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Finance Bill

Volume 155: debated on Wednesday 28 June 1922

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Again considered in Committee.

[Mr. JAMES HOPE in the Chair.]

New Clause—(Amendment Of 10 And 11 Geo V, C 18, Sch 2, Par 4)

Paragraph 4 of the Second Schedule to the Finance Act, 1920, shall have effect with the substitution of the words "Tractors, agricultural tractors, and agricultural engines, other than such tractors or engines in respect of which a duty of five shillings is chargeable, used solely in connection with agriculture" for the words "Tractors, agricultural tractors, and agricultural engines, other than such tractors or engines in respect of which a duty of five shillings is chargeable, used for haulage, solely in Connection with agriculture."

Postponed Proceeding resumed on Question, "That the Clause he read a Second time."

Question again proposed. Debate resumed.

When the proceedings of the Committee were interrupted by the Private Business, my hon. and gallant Friend the Member for Midlothian (Lieut.-Colonel Sir J. Hope) had pro- posed this new Clause. He appealed for some further relaxation of taxation in regard to agricultural tractors. I regret that I cannot meet his views in this matter. The whole question of motor taxation it at present subject to the consideration of a, Committee. With reference to this particular new Clause, the question has arisen in this way: A concession was made to agriculture in respect of certain agricultural tractors, on the ground that they did not normally use the roads. They were used normally on the land and only occasionally for hauling goods on the roads. That class of vehicle, therefore, escaped with the very low tax of The vehicles of a similar class which are used for the carrying of goods, and which, therefore, normally do use the roads, and on that basis have to pay for the upkeep of the roads, were charged a higher duty. I regret that I cannot meet the views of my hon. Friend, and that I must ask the Committee not to accept this Clause.

I hope the Committee will accept the Clause, and for the reason that, so far as agriculturists are concerned, they pay exceedingly heavy rates for the upkeep of the roads, and they are in quite a distinct and separate position from the rest of the community who use vehicles on the roads for purposes of hire. It seems to me that the Mover of this Clause has made out an excellent case. I would urge its acceptance for a further reason. I know I shall offend the susceptibilities of some of my friends opposite when I say that this is a slight weapon in the hands of the agricultural community to combat the present ruinously heavy railway rates charged on agricultural produce. It is for that reason principally, and, secondly, because agriculturists, especially farmers, pay very heavy rates in comparison with the amount of use which they make of the local rural roads, that I support the Clause.

Division No. 186.]


[9.40 p.m.

Banbury, Rt. Hon. Sir Frederick G.Galbraith, SamuelRae, Sir Henry N.
Banton, GeorgeGould, James C.Richardson, R. (Houghton-le-Spring)
Barker, G. (Monmouth, Abertillery)Hayday, ArthurRoberts, Samuel (Hereford, Hereford)
Barnes, Major H. (Newcastle, E.)Hayward, EvanRose, Frank H.
Barrand, A. R.Herbert, Col. Hon. A. (Yeovil)Royce, William Stapleton
Barton, Sir William (Oldham)Hohler, Gerald FitzroyShaw, William T. (Forfar)
Bell, Lieut.-Col. W. C. H. (Devizes)Holbrook, Sir Arthur RichardSwan, J. E.
Bird, Sir William B. M. (Chichester)Hope, Sir H.(Stirling & Cl'ckm'nn,W.)Thomas, Sir Robert J. (Wrexham)
Bramsdon, Sir ThomasIrving, DanThomson, T. (Middlesbrough, West)
Briant, FrankJackson, Lieut.-Colonel Hon. F. S.Thorne, G. R. (Wolverhampton, E.)
Bromfield, WilliamJodrell, Neville PaulTownley, Maximilian G.
Cairns, JohnJohn, William (Rhondda, West)Walsh, Stephen (Lancaster, Ince)
Campion, Lieut.-Colonel W. R.Johnstone, JosephWard-Jackson, Major C. L.
Carter, W. (Nottingham, Mansfield)Jones, Morgan (Caerphilly)Watts-Morgan, Lieut.-Col. D.
Cautley, Henry StrotherKenyon, BarnetWheler, Col. Granville C. H.
Clay, Lieut.-Colonel H. H. SpenderLawson, John JamesWhite, Charles F, (Derby, Western)
Colvin, Brig.-General Richard BealeLort-Williams, J.Wignall, James
Courthope, Lieut.-Col. George L.Maclean, Rt. Hn. Sir D. (Midlothian)Wilson, Col. M. J. (Richmond)
Davidson, Major-General Sir. J. H.McNeill, Ronald (Kent, Canterbury)Windsor, Viscount
Davies, A. (Lancaster, Clitheroe)Mallalieu, Frederick WilliamWintring ham, Margaret
Davies, Thomas (Cirencester)Morrison-Bell, Major A. C.Wolmer, Viscount
Edwards, C. (Monmouth, Bedwellty)Myers, ThomasWood, Major M. M. (Aberdeen, C.)
Entwistle, Major C. F.Naylor, Thomas Ellis
Falcon, Captain MichaelNewbould, Alfred Ernest


