New Clause. — (He-peal of Customs and Excise Duties on Sugar.)

Orders of the Day — Finance Bill – in the House of Commons on 15th July 1919.

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Sections eight and nine of the Finance Act, 1918, and the Third Schedule to that Act are hereby repealed. — [Mr. W. Graham.]

Brought up, and read the first time.

Photo of Mr William Graham Mr William Graham , Edinburgh Central

I beg to move, That the Clause be read a second time. Hon. Members will agree that it is practically impossible at this hour to advance any new argument in favour of the-repeal of this duty. All the arguments which were used in the case of tea are-usually pressed into service in the case of sugar, but this difference, I think, exists On the whole, the case for the repeal of the duty on sugar is stronger, from many points of view, than it is in the case of tea. Our first objection to this duty is, that it falls on an article which enters very largely into the dietary of the poorest classes of the community. By common consent, sugar plays a much larger part in the dietary of the poor than it does in that of those much better off, and to that extent this is a tax which falls with severe and unequal incidence on that section or the population least able to bear it. In the second place, we press very strongly for the repeal of this duty largely because the country has entered upon far-reaching schemes of child welfare, providing for the food of the children, in which connection sugar again plays a very large part. We hold that, under these two heads, there would, be a real gain, and not a loss, to the community by the repeal of the duty. But, quite apart from these arguments, which I readily concede have been used on many platforms for many years, there is also the consideration that sugar enters largely into industry to all intents and pur- poses as a raw material. If the industries which depend to a material extent on sugar at the present moment were mainly or largely industries concerned with the turning out of luxuries, the ease would not be very strong, but in many industries sugar is urgently required, apart from any luxury consideration at all. The case for the repeal of the duty there is undeniably strong. If we want to facilitate the recovery of industry in this country, we want to remove, as far as possible, every tax which is penalising the raw material or the ingredients of that industry. Consequently, on these two grounds, first of all, the human ground, if I may so describe it, of taking taxation off an article which enters largely into food, and, secondly, on the public ground that this is an ingredient of industry, I beg to move the Second Heading of this Clause.

Photo of Mr Sydney Arnold Mr Sydney Arnold , Penistone

As one who, for many years, has opposed the duty on sugar, I should like to support this Clause. The Sugar Duty is, in my opinion, a cruel and iniquitous tax—a tax which is most inequitable in its incidence. As my hon. Friend has pointed out, it falls with severity upon the poor, and especially those with large families, because the larger a man's family the more a man has to pay; in fact, the incidence of this duty is in inverse ratio to ability to pay. Those who are least able to pay have to pay most. That is totally inconsistent with the principle which runs through most of our taxation, or which ought to run through most of our taxation, and it is in direct opposition to the fundamental canon of sound taxation. This is all the more serious because the Sugar Duty now is extremely heavy. Let me look at the finance of this duty. There is to be raised by the Customs Duty on sugar, £38,500,000 and by the Excise Dutyonsugar£l,000,000, making a total revenue from the Sugar Duty this year of £39,500,000. In the year before the War, the revenue got from the Sugar Duty about £3,250,000, so that we are now raising from sugar somewhere about twelve times as much as we were raising before the War. The yield of no other tax has been increased to that extent, and I say it is a striking commentary on Coalition finance that the tax which has been increased most is a tax upon the food of the poor, and that at a time of extraordinarily high prices. I should be very interested to know what my right hon. Friend (Mr. Barnes), who is still a member of the War Cabinet, has to say about this matter. Perhaps he will be good enough to intervene in the Debate. I remember very well in 1915, when he was in a position of greater freedom, and less responsibility, and a more moderate Sugar Tax than the present one was being discussed, he was then most indignant about it, and spoke of it, not, perhaps, so strongly as I do, but he went a good long way in arguing against it. I should like to know what set of circumstances has changed his view, because I assume he will now support it. How is it he is in favour of this higher duty now? I, personally, should be very interested to hear what he has to say on that.

