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New Clause—(Repeal Of Duties On Table Waters)

Volume 155: debated on Wednesday 28 June 1922

The text on this page has been created from Hansard archive content, it may contain typographical errors.

Sections four, five and six of the Finance (New Duties) Act, 1916, and Section eleven of the Finance Act, 1916, are hereby repealed.—[Sir Hatford Mackinder.]

Brought up, and read the First time.

I beg to move, "That the Clause be read a Second time."

I have a very simple case to make. My point is that the Mineral Water Duties if completely repealed would yield a revenue to the Exchequer. I believe that at the present time they are yielding no net revenue to the State, or that they are very nearly reaching that point. The duties are fourpence a gallon in the case of sweetened mineral waters and eight-pence in the case of unsweetened: that is practically in the case of soda water. By far the more important of the two are the sweetened, because if we take the quantities on which duty was paid last year, we find that 45,000,000 gallons of sweetened mineral waters paid duty, whereas only 12,000,000 gallons of unsweetened paid. That being the case, we find this very simple equation. The duty yielded last year by the sweetened waters amounted to about £750,000. In addition to that there was paid on these sweetened waters, I am informed, about £500,000 duty on sugar, and about £250,000 duty on the alcohol in the essences which were used to flavour them. We thus get about £750,000 as the indirect taxation paid by sweetened mineral waters, and £750,000 as the direct taxation in the shape of the fourpenny duty. It follows from that that if you double the present sale you would get as much from the indirect taxation as you get to-day from the indirect and the direct put together.

What is the position as regards the quantities that are being drunk? Since the duties were imposed in 1916 there has been a falling off in quantity of 75 per cent., and that 75 per cent. cannot be ascribed to the present depression in the purchasing powers of the mass of the people, because if I take the decreases that have taken place in the last three years they amount in round figures to this sort of thing. For the year 1919 there was a falling off of nearly 10,000,000 gallons. In the year 1920 there was an additional falling off of nearly 10.000,000 gallons, and in the year 1921 there was a falling off of nearly 3,000,000 more. The result is that you have had over 22,000,000 gallons fall in the consumption of sweetened mineral waters in the last three years, and that includes the time of boom, and the fall was more rapid in the time of boom than in the year of depression. I understand that at the present time the figures show that the diminution is still continuing. There is a very considerable case to be made for the view that if you take your direct duty off, and you thereby permit a reduction in the price charged, you would according to the ordinary results of cheapening a commodity, increase the consumption, and the yield from indirect taxation on sugar and the alcohol in the essences would compensate you for the loss of your direct taxation. That is the simple case in regard to the matter. But then you have to consider the cost of collection. You have to consider the fact that there are about 3,000 manufacturers of mineral waters in this country with a capital which I am assured runs to about £30,000,000, and that in the time before 1916 they used to pay something like £7,000,000 a year in wages. I am assured now that the number of employees of these manufacturers has fallen by one half, from 30,000 to 15,000. We have to add to the loss to the Exchequer the unemployment dole and the loss of Income Tax which you would have got. In addition you have to consider the other trades which are involved in this matter. There are the makers of boxes and bottles, and the makers of machinery that is required to fill the bottles. All of these industries are employing fewer people, returning a smaller profit and yielding less income to the State. I feel that a very fair case may be made out for the statement that these mineral water duties at the present time are actually a losing concern to the Exchequer, and that their repeal would lead to an appreciable profit if not in the first year at any rate in the second year.

The hon. Member is in favour of taxing bottles but not their contents.

One thing at a time. If I am in favour of taxing bottles I am asking for what will increase the bottle making industry and therefore will make the taxes yield more.

There is the case of course of the soda water. There you have no compensation in the shape of increased yield in indirect taxation. But the soda water portion of the industry is a relatively unimportant one. The consumption is only 12,000.000 gallons against 45,000,000 gallons. I have put the Clause in such a form as to abolish that duty because it seemed to me that probably the Chancellor of the Exchequer, if he made a concession, would wish to make a clean sweep of a. losing concern. But I rest my case mainly on the case of the sweetened waters which, I believe, is a. sufficiently strong one to carry all that is involved on the other side. I appeal to the Solicitor-General to face that case and to say whether he does not think that we might profitably remit the tax which is causing a great deal of trouble to the manufacturers. There is also the point that at the present time you have a very large system of evasion of this tax going on. You have the shops with soda water fountains. Those soda water fountains are bought at considerable cost. I believe they run to about £150.

I have asked questions several times of the Treasury in regard to the yield of this tax in the case of shops selling from these soda water fountains, and I am assured that though no separate statistics are kept, every effort is made to see that there no evasion is resorted to. I have not been able to ascertain what these means are, but there is considerable suspicion at any rate in the City of Glasgow, where I have had this matter investigated, that there is very large evasion going on. I suggest that that is bad for the morals of the community. These machines are mostly of foreign make, and do not give employment to people in this country. They may yield something in duty, but they do not give employment in this country.