Finney, SamuelNicholson, Brig.-Gen. J. (Westminster)Lieut.-Colonel Sir J. Hope and Mr. Turton.
Foot, IsaacPretyman, Rt. Hon. Ernest G.
Fraser, Major Sir Keith


Agg-Gardner, Sir James TynteChamberlain, N. (Birm., Ladywood)Greene, Lt.-Col. Sir W. (Hack'y, N.)
Armstrong, Henry BruceClough, Sir RobertGreenwood, Rt. Hon. Sir Hamar
Baird, Sir John LawrenceCope, Major WilliamGreenwood, William (Stockport)
Balfour, George (Hampstead)Cory, Sir J. H. (Cardiff, South)Greig, Colonel Sir James William
Barker, Major Robert H.Davidson, J. C. C. (Hemel Hempstead)Gritten, W. G. Howard
Barlow, Sir MontagueCockrell, Sir MauriceGuest, Capt. Rt. Hon. Frederick E.
Barnes, Rt. Hon. G. (Glas., Gorbals)Doyle, N. GrattanHacking, Captain Douglas H.
Barnston, Major HarryEdgar, Clifford B.Hamilton, Sir George C.
Barrie, Sir Charles Coupar (Banff)Edwards, Allen C. (East Ham. S.)Hannon, Patrick Joseph Henry
Bartley-Denniss, Sir Edmund RobertEdwards, Major. J. (Aberavon)Harmsworth, C. B. (Bedford, Luton)
Betterton, Henry B.Edwards, Hugh (Glam., Neath)Henderson, Lt.-Col. V. L. (Tradeston)
Birchall, J. DearmanElliott, Lt.-Col. Sir G. (Islington, W.)Herbert, Dennis (Hertford, Watford)
Berwick, Major G. O.Elveden, ViscountHinds, John
Bowerman, Rt. Hon. Charles W.Evans, ErnestHopkins, John W. W.
Breese, Major Charles E.Falle, Major Sir Bertram GodfrayHorne, Sir R. S. (Glasgow, Hillhead)
Broad, Thomas TuckerFell, Sir ArthurHurst, Lieut.-Colonel Gerald B.
Bruton, Sir JamesGeorge, Rt. Hon. David LloydInskip, Thomas Walker H.
Buckley, Lieut.-Colonel A.Gibbs, Colonel George AbrahamJephcott, A. H.
Bull, Rt. Hon. Sir William JamesGilmour, Lieut.-Colonel Sir JohnJohnson, Sir Stanley
Carr, W. TheodoreGray, Major Ernest (Accrington)Jones, G. W. H. (Stoke Newington)
Cecil, Rt. Hon. Sir Evelyn (Aston)Green, Joseph F. (Leicester, W.)Jones, J. T. (Carmarthen, Llanelly)

that poor Cinderella, agriculture, is to be left out in the cold. This is an extremely hard case. As my hon. Friend the Member for the Holland Division (Mr. Royce) has pointed out, the farmers pay almost the whole rates for the roads, except for the small subsidy from the Road Board. What we ask is, that if the tractor be used for purposes of conveying goods to market, the farmer should be allowed to get his tax at a lower rate. I do suggest, under the circumstances, having regard to the unsatisfactory reply received from the Government, that we should go to a Division.