This Sugar Duty, is taking out of the pockets of the poorer people something over £30,000,000 a year, or over £500,000 a week, and I say it does not require much imagination to realise what a burden that is on the household of the poor, where every penny has to be considered, and where every penny has its real value. The Sugar Duty, too, is particularly economically unsound, because sugar is not only a food, but it is a vital article of food. It is specially beneficial and nutritious to children, and, as regards workers, it is a great producer of physical energy. This duty is trenching on the margin of subsistence of hundreds of thousands of families, and at a time when the Government is constantly telling us they want an increased output of work. How can you get this if you are decreasing the industrial efficiency of the workers by a heavy tax on food? It cannot be done. The Government's position in this matter is totally inconsistent. If they want a bigger output, they should do everything they can to increase the physical efficiency of the workers, but taxes like this have a directly opposite effect, and that is all the more indefensible because of the abnormally high food prices at the present time. Owing to the great increase in the cost of living, hundreds of of thousands—I might say millions—of families have been driven down near, and right below, the level of subsistence. The Leader of the House said last night that, owing to the War, many members of the working classes are better off, but in ray view the majority—and I believe, if the thing were gone into statistically, the great majority—of the workers are, despite increased wages, worse off than before the War, owing to the extraordinarily high prices prevailing. It is utterly wrong to tax the necessities of life to those who already have not got enough to live on. That is an argument which I myself, and other hon. Members who think with me, have ventured to address to the Treasury Bench from time to time in past years. No real reply has ever been forthcoming. No real reply, as a matter of fact, is possible. All that the Chancellor of the Exchequer can say, as I have no doubt he will say, is that he must have money. I say you can get money too dear, if you are getting it at the expense of health and efficiency. I have said before, and I say again, it is no use the Chancellor of the Exchequer saying he cannot get the money. He could get the money if he would exercise a little boldness and courage, and face the financial position as it ought to be faced. If he would reduce the enormous burden of war debt by a levy on capital, all these matters could be adjusted, and this relief could be given to the poorer classes.

There is one further point I would like to make, and it is this: When discussing the Tea Duty, the Financial Secretary got up and said, "Yes, but look how much we have increased direct taxation! Look how different the proportions are now between direct and indirect taxation as compared with what they used to be!" There really is nothing in that point at all. It used to be necessary, about the middle of last century, to maintain a certain balance—about half-and-half—between direct and indirect taxation. Obviously, there is nothing scientific at all in that notion, because the proportion between direct and indirect taxation has changed greatly, and was, in particular, being changed before the War. You cannot arrive at anything scientific, definite, or final by pointing to the relative proportion of indirect and direct taxation. I submit that you ought to levy your taxes on sound principles. A tax should be decided on three main principles: whether or not it is equitable, economically sound, and productive. If your tax is in accordance with these three principles, it is a good tax; if it is not in accordance with them, it is not a good tax. This Sugar Tax does not conform to these three principles. You have levied it not according to them, and quite irrespective of the proportion between direct and indirect taxation. It is a thoroughly bad tax, and I shall certainly vote against it.

Photo of Mr Arthur Samuel Mr Arthur Samuel , Farnham

Does the hon. Gentleman realise that the figure he gave —£30,000,000—is divided amongst 45,000,000 of people, which works out at not more than l¼d. per head of the population? 1s that going to ruin families? There is nothing in it.

Photo of Mr Sydney Arnold Mr Sydney Arnold , Penistone

I do not quite follow the hon. Member. Does he mean l¼d. per year?

Photo of Mr Arthur Samuel Mr Arthur Samuel , Farnham

Per head, per day!

Photo of Mr Sydney Arnold Mr Sydney Arnold , Penistone

If you come down to large families—father, mother, and seven and eight children—sit means paying 1s. Sugar Duty. If you go amongst the poor, you will find that 1s. a day is a very great matter.

Dr. MURRAY:

I noticed the Minister of Health come in, and I was hoping that he was going to give of his expert knowledge to the Treasury, because this is really as much a health question as an economic question I agree with the hon. Gentleman who has spoken in saying that any tax upon sugar which makes it more difficult for the poor of the country to obtain sugar for themselves and for their children is bad, and helps to make the population a C 3 population, as the phrase is. I had hoped the Minister for Health would have stayed and taken part in this Debate. I see the Parliamentary Secretary here. I hope he is going to rise and speak against the Chancellor of the Exchequer on this occasion, and fell him that it is the considered opinion of the Minister of Health that any tax upon sugar is a tax upon the health of the rising generation. It used to be considered a crime to give sweets to children. Scientific opinion is more enlightened now. It is recognised on scientific authority that sugar is a great asset in the food and general health of the community. An hon. Gentleman opposite rose and suggested that this was a mere trifle in the budget of poor families. Personally, I am acquainted with some of these families, and I know a village where it is easy for people to get an extra ration of sugar. Why? Because the poor people with largo families are not able to buy the ration of sugar which the Government allows them on account of the price. In view of the general high level of prices in these times, relief of this sort would be a very great help to the poorer families in the community, who would be able to obtain more sugar, and it would also relieve the family budget in other directions.

