters. What is a component part? What is a prescribed component part? Is it any old iron? Who is to define it?
1045 We have often talked about the evils of delegated legislation, when the power to define a thing has been handed to a Minister. In this Clause that power is not merely handed to a Minister. It is not merely handed to the Treasury, who have certain functions to discharge. It is handed still further, to the Commissioners, who under subsection (3) are to determine whether a component part of a lighter appears to them to be constructed solely for the purpose of igniting gas. How do they determine that? What are the conditions upon which they make their judgment? There is nothing here to indicate that. Will the Commissioners go from one part of the country to another? There is nothing to indicate it. This is a typical tariff Clause, muddle-headed from start to finish, which ought to be deleted.

§ The Economic Secretary to the Treasury (Mr. John Edwards)
I think that the purpose of this Clause is quite straightforward, and although it may take up some 50 lines or so of the Bill I doubt very much whether even the ingenuity of hon. and learned Members opposite could produce something that was any shorter or clearer for the purpose in mind.

Mr. Hopkin Morris
Delete it.

§ Mr. Edwards
Let me explain the point of the Clause. It is, of course, not to raise revenue but to safeguard revenue. Some manufacturers found a legal way of avoiding the payment of duty on gas lighters of certain types. The method that has been adopted is to offer for sale, free of duty, complete sets of parts, ostensibly for replacing worn out parts of lighters in use, but in reality for assembly into complete lighters by the purchaser at home. I think the Committee will agree that this evasion of tax constitutes a form of unfair competition to the legitimate trader, and that it was reasonable that we should try to stop it, for if we were not to stop it this kind of device could spread.
What this Clause does is to establish the principle that no set of mechanical lighter parts can be sold unless one of the parts has borne the appropriate amount of duty, and it leaves the Treasury to apply this principle according to the special circumstances for each type of lighter. Clearly, it was necessary to apply this from the time it was first announced 1046 in the Budget Speech, and we therefore had a Budget Resolution imposing the charge as from 11th April. If we did not make this retrospective there would be nothing to prevent the stocks of these prescribed components held by manufacturers being disposed of without payment, and it is therefore essential that that part should be in the Clause.

§ Mr. Birch
Why could not a date be put in subsection (1, b)? The thing is completely unlimited at the moment.

§ Mr. Edwards
Clearly, it only has effect from the Budget Resolution of 11th April. The Budget Resolution of 11th April actually imposed this charge, and all we wanted to be sure about was that the people who had been doing this would not be able to dispose of their stocks. That is the only point. I should have thought the Committee was completely protected by the procedure laid down here, that we have to have an Affirmative resolution if the incidence of the tax is extended and a Negative resolution in other cases.