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

The Committee divided: Ayes, 75; Noes, 136.

Kidd, JamesPerring, William GeorgeTaylor, J.
King, Captain Henry DouglasPownall, Lieut.-Colonel AsshetonThomson, F. C. (Aberdeen, South)
Lewis, Rt. Hon. J. H. (Univ., Wales)Preston, Sir W. R.Thorpe, Captain John Henry
Lewis, T. A. (Glam., Pontypridd)Prescott, Major Sir W. HTryon, Major George Clement
Lindsay, William ArthurRatcliffe, Henry ButlerWallace, J.
Lloyd, George ButlerRemer, J. R.Walters, Rt. Hon. Sir John Tudor
Locker-Lampson, G. (Wood Green)Renwick, Sir GeorgeWalton, J. (York. W. R., Don Valley)
McCurdy, Rt. Hon. Charles A.Roberts, Rt. Hon. G. H. (Norwich)Ward, Col. J. (Stoke-upon-Trent)
Macdonald, Rt. Hon. John MurrayRoberts, Sir S. (Sheffield, Ecclesall)Ward, Col. L. (Kingston-upon-Hull)
Mackinder, Sir H. J. (Camlachie)Robinson, S. (Brecon and Radnor)Warner, Sir T. Courtenay T.
McLaren, Robert (Lanark, Northern)Roundels, Colonel R. F.White, Col. G. D. (Southport)
Macquisten, F. A.Sanders, Colonel Sir Robert ArthurWild, Sir Ernest Edward
Magnus, Sir PhilipScott, A. M. (Glasgow, Bridgeton)Williams, C. (Tavistock)
Marks, Sir George CroydonScott, Sir Leslie (Liverp'l, Exchange)Williams. Col. P. (Middlesbrough, E.)
Mason, RobertSeddon, J. A.Wilson, Rt. Hon. J. W. (Stourbridge)
Morden, Col. W. GrantShaw, Hon. Alex. (Kilmarnock)Wise, Frederick
Moreing, Captain Algernon H.Shunt, Rt. Hon. E. (N'castle-on-T.)Wood, Sir H. K. (Woolwich, West)
Murray, John (Leeds, West)Simm, M. T.Wood, Major Sir S. Hill-(High Peak)
Neal, ArthurStanley, Major Hon. G. (Preston)Worthington-Evans, Rt. Hon. Sir L.
Newman, Sir R. H. S. D. L. (Exeter)Stanton, Charles ButtYeo, Sir Alfred William
Norris, Colonel Sir Henry G.Stephenson, Lieut.-Colonel H. K.Younger, Sir George
Norton-Griffiths, Lieut.-Col. Sir JohnStrauss, Edward Anthony
Parry, Lieut.-Colonel Thomas HenrySturrock, J. Long


Pease, Rt. Hon. Herbert PikeSugden, W. H.Colonel Leslie Wilson and Mr. Dudley Ward.
Pennefather, De FonblanqueSutherland, Sir William
Perkins, Walter FrankSykes, Sir Charles (Huddersfield)

New Clause—(Entertainments Duty)

Notwithstanding anything in Section one of the Finance (New Duties) Act. 1916, as amended by any subsequent enactment. Entertainments Duty shall not be charged for admission to any entertainment where the Commissioners of Customs and Excise are satisfied that the whole of the profits thereof are devoted to philanthropic or charitable purposes.—[Mr. Rose.]