Sugar enters into so many articles of food that it is really a direct tax upon the food of the country. I hope that the Chancellor of the Exchequer, whom I was very sorry to see appear so helpless this afternoon in the presence of the war profiteer, will be less helpless in this case. The country is restive in the knowledge that so many people have made money out of the War while most of the people have made sacrifices. The right hon. Gentleman to-day told us that he was absolutely helpless in the presence of this great problem of profiteering, which, I venture to say, attracts more attention in the country than any other problem at the present time. I do not believe anyone should have been allowed to make money directly out of the War. Instead of the Chancellor taxing the essential food elements of the people it would be a juster form of taxation to attend to the other problem. I have no intention of speaking further, but simply of giving my little testimony to the suggestion and contention that sugar is an essential food for the country, and especially for the rising generation, whoso development should not be hindered in any way. Let the right hon. Gentleman get his money by some ingenuity displayed towards the profiteer, by putting salt upon the tail of the profiteer, instead of getting it out of the food of the poorer portion of the population.

Mr. CHAMBERLAIN:

I am sorry I cannot accept this Amendment. It is quite true that sugar is one of the necessaries of life. There was a time when the much criticised tariff reformers insisted upon the fact that tea and sugar were both a necessary of life, as much a necessity for the poor household as some other foods upon which it was deemed sacrilegious to lay hands. At that time hon. Gentlemen belonging to the party opposite drew a distinction between tea and sugar and these other things. Apparently they have been converted.

Captain BENN:

But you tax both !

Mr. CHAMBERLAIN:

A distinction, I say, was drawn between these and other articles by hon. Gentlemen opposite. Apparently they have now been converted to the views then expressed by some of us, and they do not now draw the distinction between the different articles they previously did. I should be very glad if I could see my way to reduce the Sugar Duty from its present time rate. I do not profess to look forward to the time in the near future, or in any future with which I am likely to be associated, when it will be wise or sound policy to abolish the Sugar Duty altogether. I should be very glad if I could see my way to reduce it, or if I could have done so this year. I cannot, in view of the charges upon the State, in view of the. financial prospects, and the immense expenditure which we have before us; in view of the increased expenditure which is being pressed upon my colleagues and myself almost day by day, and the requests which come from hon. Gentlemen when the Budget is under discussion, who say, "Give us this or the other tax," while at the same time pressing for expenditure in other directions. If these hon. Gentlemen would set their faces against all increases of expenditure, and if they would do more than that, work to reduce them, then the realisation of our hopes might come. So long, however, as they are urging upon the Government that it should spend more on this, that, and the other direction, it really is not a counsel of practical possibility to ask us to abandon the Sugar Duty. The heavy charges with which the country is left, and the heavy charges (involved in the new policy which has been pressed forward by the Government, or rather pressed upon the Government by the House of Commons and the country, is not compatible with low taxation. To say that you are to have expenditure on all these great schemes which you are called upon to carry them out rapidly, and quickly, and at the same time to reduce or abolish altogether taxes of this kind, is really a matter we cannot accomplish whatever be our desire. Of this I have no doubt. I am sorry it is not possible to accept the Amendment.

8.0 p.m.

Captain BENN:

I quite realise the great force of what the right hon. Gentleman has said, and, so far as I am concerned, I shall not be able to go into the Lobby against the repeal of the whole of this duty. I have no doubt that my hon. Friends for perfectly good reasons themselves intend to do so, and I do not question their good faith. The reason I cannot vote against the new Clause is because it is obviously right that the Chancellor of the Exchequer should have the right to balance his budgets—that is to say, decide how much is to be taken from one source and how much from another, how much from indirect and how much from direct taxation. But it is proper for us on a new Clause of this kind to make what reference we wish to the judgment the Chancellor has exercised, in deciding how much of his taxes shall fall upon the poor people and how much upon the rich people. He made a point, which I am afraid I did not follow closely, about something which the great late Liberal Government did with sugar and tea. He said we made a distinction between tea and sugar. One recalls the fact that the Liberal Government reduced the taxes, both on tea and sugar, so that to that extent they did show their desire to reduce the cost of living by taking off part of the taxes on tea and sugar. Our complaint against the Chancellor of the Exchequer is that he has not sufficiently considered the position of the poor families, people with a number of children, who have a hard job to make up their family budget. As my hon. Friend has pointed out in his forcible speech, this duty is really a poll tax which is not distributed according to the ability to bear

