§ With regard to tobacco, I am sure that the Committee will expect me to be cautious about this duty, which yields so large a proportion of the revenue. The Committee is also fully conversant with the current public discussion about smoking and health. It has been suggested, among other things, in the Report of the Royal College of Physicians, that the duty should be recast to discriminate against cigarettes and in favour of pipe tobacco and cigars. It would be possible, though more staff would be needed, to deal specially with cigarettes delivered direct from the factories. The difficulty is that any differential tax could be easily avoided by people making their own cigarettes from tobacco which could not be distinguished 987 for revenue purposes from some kinds of pipe tobacco. Simple devices exist for this purpose—and some of us may have used them already. In fact, manufacture would be shifted from the factory to the home.
§ I think, therefore, that it is wiser to consider the general level of the duty. The duty is already extremely high: it accounts, with the surcharge, for about 3s. 4d. on a packet of cigarettes selling for 4s. 6d., which is equivalent to a Purchase Tax of nearly 500 per cent. If I were to make a further, penal, increase in the general rate of duty, smoking, even in moderation, would be taken quite out of reach of many people of limited means, and I am not prepared to do this.
§ I will content myself with consolidating the basic tobacco duty at a level broadly equivalent to What it is now, including the surcharge. In technical language, this means adding to last year's basic rates the average of the surcharges on the most-favoured-nation rate and on the preferential rate. That is the technical language. In non-technical language, it means that a person buying a packet of cigarettes tomorrow will pay the same price as today. In present circumstances it is difficult to estimate the yield of the Tobacco Duty for the coming year. I am putting it at £885 million, which is £15 million more than last year, when the surcharge was operative for eight months only. But in framing my Budget I have taken into account—and that is an element in my Budget statement to which I have referred—the possibility that the yield may be less than this.
§ The second range of duties on which I propose to maintain taxation at roughly the present levels is that on alcoholic drinks. To do this, I have to take the Excise and Commonwealth preference rates of a year ago, and make the appropriate addition to arrive at the 10 per cent. increase. For spirits, consolidation means an addition of £1 1s. 1d. a proof gallon above the rates of the last Budget; that is, before the surcharge. For beer, it means an addition of 11s. 2½d. for 36 gallons, with corresponding increases for the stronger beers. I repeat, in both cases there should be no changes in today's prices.
§ Wine is somewhat more complicated, because the preference margins are relatively 988 larger and there are certain additions for bottled and sparkling wines which were bound under G.A.T.T. My proposals ensure that in no case will the duty on wine be more than at present. Consolidation means an addition of 1s. a gallon to last year's basic duties for light wine and Is. 6d. a gallon for heavy wine. There is no duty distinction between light and heavy British wine, and consolidation here means a uniform addition of 1s. a gallon.
§ Next, light hydrocarbon oils. The present surcharge on light hydrocarbon oils and derv is 3d. a gallon. Consolidation here means an addition to the basic rates of precisely that amount. We are bound by our E.F.T.A. agreement not to increase the excise protective margin of Is. 3d. a gallon. To avoid doing so it is necessary to increase the Excise rate to Is. 6d. from today's level of Is. 4½d. The revenue reason for this course is over-riding: if Is.4½d. was maintained as the Excise rate, which would mean 2s. 7½d. for the Customs duty, the Revenue would lose about £20 million a year.
§ There are two other duties where I propose consolidation at the present level, inclusive of surcharge: the football pool betting duty, where the basic rate will become 33 per cent. instead of 30 per cent., and the television advertisement duty, where the basic rate will become 11 per cent. instead of 10 per cent.
§ I have decided to leave the duty on matches, the countervailing duty on mechanical lighters and the duty on betting at dog-race courses at the levels of the last Budget.
§ I have also decided not to increase the basic duty on heavy hydrocarbon oils of 2d. a gallon introduced in last year's Budget. That means a cut of 9 per cent. in the present duty inclusive of surcharge. At the same time, I propose to improve in a minor way the existing definition of fuel oils. There will be included among the fuel oils chargeable at 2d. a gallon certain oils, which for technical reasons, have hitherto been liable at 3d.
§ There is another matter of which I have to take account, and about which I must tell the Committee. In the Stockholm Treaty we undertook obligations 989 to other members of the European Free Trade Association to eliminate protective margins against them by 1965. I propose to make a start on this process now, by introducing certain new rates at a cost of about £150,000 this year. For manufactured tobacco, spirits and beer, matches and mechanical lighters imported from E.F.T.A. countries I propose that the Customs duty shall be reduced below the most-favoured-nation rate—I cannot avoid using the phrase "most-favoured-nation rate" although, in this context, it seems the least favoured nation rate—by an amount equal to about one-half of the preference margin: or, where there is no preference margin, by an amount equal to half the difference between the Customs duty and the Excise duty. Hon. Members will see an extra column in the Schedules of duty rates giving the appropriate rates for imports from E.F.T.A. countries for the goods I have mentioned.
§ Looking at these Customs and Excise revenue duties as a whole, the yield from the surcharge for the whole of the rest of the year would have been £139 million. My changes bring in a little less than this—£132 million this year and £138 million in a full year. All these changes take effect from midnight tonight.