Brought up, and read the First time.

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

I am in some trepidation in moving this. I think the Chancellor of the Exchequer has existing somewhere something in the nature of a benevolent fund, though we know it is not of very considerable dimensions. I can only hope he has enough left to do what we are asking in this proposed Clause. I consider it to be an act simple justice, if not a matter of simple propriety. The object of this Amendment is to exempt from Entertainments Duty all such entertainments as are bonâ fide for charitable objects As the law stands to-day, as T understand it, Entertainments Duty is not payable on entertainments the profits of which are entirely devoted to charitable or philanthropic objects. If the promoters of charitable entertainments have to pay artists or attendants they have to pay the Entertainments Duty. I do not know what this proposal will cost. I suppose that is generally the determining factor in a matter of this sort. But whether it costs much or little I do not for a moment care. I am not appealing to the sentiments or the sympathy of the Chancellor of the Exchequer. I do not believe in a sympathetic Chancellor of the Exchequer.

If you find the Chancellor of the Exchequer sympathetic, be sure he is not fit for his job. The right hon. Gentleman is a respectable man, and that is all I am asking him to he. That is the only trait in his character that at present I am asking him to justify. If people get up entertainments of the kind referred to in the proposed new Clause, if they want to be exempt from Entertainments Duty, they have to find some even more benevolent persons who will stand the whole of the expenses; then they can be free. This request comes from a very important town in Scotland which I have the honour to represent. The particulars I am about to give I think are typical, but not peculiar.

The District Hospitals Fund Association of Aberdeen during the last year got up entertainments and were able to pay to the local hospitals, infirmaries, dispensaries, nursing associations, and so forth, £1,000; but they had also to pay Entertainments Duty to the extent of £232. That does not seem to me to be quite the right thing. I daresay the Chancellor will say that he cannot accept my proposal because it would mean a reduction of, roughly, 25 per cent. of the money realised. He will probably say that that sort of thing spread over the kingdom would mean a considerable sum lost to him. I do not know whether that is so or not. The Chancellor may have figures from which he can tell us the cost of this proposal. Frankly, I do not care a bit what it costs. It is something which seems to me ought to be done. It is not. right, after all—and I suppose right and wrong do sometimes enter into the consideration even of Cabinet Ministers—when these entertainments are got up for the purpose of raising money for helping the poor, the infirm, the sick and ailing, it is utterly wrongful and utterly improper for such money or enterprises to be taxed. I am not going to supplicate the Chancellor of the Exchequer. I have heard so many Members hope that the Chancellor will be so good or so considerate as to make certain concessions. I do not put it that way. I merely state the case, and leave it to the good sense of the right hon. Gentleman.

On a point of Order. May I ask, Mr. Hope, whether the Debate on this proposed new Clause excludes the Debate on the next proposed new Clause, standing in the name of the hon. and gallant Gentleman the Member for Howdenshire (Lieut.-Colonel Jackson), which seeks to exempt sports clubs under specified conditions? In the one case the Clause speaks of philanthropic or charitable purposes, and in the other, games, athletic exercises, physical recreation, etc. Whatever difference there may be in the immediate objectives of the two proposed Clauses, the Debate will run in much the same way, and I was wondering whether the Division upon the first would exclude discussion upon the second. It seems to be of wider scope and open to more detailed argument.

No. The Debate on the first proposed Clause will be confined to charity, and on the second to sport.

I imagine that most, if not all of us, have been pestered by, principally, the clergy in our constituencies to move the Chancellor, so far as posible, into giving some relief in this matter. Might I suggest that if the right hon. Gentleman cannot take off the tax, he might make the deduction for expenses on a more liberal scale? At the present moment it is 20 per cent.