I only want to put a question to my right hon. and learned Friend in regard to this evasion by manufacturers. I have communicated with the Chancellor of the Exchequer on the matter, without satisfactory result. I will give my own experience. I had a machine for making soda water and in about six months time I found that I had saved £9 in duty. The machine was a very simple household one and, if it had been a large one, the amount of duty saved would have been far greater.

I cannot exactly tell at the moment. When I approached the Chancellor on the matter he said that the machine was not used for selling the soda. Then I wrote to him and asked if the logical conclusion was that it would be right for me to have a private still if I promised not to sell the whisky. He seemed to regard the letter as of a frivolous character, because he did not reply to it. I should not be allowed to save taxation as I now legally can at 8d. a gallon. The Chancellor should do either one of two things; either take the duty off altogether, or see that those who manufactured the water were taxed. I submit that the logical conclusion is either tax them all or abolish the duty.

I regret that the Chancellor of the Exchequer does not see his way to accede to this Amendment. In the first place, the Amendment would cost £1,150,000 in the full year [HON. MEMBERS: "No."] Secondly, I should like to make one or two observations on the speech of the hon. Member for Camlachie (Sir H. Mackinder.) He delivered a most interesting speech, the foundation of which I desire however to criticise. The speech followed a perfectly logical sequence right through and was extremely interesting. The whole basis of his case was that if you look at the statistics of this trade you find that this unfortunate trade has suffered a series of vicissitudes from 1916 onwards. I think it is not only not true but not at all true to say so. Look at the statistics. I have the figures here. The duty was imposed in 1916 in regard to sweetened table waters. The consumption from the 1st May, 1916 to 1917—that is to say a little less than the full fiscal year—was 46 million gallons. The result of imposing the duty was not to make the sales go down, for they rose by 10 millions to 56 millions the next year, and they rose another S millions to 64 millions the year after. Then the War being over in 1919—

it fell to 56 millions, and in 1921 to 45 millions, and this year it is estimated to 41 millions. During the same series of years unsweetened rose practically steadily from 10 millions in 1917 to 13 millions for this year. No doubt in 1918 the sales of mineral waters in the sweetened were encouraged arid artificially fomented by the restriction on the sale of beer which we all remember. If you look into the figures you find various reasons of that kind, but so far as we are able to judge from the statistics, it is impossible to say that the duty has had any definite effect in any one year. Of course, we all know that the economic change must necessarily have some economic result. All we can say is that you cannot build upon that any argument at all. The difficulties literally, no doubt, are due to trade depression. They are not now selling the penny bottles to school children which they used to buy to a great extent and which very largely increased their turnover. The truth of the matter is that, though it is not an extreme luxury—it is a mistake to call it a luxury—it is not an absolutely indis- pensable necessity. Drinks such as ginger-beer and lemonade are a fair subject for a tax for a Chancellor in extremis, and, after all, there has been a claim from the trade in alcoholic drinks for a great number of years that something should be put on the people who did not drink beer and spirits. There is a great deal to be said for the complaint from a purely fiscal point of view. The Chancellor of the Exchequer is obliged to consider these things from the point of view of raising revenue, and no other point of view. To take off this tax now would not only cost considerably more than a million in the full year, but produce an inequality of treatment against which a very large section of the community somewhat seriously complain. The only other point is that last year there was a Motion to abolish the duties. It was not even moved. There was an Amendment to reduce the duty by half, but it was considered in the House and rejected. The House considered and disposed of it, so I ask the Committee to take the same view now.

I have no doubt that if the hon. Member communicates with the Chancellor of the Exchequer he will be glad to receive his representations. Speaking upon the final point of view, I do not think that the evasion on soda-water fountains amounts to very much.

I should like to ask the Solicitor-General whether or not the Member for Cromac (Mr. Lindsay) has a right to establish a private soda-water still, thereby depriving the Revenue; and, secondly, whether or not the Solicitor-General wishes us to understand that this tax is now to be regarded in the nature of a permanent tax?

May I put it down to my mis-apprehension of his remarks? I am only referring to his argument that there was heavy taxation upon all alcoholic liquors and that the basis of taxation was broad and fair. Therefore this tax was to be defended on that ground. Now we have a fairer distribution. both in regard to those who indulge in mineral waters, whether to be used with or without the accompaniment of some of those others the hon. Member for Cromac (Mr. Lindsay) associated with so large a consumption of innocent, bubbling water.

May I ask by what right the hon. Gentleman says that? I said nothing about taking anything with the soda.

If the hon. Gentleman is going to consume that vast quantity of aerated water without anything to support or justify so large a consumption, we shall hold him in even less regard than we do at present, and we shall even wonder at him and be amazed.

