Abolition of the Customs Duty on Tea.

Part of Orders of the Day — Ways and Means. – in the House of Commons at on 16 April 1929.

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Photo of Mr John Gretton Mr John Gretton , Burton

One has heard many speeches from the hon. Member for West Leicester (Mr. Pethick-Lawrence), and one wonders, in these financial matters, what will satisfy the hon. Member. He puts up a series of assertions which he generally does not attempt to prove, and he claims on these assertions that something which he wishes to be done has not been done. I need not detain the Committee by attempting to deal with the remarks which he has made; if they are worth replying to, no doubt the Financial Secretary to the Treasury will deal with them. I gather that the complaint of the hon. Gentleman is that the reductions in the Income Tax made by the present Government were entirely for the benefit of those who draw fixed incomes. He is forgetful that Income Tax is not imposed on fixed incomes only, it is imposed on all income—incomes derived from business and production, and the profits of every company. Reductions in Income Tax are probably the most widespread of all the benefits that could be given.

I think it may be expected that I should offer one or two observations upon the Brewers Licence Duty. I will not attempt to deal with the distillers or tobacco manufacturers. These Licence Duties are estimated to produce something like £350,000. At the time that the right hon. Gentleman the Minister of Health was introducing his de-rating scheme, some of us said that we did not want to be included in it and would rather be left alone, but the answer given to us by the right hon. Gentleman was that he insisted upon the symmetry of his scheme. It was, he said, a great scheme to relieve producing manufacturers of a portion of the rates which they ought not to pay, and brewers, distillers, and tobacco manufacturers could not be left out. In spite of our disclaimers, we were included in the scheme. Then comes along my right hon. Friend the Chancellor of the Exchequer, and he says: "On consideration, I have found a way round. I will preserve the exact symmetry of my right hon. Friend's scheme, and it shall not be disturbed, but we will get the money, and we will make an adjustment by charging an increased manufacturer's Licence Duty, which will replace the money which the Treasury will have to pay towards the rates of brewers, distillers, and tobacco manufacturers."

That is all very well. We all know quite well that in making these adjustments, the Treasury are very careful to cover themselves, and in fact the adjustment is in favour of the Treasury, for they will get a little more than they will pay out. It is not possible to say at this stage what that will amount to, but, in dealing with a number of instances this morning since the proposals of the Chancellor became known, I found that in every case the brewer was worse off than he was before my two right hon. Friends brought in their proposals. This matter in the general question of finance is a comparatively small one, but I do think that even in this small case we have been perhaps a little hardly used. If the Government had seen their way to leave us alone, we should have known where we were, but now we have to deal with one set of officials and experts to settle what are our de-rating allowances, and on the other hand we are to have the usual struggle with the collectors of revenue to find out what we ought to pay on the brewers' licence. We shall be harassed from two sides, and be somewhat worse off than we were before as the result of the two operations of my right hon. Friends.

I turn to the question of the retail licences. In this matter, the retail licence holders had a very real grievance for a long time. In the period of the War, the Licence Duties were increased, and that, being a War tax, was submitted to without complaint. Then the right hon. Gentleman the Foreign Secretary, when he was Chancellor of the Exchequer, put a further increase on the duty. Later on, under the Defence of the Realm Act Regulations, the hours of opening of licenced houses were reduced from 12 to eight. This is a real grievance which, when we settled down again to normal conditions ought properly to be readjusted. The retail traders have expressed themselves for a long time on their grievances, and now that there is money available to remove one of them, I think that the Chancellor of the Exchequer was perfectly right to remove it, and I thank him for the action which he has taken. The right hon. Gentleman the Member for Colne Valley (Mr. Snowden) made play with the fact that some brewers may get an advantage out of the reduction of the retail licences; he made great play also about the licenced houses which were under management, and about cases where the brewer had come to the rescue of the hard pressed retailer and agreed to pay his licence duty. These cases are exceptions. I will give another exceptional case which will benefit and which the right hon. Gentleman forgot. These retail licence duties will affect all those benevolent institutions like the Public House Trust Company, and so on, which hold many hundreds of licences, and they will share in the benefit of the reduced licences. The majority of cases, however, are tenants of houses who have to pay their own rates and taxes and licence duties, and in those cases undoubtedly it will go directly to their relief. I am prepared to say on behalf of leading members of my trade, with whom I have consulted, that we shall use our utmost influence with the brewers and retailers generally to see that the benefit shall go to the relief of those for whom it is intended.

May I make a remark on tea? I am not complaining that the Tea Duty has been abolished, except in one particular. It is a very great pity that the preference has not been maintained on the tea produced within the Empire. No one would raise a voice against removing all taxation from tea produced in the Empire, but there is a great deal of common tea which is produced in Java; there is China tea, which is a diminishing quantity, though Java tea is an increasing quantity which might, I believe, in justice to the Dominions, continue to bear some measure of taxation. I am not sure that there is not a breach of faith or breach of undertaking involved, because a Resolution was passed by this House to the effect that where immediately before 1st July, 1926, a duty of Customs was chargeable at preferential rates in the case of an article of Empire produce, these articles would, during the period of 10 years from the 1st July, 1926, continue to enjoy that preferential rate. There may be reasons why that should not be applied to tea, but undoubtedly it was the intention to apply it to tea at the time it was passed, and I would suggest for the consideration of the Government and the Committee that they will find it before very long necessary to offer to Ceylon, India and elsewhere within the Empire where tea is grown some equivalent to the preference which they now propose to withdraw.

7.0 p.m.

I am not going to follow my hon. Friends in endeavouring to make a long examination of the financial position. There is serious doubt as to what is the real surplus on the revenue of the year. We have not yet the full quarterly returns of the revenue and expenditure, and I prefer not to commit myself to any detailed remarks on these matters until the returns are available and the figures may be checked from all points of view. The reduction of expenditure has not been equal to expectations. There seems to be some failure in the Estimates in the coming years to take account of the inevitable increased expenditure on certain items. The growing expenditure on de-rating has been men- tioned, and we have also to face a growing and continually increasing expenditure for some time on pensions. There is also an increase of expenditure in another direction which will probably shock hon. Members above the Gangway. The time is inevitably coming when we shall have to make a larger expenditure on rebuilding and replacing the ships of the Navy. No one in this House is bold enough to say that he would abolish the Navy and a great deal will have to be spent on replacement, because nothing could be worse than a Navy which is not efficient. You must provide efficient ships, and, as the Navy runs down and the ships wear out with age and use, they will have to be replaced.

I was astounded at one remark made by the right hon. Member for Colne Valley when he said that the Super-tax and the Death Duties ought to increase simultaneously. That was astounding because the Death Duties are doing away with capital which produces Super-tax and the Income Tax. When you, in this financial year, absorb and take from private hands some £87,000,000 of capital, that £87,000,000 of capital is no longer going to produce either Income Tax or Super-tax. You are destroying your revenue. You are going, by this rapid destruction of accumulations of capital in the form of Death Duties, to destroy that source of revenue in no very long period and that source of income will have to be replaced. Super-tax is not an inexhaustible well into which future Chancellors of the Exchequer can dip. Taxes which are over-strained are apt to diminish and dry up. I shall not pursue the subject beyond saying that I was astounded at that very remarkable statement which I heard from the right hon. Member for Colne Valley, and I thank the Committee for allowing me to make these few remarks. I do not propose to say more upon the general financial situation.