I was a little startled at the beginning of the speech of the hon. Member for North Aberdeen (Mr. Rose) and his references to the Chancellor of the Exchequer, but when I remember the part of the country which he represents I readily understood. I do not think that he has yet entirely acquired the habit of those whom he represents. He seems to have missed the most important point in connection with the imposition of the Entertainments Duty which has just been elucidated by my hon. Friend the Member for Oldham (Sir E. Bartley-Denniss). The assumption of the Mover of this Clause was that at the present time no allowance is made for any of the expenses incurred by promoters of entertainments for philanthropic and charitable purposes, but that is not so. Originally it was provided that only those entertainments in regard to which the whole proceeds were given to the charity were exempt from the duty, but that has been modified to the effect that where not more than 20 per cent of the proceeds has been spent upon expenses in such a case the entertainment shall be exempted from the duty.

The suggestion of my hon. Friend the Member for Oldham is that the allowance in regard to expenses should be increased, and I am willing to accede to that suggestion. I cannot, however, go so far as my hon. Friend desires, because that would mean the loss of much more money than the people of his constituency would think wise on the part of the Chancellor of the Exchequer, but I am certainly moved by the representations made to me to the effect that many quite justifiable philanthropic and charitable objects are defeated in the chance of holding profitable entertainments because of the fact that the expenses cannot be kept within the narrow limits at present imposed. I have gone into the figures, and I have come to the conclusion that we ought to increase the amount from 20 per cent. to 30 per cent. I think by that increase we shall really meet the most deserving cases.

I beg my hon. Friend to notice that, in doing this, I am not departing from the high standard of unsympathetic Chancellors of the Exchequer whom he desires me to follow. I anticipate by making this slight advance in the percentage of expenses which will be allowed that I shall in connection with the hospitals be likely to escape from burdens which might possibly be imposed upon the Treasury. T am doing this with an entirely selfish object, and whilst it may cost £50,000 to perform this operation, I expect to be more than recouped by the advantageous results of the suggestion I am making to the House. If my hon. Friend will consent to withdraw his particular proposal I will put down on the Report Stage a Clause which will give the increased allowance for expenses to which I have referred.

After what the right hon. Gentleman has said I ask leave to withdraw my Motion.

Motion and Clause, by leave, withdrawn.

New Clause—(Amendment Of 6 George V, C 11, S 1)

Section one, Sub-section (4), paragraph (a), of the Finance (New Duties) Act, 1916, shall read as though there were inserted at the end of Section one, paragraph (a), the words:
Provided that this Section shall not apply to subscription of members, paid by means of a lump sum, of sports clubs whose whole income is diverted to the promotion of games, athletic exercises, or physical recreation, and when no profit or surplus is or has been distributed as dividends or bonus.
—[Lieut.-Colonel Jackson.]

Brought up, and read the First time.

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

The object of this Clause is to amend the Finance (New Duties) Act, 1916, so far as it applies to the assessment of the subscriptions of members of clubs and associations which are paid by means of a lump sum. Sub-section (4) of Section 1 of that Act, when the subscription of clubs and associations is paid by means of a lump sum, and when a charge is made for admission, allows certain rates for the Entertainments Duty. It is felt that this method of taxing members' subscriptions bears hardly and somewhat unfairly especially upon small clubs and, associations whose whole revenue is spent and devoted to the promotion of sports and exercises and physical recreation. The new Clause proposes to exempt from this duty members' subscriptions of clubs run solely for this purpose and where no profit is distributed in any way whatever.

10.0 P.M.

My appeal for favourable consideration is based upon the necessity for promoting the physical well-being of multitudes of young people in this country. It is generally acknowledged that a reasonable indulgence in games and athletics is not only de- sirable but really is of some considerable national importance. I believe it has been proved beyond doubt that unencumbered opportunities of indulgence in sports, games and athletics has had a beneficial influence not only upon the health and physique of the manhood of the country, but also on the character of the people. I make a special appeal in the interests of small clubs and associations. Those who have had experience of running these small clubs know the enormous difficulty of running them with any sort of success merely by the aid of members' subscriptions. They have to make both ends meet, and in order to do that they have to depend upon public assistance, and this assistance is obtained by matches and competitions of one kind and another where a small charge is made for admission. This small charge naturally means that the subscriptions of the members are liable to assessment for Entertainments Duty.