My hon. Friend sits for a constituency in a part of Great Britain which is more responsible for the consumption of non-alcoholic liquor in the way of soda water than any other part of the country, and I am not surprised that he is rather bubbling over and ebullient in his observations. But his observations are really as irrelevant as if we were discussing the particular form of liquor which his constituency is associated with.

I would press the Solicitor-General to give us an assurance on this point. It is not fair that the mineral water trade of the country should bear this burden. It is something new in our fiscal system. We regard the consumption of alcoholic liquors as in the nature of a luxury. When one considers the social habits of the mass of the people it cannot be said that the consumption of mineral water is in the nature of a luxury. This is a tax which bears hardly on the mass of the people—those least able to bear the burden. Therefore I shall oppose the continuance of this tax.

In reference to the speech of my hon. Friend the Member for Camlachie (Sir H Mackinder), according to the Solicitor-General he is the first Member of the House who has had the courage to press this claim. I am oddly amused that he, who is opposing the increased cost of these non-alcoholic drinks, should be supporting the increased cost of the bottles which contain these innocuous drinks. [HON. MEMBERS: "Order!"] I am perfectly in order. I have never known a Chairman who so strictly determines that every Member shall keep in order as does our present Chairman. The Chairman has called me to order on occasions when I felt it to be rather painful, because I thought I was in order. Whenever the Chairman calls me to order I shall immediately obey, but I shall wait till he does so. I think I am entitled to say that my hon. Friend who moves this Clause is one of those who is supporting taxation under the purely farcical and absurd nomenclature of the safeguarding of industries.

I think I gathered that the hon. Member was anticipating that he would be out of Order.

I am sorry to have confirmed your premonition. I hoped I was in order in showing that, if my hon. Friend is to be interpreted rightly by this Committee, he wants these nonalcoholic liquors to be sold more cheaply by the removal of this tax, and therefore that it is not appropriate that he should

Division No. 189.]


[1.0 a.m.

Bowerman, Rt. Hon. Charles W.Lindsay, William ArthurThomson, T. (Middlesbrough, West)
Edwards, C. (Monmouth, Bedwellty)Lyle-Samuel, AlexanderWalsh, Stephen (Lancaster, Ince)
Entwistle, Major C. F.Newbould, Alfred ErnestWatts-Morgan. Lieut.-Col. D.
Hayday, ArthurRendall, AthelstanWilliams, Penry (Middlesbrough. E.)
Holmes, J. StanleyRichardson, R. (Houghton-le-Spring)
John, William (Rhondda, West)Rose, Frank H.


Jones, Morgan (Caerphilly)Royce, William StapletonLieut. Commander Kenworthy and Mr. Myers.
Kiley, James DanielSwan, J. E.
Lawson, John James


Agg-Gardner, Sir James TynteClay, Lieut.-Colonel H. H. SpenderGreene, Lt.-Col. Sir W. (Hack'y, N.)
Amery, Rt. Hon. Leopold C. M. S.Coats, Sir StuartGreenwood, Rt. Hon. Sir Hamar
Armitage, RobertCope, Major WilliamGreenwood, William (Stockport)
Armstrong, Henry BruceCourthope, Lieut.-Col. George L.Gretton, Colonel John
Baird, Sir John LawrenceDavidson, J. C. C. (Hemel Hempstead)Gritten, W. G. Howard
Barker, Major Robert H.Davidson, Major-General Sir J. H.Guest, Capt. Rt. Hon. Frederick E.
Barlow, Sir MontagueDavies, Thomas (Cirencester)Hacking, Captain Douglas H.
Barnes, Major H. (Newcastle, E.)Doyle, N. GrattanHannon, Patrick Joseph Henry
Barnston, Major HarryEdnam, ViscountHarmsworth, C. B. (Bedford, Luton)
Bell, Lieut.-Col. W. C. H. (Devizes)Edwards, Major J. (Aberavon)Harmsworth, Hon. E. C. (Kent)
Bigland, AlfredEvans, ErnestHenderson, Lt.-Col. V. L. (Tradeston)
Birchall, J. DearmanEyres-Monsell, Com. Bolton M.Hennessy, Major J. R. G.
Borwick, Major G. O.Falie, Major Sir Bertram GodfrayHerbert, Dennis (Hertford, Watford)
Boscawen, Rt. Hon. Sir A. Griffith-Fisher, Rt. Hon. Herbert A. L.Hinds, John
Bowyer. Captain G. W. E.FitzRoy, Captain Hon. Edward A.Holbrook, Sir Arthur Richard
Breese, Major Charles E.Foot, IsaacHood, Sir Joseph
Bridgeman, Rt. Hon. William CliveFoxcroft, Captain Charles TalbotHopkinson, A. (Lancaster, Mossley)
Broad, Thomas TuckerFrance, Gerald AshburnerHorne, Sir R. S. (Glasgow, Hillhead)
Brown, Brig.-Gen. Clifton (Newbury)Fraser, Major Sir KeithHunter, General Sir A. (Lancaster)
Bruton, Sir JamesGanzoni, Sir JohnInskip, Thomas Walker H.
Buckley, Lieut.-Colonel A.George, Rt. Hon. David LloydJohnstone, Joseph
Burdon, Colonel RowlandGibbs, Colonel George AbrahamJones, J. T. (Carmarthen, Llanelly)
Campion, Lieut.-Colonel W. R.Gilmour, Lieut.-Colonel Sir JohnKellaway, Rt. Hon. Fredk. George
Carr, W. TheodoreGoff, Sir R. ParkKidd, James