it, but according to the number of heads in the family, and that is the worst possible form of taxation, because it penalises the very people who are doing most in the direction of national reconstruction. Our complaint against the right hon. Gentleman is that he has left the duty on sugar multiplied by twelve times to the pre-war period which leaves it altogether a war tax in times of peace, while there arc other sources of revenue from which he can get his money. The point of my hon. Friend's proposal seems a really good one, and the Chancellor of the Exchequer does not appear to have realised in distributing the fiscal burdens of the country the urgent needs of the poor.

Question put. That the Clause be read a second time.

The Committee divided: Ayes, 46; Noes, 178.

Division No. 71.]AYES.[8.1 p.m.
Bramsden, Sir T.Guest, J. (Hemsworth, York)Short, A. (Wednesbury)
Briant, F.Harbison, T. J. S.Sitch, C. H.
Bromfield, W.Hayday, A.Smith, W. (Wellingborough)
Cairns, JohnHayward, Major EvanSwan, J. E. C.
Carter, W. (Mansfield)Holmes, J. S.Thomas, Brig.-Gen. Sir O. (Anglesey)
Casey, T. W.Kenworthy, Lieut.-CommanderTootill, Robert
Davies, Alfred (Clitheroe)Kenyon, BarnetWignall, James
Davison, J. E. (Smethwick)Lunn, WilliamWilliams, A. (Consett, Durham)
Devlin, JosephMurray, Dr. D. (Western Isles)Williams, J. (Gower, Glam.)
Entwistie, Major C. F.Newbould, A. E.Wilson, W. T. (Westhoughton)
Galbraith, SamuelRattan, peter WilsonWood, Major Mackenzie (Aberdeen, C.)
Glanville, Harold JamesRichardson, R. (Houghton)
Graham, W. (Edinburgh)Roberts, F. O. (W. Bromwich)TELLERS FOR THE AYES.—Mr.
Griffiths, T. (Pontypool)Sexton, JamesHogge and Mr. Fred Hall
Grundy, T. W.Shaw, Tom (Preston)
NOES.
Addison, Rt. Hon. Dr. ChristopherCampbell, J. G. D.Forestier-Walker, L.
Agg-Gardner, Sir James TynteCarter, R. A. D. (Manchester)Foxcrott, Captain C.
Ainsworth, Captain C.Chamberlain, Rt. Hon. J. A. (Birm., W.)Fraser, Major Sir Keith
Archdale, Edward M.Chamberlain, N. (Birm., Ladywood)Gardiner, J. (Perth)
Archer-Shee, Lieut.-Colonel MartinCheyne, Sir William WatsonGilbert, James Daniel
Astbury, Lieut.-Com. F. W.Clough, R.Gilmour, Lieut.-Colonel John
Astor, Major Hon. WaldorfCompton-Rickett, Rt. Hon. Sir J.Green, J. F. (Leicester)
Austin, Sir H.Cope, Major W. (Glamorgan)Gretton, Colonel John
Baird, John LawrenceCory, Sir Clifford John (St. Ives)Griggs, Sir Peter
Baldwin, StanleyCory, Sir James Herbert (Cardiff)Gritten, W. G. Howard
Balfour, George (Hampstead)Courthope, Major George LoydHailwood, A.
Balfour, Sir Robert (Partick)Cowan, D. M. (Scottish University)Hancock, John George
Barnett, Captain Richard WCraig, Captain Charles C. (Antrim)Harmsworth, Cecil B. (Luton, Beds.)
Barnston, Major HarryCraig, Col. Sir James (Down, Mid.)Haslam, Lewis
Barrand, A. R.Craik, Rt. Hon. Sir HenryHenderson, Major V. L
Barton, R. C. (Wicklow, W.)Davies, Alfred Thomas (Lincoln)Henry, Denis S. (Londonderry, S.)
Beckett, Hon. GervaseDavies, T. (Cirencester)Hewart, Rt. Hon. Sir Gordon