The result of these enterprises generally means that there is a deficit for these small clubs. I have a kind of idea that many hon. Members have occasionally had some sort of requests to make up these small deficits. This deduction by a tax of the sum paid for members' subscriptions has this effect that economies have to be made in consequence and I have heard of several instances where the sum of £15 or £20 has had to be paid in Entertainments Duty when this is the sum that has usually been paid to some man for his services during three or four months of the year in connection with the ground, and they find that they have not this money with the result that they have to dispense with the services of that man who may be some pensioner or some old man who in his time has been a great sportsman. The result is that he has to leave his job and the ground deteriorates. That is not all because when members are asked to pay another ten shillings upon their subscription I am told they often find it not only very difficult to get. new members but they are likely to lose some of their Gld members on this account. I am not opposed to the principle of an Entertainments Duty, and I do not think sportsmen in general are opposed to it because they desire to do all they can to meet the difficulties of the times. I believe the Entertainments Duty in these hard times is a fairly reasonable and just way of raising revenue. but I have always found it hard to appreciate the soundness of the principle of taxing the means of providing an entertainment which produces the duty. Members subscriptions are the direct means of the provision of the opportunity of sporting recreation, and of the entertainment of those who go there merely to watch and who pay at the gate. If the Chancellor of the Exchequer wants the goose to go on laying golden eggs, it is not wise for him to cut off its food. In my judgment, when subscriptions are paid by means of a lump sum, it is inequitable to charge the Entertainments Duty on them. Lots of people have to pay the duty who never have an opportunity of seeing an entertainment, and, therefore, they really pay for something they practically never get. It is well known that members often subscribe to these clubs for the purpose of keeping the club going and do not get an opportunity to enjoy recreation on the club premises. They do not subscribe, therefore, for the entertainment which they get out of the club. Old playing members who have finished their active course, go on supporting the club, and seek to keep it going for the benefit probably of their sons and daughters.

I know that many appeals are made and are bound to be made to the Chancellor of the Exchequer for relief from this Entertainments Duty, and many of them are reasonable. But there is something about my proposal which I think differs it from other proposals. I make my appeal in the interests of those who, through these clubs, desire to actively participate in the recreation which these dubs supply by encouraging opportunities for play and recreation. I believe, and I think we all believe, it produces that health and contentment which assist considerably towards efficiency in work. Efficiency in work goes towards making up the prosperity of this country, and the prosperity of the country is by far the most fruitful source of revenue to which any Chancellor of the Exchequer can look. I hope my right hon. Friend may be able to give favourable consideration to this Clause. I have a feeling, having the privilege of his acquaintance, that if he follows his own inclination there can be no doubt that he will accept it, but he may possibly be diverted from so doing by the fact that he is faced with a financial situation over which he has no control.