take a course which necessitates that they are sold more dearly.

Although I do not feel that the learned Solicitor-General has in the least met the case, I recognise that at this time of night it is not practical to go into statistics and meet his points in detail, and also that I can hardly ask the House to divide on this question. There is no good in having Divisions which are futile, and this would be a futile Division. I do ask the Solicitor-General to put it to the Chancellor of the Exchequer that between now and the next Budget this matter should be very carefully considered from the point of view of these duties not being a business proposition. I do not believe they are. Further, in spite of all he has said, I really do not think he has realised the magnitude of the evasion. There is a great evasion going on in shops, and if we could have some proper method of dealing with it in order to bring this matter to the test we should be grateful. I ask leave to withdraw the Motion.

Question put, "That the Clause be read a Second time."

The Committee divided: Ayes, 21; Noes, 149.

King, Captain Henry DouglasPercy, Lord Eustace (Hastings)Sugden, W. H.
Lane-Fox, G. R.Perkins, Waiter FrankSutherland, Sir William
Lewis, T. A. (Glam., Pontypridd)Pollock, Rt. Hon. Sir Ernest MurrayThomson, F. C. (Aberdeen, South)
Lort-Williams, J.Pretyman, Rt. Hon. Ernest G.Thomson, Sir W. Mitchell- (Maryhill)
McLaren, Hon. H. D. (Leicester)Rae, Sir Henry N.Tryon, Major George Clement
McLaren, Robert (Lanark, Northern)Raw, Lieutenant-Colonel Dr. N.Turton, Edmund Russborough
Macquisten, F. A.Remer, J. R.Wallace, J.
Mallalieu, Frederick WilliamRichardson, Lt.-Col. Sir P. (Chertsey)Walters, Rt. Hon. Sir John Tudor
Manville, EdwardRoberts, Rt. Hon. G. H. (Norwich)Ward, William Dudley (Southampton)
Mason, RobertRoberts, Samuel (Hereford, Hereford)Ward-Jackson, Major C. L.
Mond, Rt. Hon. Sir Alfred MoritzRobinson, S. (Brecon and Radnor)Waring, Major Walter
Montagu, Rt. Hon. E. S.Roundell, Colonel R. F.Watson, Captain John Bertrand
Moore-Brabazon, Lieut.-Col. J. T. C.Royds, Lieut.-Colonel EdmundWheler, Col. Granville C. H.
Morden, Col. W. GrantSanders, Colonel Sir Robert ArthurWhite, Col. G. D. (Southport)
Moreing, Captain Algernon H.Sassoon, Sir Philip Albert Gustave D.Williams, C. (Tavistock)
Morrison, HughScott, A. M. (Glasgow, Bridgeton)Wills, Lt.-Col. Sir Gilbert Alan H.
Morrison-Bell, Major A. C.Scott, Sir Leslie (Liverp'l, Exchange)Wilson, Rt. Hon. J. W. (Stourbridge)
Munro, Rt. Hon. RobertSeddon, J. A.Wise, Frederick
Murchison, C. K.Seely, Major-General Rt. Hon. JohnWolmer, Viscount
Murray, Rt. Hon. C. D. (Edinburgh)Shaw, Hon. Alex. (Kilmarnock)Wood, Hon. Edward F. L. (Ripon)
Murray, John (Leeds, West)Shortt, Rt. Hon. E. (N'castle-on-T.)Wood, Sir H. K. (Woolwich, West)
Neal, ArthurSmith, Sir Allan M. (Croydon, South)Wood, Major Sir S. Hill-(High Peak)
Newman, Sir R. H. S. D. L. (Exeter)Smith Sir Harold (Warrington)Young, Sir Frederick W. (Swindon)
Nicholson, Reginald (Doncaster)Stanley, Major Hon. G. (Preston)
Parry, Lieut.-Colonel Thomas HenryStanton, Charles Butt


Pease, Rt. Hon. Herbert PikeSteel, Major S. StrangColonel Leslie Wilson and Mr. McCurdy.
Pennefather, De FonblanqueSturrock, J. Leng