Bell, Lieut.-Col. W. C. H. (Devizes)Dawes, J. A.Hohler, Gerald Fitzroy
Blades, Sir George R.Dean, Com. P. T.Hope, Harry (Stirling)
Blair, Major ReginaldDoyle, N. GrattanHope, James Fitzalan (Sheffield)
Blake, Sir Francis DouglasDu Pre, Colonel W. B.Hope, John Deans (Berwick)
Boles, Lieut.-Colonel D. F.Edgar, CliffordHopkins, J. W. W.
Breese, Major C. EEdge, Captain WilliamHopkinson, Austin (Mossley)
Brings, HaroldEdwards, Major j. (Aberavon)Horne, Edgar (Guildford)
Brings, HaroldEyres-Monsell, CommanderHoward, Major S. G
Brotherton, Col. Sir E. AFalcon, Captain M.Hughes, Spencer Leigh
Brown, Captain D. C. (Hexham)Farquharson, Major A. CHurd, P. A.
Bull, Rt. Hon. Sir William JamesFell, Sir ArthurInskip, T. W. H.
Jephcott, A. R.Mitchell, William Lane-Stanley, Colonel Hon. G. F. (Presto.:)
Jesson, C.Mond, Rt. Han. Sir Alfred MoritzSteel, Major S, Strang
Jodrell, N. P.Moreing, Captain Algernon H.Stephenson, Colonel H. K.
Johnson, L. S.Mount, William ArthurStrauss, Edward Anthony
Johnstone, J.Murray, William (Dumfries)Sugden, W. H.
Jones, Sir Edgar R. (Merthyr Tydvil)Nail, Major JosephSutherland, Sir William
Jones, G. W. H. (Stoke Newington)Neal, ArthurTerrell, Capt. R. (Henley, Oxfard)
Jones, J. Towyn (Carmarthen)Nield, Sir HerbertThomas-Stanford, Charles
Jones, Win. Kennedy (Hornsey)O'Neill, Capt. Hon. Robert W. H.Waddington, R.
Joynson-Hicks, WilliamPearce, Sir WilliamWallace, J.
Kellaway, Frederick GeorgePerkins, Walter FrankWalton, Sir Joseph (Barnsley)
King, Commander DouglasPretyman, Rt. Hon. Ernest G.Ward, Colonel L. (Kingston-upon-Hill)
Knights, Capt. H.Pulley, Charles ThorntonWardie, George J.
Lane-Fox, Major G. R.Rae, H. NormanWatson, Captain John Bertrand
Law, A. J. (Rochdale)Ramsden, G. T.Weston, Colonel John W.
Lewis, T. A. (Pontypridd, Clam.)Ratcliffe, Henry ButlerWhite, Col. G. D. (Southport)
Lister. Sir R. AshtonRawlinson, John Frederick PeelWhitla, Sir William
Lloyd, George ButlerRichardson, Alex. (Gravesend)Williams, Lt.-Com. C. (Tavistock)
Locker-Lampson G. (Wood Green)Robinson, S. (Brecon and Radnor)Williams, Col. Sir R. (Dorset, W.)
Locker-Lampson, Com. O. (Hunt'don)Robinson, T. (Stretford, Lanes.)Willoughby, Lt.-Col. Hon. Claud
Long, Rt. Hon. WalterRodger, A. K.Wilson, Colonel Leslie (Reading)
Lorden, John WilliamRowlands JamesWilson, Col. M. (Richmond, Yorks.)
Lort-Williams, J.Samuel, A. M. (Farnham, Surrey)Wilson-Fox, Henry
Lowther, Major c. (Cumberland, N)Sanders, Colonel Robert ArthurWolmer, Viscount
M'Curdy, Charles AlbertSeager, Sir WilliamWoolcock, W. J. U-
Mackinder, Halford J.Shaw, Hon. A. (Kilmarnock)Worsfold, T. Cato
M'Laren, R. (Lanark, N.)Shaw, Captain W. T. (Forfar)Worthington-Evans, Rt. Hon. Sir L.
McNeill, Ronald (Canterbury)Shortt, Rt. Hon. E. (N'castle-on-T., W.)Yeo, Sir Alfred William
Macquisten, F. A.Smith, Harold (Warrington)Young, Sir F. W. (Swindon)
Maddocks, HenrySmithers, Alfred W.
Maitland, Sir A. D. Steel-Sprot, Col. Sir AlexanderTELLERS FOR THE NOES.—Lord E.
Martin, A. E.Stanier, Captain Sir BevilleTalbot and Mr. Dudley Ward
Meysey-Thompson, Lt.-Col. E. C.