There is no Member of this House who has more right to propose this Clause than the hon. and gallant Gentleman who has just spoken, nor is there anyone who should be listened to with so much respect on the topic on which he has discoursed. His speech has been so moderate in character that I think the views he has represented will naturally meet the appreciation of all of us. But for the reasons I am now going to state to the Committee I regret very much I am not in a position to accept this proposal, not so much because of what it contains, but rather because of the effect it will have on the ramifications of the Entertainments Duty. If we are to make this particular exception I do not see at the moment where the exceptions can be ended. Let me remind the Committee of the position of this tax in relation to sports clubs at the present time. If there is any playing member who pays his subscriptions in a lump sum, he is entirely exempt from any imposition of the Entertainments Duty on any portion of his subscription. On the other hand, in the case of a non-playing member only so much of the subscription as may be regarded as representing what he pays for admission to the ground at all times is held to be subject to the Entertainments Duty. In that way a large part of the subscription of non-paying members of sports clubs is held to be exempt from the duty. If one were to carry the matter further, and say that all subscriptions to sports clubs should be exempt from duty, it is easy to see what the result would be. People would take up membership cards which would entitle them to free entry to all matches in which the club is interested, mid then the Entertainments Duty would almost entirely disappear in such cases. Take the case of a football club from which possibly the largest amount of revenue is derived from the Entertainments Duty. People supporting that club are on the club ground practically every Saturday, and all they have to do accordingly is to join the club for that purpose and get a season ticket for admission to the club ground to witness the matches. Thousands of people who never play the game could do that, and in that way the object of the Entertainments Duty would be entirely defeated. Indeed, I cannot see how, if I adopted the suggestion of the hon. Member, one could discriminate between the spectators who pay at the gate and those who pay by a lump sum a subscription to the club for the year. Under these circumstances I fear it is impossible for me to do as my hon. Friend suggests.

But I would say this. He has stated there are many members who keep up their subscriptions to clubs for the purpose of maintaining them in existence, and who never enter on the club premises at all. The Customs officials have a discretion conferred on them by Statute in dealing with the subscriptions of members as to the amount of the subscription which shall be subject to the duty. In any case, where in fact it is true that a member take's out a membership card, not for the purpose of attending the club premises, but rather in order to support the institution, I can assure my hon. Friend that the instructions of the Department are that every possible consideration should be extended in those cases, and that a generous view should be taken of the position. I should myself think that the result would be that in cases where it is reasonably clear that subscriptions are paid, not for the purpose of obtaining entrance to the club premises, but for the purpose of maintaining its existence, in such cases no part of the membership subscription would become subject to the duty. I think that is really as far as I can go in the matter.

The machinery is in existence. For example, if I might just repeat what I said, it is the duty of the Customs officers to come to a conclusion with the representatives of the club as to how much of the subscription could really be allotted to the privilege of entrance to the grounds of the club, and, since they have that task to carry out in any case, it is equally simple, in dealing with the secretary of the club when that arrangement is being made, to discover—of course, it will not be very meticulous—what membership subscriptions are really paid without any real desire to enter the club premises at all. I have discussed the matter, and have no doubt as to its possibility.

It will be possible to arrive at a rough calculation. These rough calculations must be made in the administration of a duty of this kind, and I have no doubt that it is quite feasible.

I hope that my hon. and gallant Friend, who moved this Clause in a speech which found general acceptance throughout the Committee, will press the right hon. Gentleman a little more closely than he has done to-night, in order to achieve the object he has in view. What the Chancellor of the Exchequer said he said, of course, with perfect good will and with a desire to carry into effect the concession he has given, but the experience, unfortunately, of all Members of the House of Commons in regard to Chancellors of the Exchequer of all parties who, I will not say have given undertakings, but have expressed good will, has not been particularly happy in the way in which it has worked out, and I really think, if I might make the suggestion, without any disrespect to the Chancellor at all, that between now and Report, my hon. and gallant Friend should endeavour to see how far the proposal can be reduced to working with the authorities, and it might be put down on Report. Of course we do not desire to press this Clause at all, after what the Chancellor of the Exchequer bas said about the obvious way in which it would lead to very large evasions of tax, but this concession is one which would be difficult to administer, and, in so far as it is practicable to do it, I hope that by the time the Report stage arrives, the House will be in possession of rather more particular information as to bow it is to be carried out than is available at present.

The Chancellor of the Exchequer based his argument against this Clause on the plea that great revenue was derived from what are really professional football clubs, and, of course, that revenue is very large. He overlooks the fact that this Clause only applies to clubs which do not distribute dividends, but all the big association grounds are owned by clubs which are really limited companies, run for profit, and paying dividends.

As a very old football player, I must claim to know more about it than does the right hon. Gentleman, and I think that if he will take the trouble to investigate the matter he will find that what I am saying is correct. Therefore, I submit that as far as that is concerned, his contention has entirely failed.

I do not think that even now the Chancellor of the Exchequer fully appreciates the real effect of this tax. He seems to imply that unless there is revenue from admission charges there is no tax at present, but that is not so. Clubs which have no entrance fee whatever are being taxed at the present moment, and are being asked for the tax. Even where there is no gate, and not a farthing is charged, claims are made by the Inland Revenue Department for so much in respect of each member. If the right hon. Gentleman has forgotten, I can fortify his memory by reminding him that, as late as the 15th June, the Department wrote as follows:

"In view of the fact that non-playing members are not entitled to take part in any game, and have, in virtue of their subscriptions, the privilege of watching games from which non-members other than the friends of members are excluded, the Commissioners have no alternative but to regard seine portion of such subscriptions as representative of admission fees."
There is no charge for admission to anyone. The Inland Revenue has drawn up a list that they are going to charge even where only friends are admitted. I could show the right hon. Gentleman a long correspondence with a well-known club in which the Inland Revenue not only claim for the present year, but ask them to send in an account for the three pre- vious years, and demand for that time certain payments of which they had drawn up a long list. I do not think the right hon. Gentleman understands how this affects the smaller clubs. The Duke of York yesterday took the chair at a meeting in reference to the Industrial Council, which has for its object to assist sport among the working people connected with factories. That very Council has written to me repeatedly complaining of the action taken by the Inland Revenue. There is an Old Boys' Union at Port Glasgow. They pay half a crown for the whole year and the Inland Revenue demands 2d. out of each half-crown because the boys play some sort of game and go to meetings where at the end of, say, a lecture a few lads may sing a song. They are charged Entertainments Duty, although next door there may be a dance where an orchestra may be paid £25 for playing, and because in theory when you dance you do not amuse anyone else, except your partner, you escape the Duty. The Port Glasgow Boys' Union got nervous. They had down on their membership card at one time that they would have a Church parade. They wondered if it would be chargeable, and they wrote and got a reply that the Church parade would be exempted from the Duty if there was no music or singing.

The right hon. Gentleman has been very busy with more important items in his Budget, and has probably not been able to give time to the details of this. I have been overwhelmed in the last twelve months with letters about the ridiculous impediments put in the way of small clubs. We do not object in the slightest to payment of duty on the man who comes in and pays at the door. Every hon. Member knows full well the number of times he has to be an honorary member in order to support a club in which he is interested, and yet so keen are the Inland Revenue on getting duty that you are only allowed to go on to the ground without paying it so long as there is nothing going on. I do not think the right hon. Gentleman can have examined the correspondence, which I should be pleased to show him, from his own Department. I appeal on behalf of many hundreds of small clubs with which, in one way or another, I have been associated. To the working lad and the working man this is a matter of first importance, and it is also of first importance to the nation. I hold no brief for professional sport because sport in the end will depend upon amateur sport, for which I appeal. I hope the Chancellor of the Exchequer will give further consideration to this question, and examine the archives of his Department, and some of the mysterious letters which some members of his staff have time to write. I trust that he will see that there is a real case for some more drastic concession than he has suggested. There is already in existence some method by which a certain amount is allocated. That is already done, but that does not meet the case. I ask for something much more drastic in order to meet a real want and a real grievance amongst hundreds and thousands of young fellows, whose sport is the one entertainment and the most important recreation of the week.

I ask for an assurance from the Chancellor of the Exchequer that he will instruct his officers to give a more lenient rendering of the letter of the law, which he has promised in the case of some clubs, to the case of the National Rifle Association. It may be news to a great many hon. Members that the National Rifle Association is actually charged Entertainments Duty. It is a most extraordinary thing that it should be so. Rifle shooting is not an entertainment. The only entertainment that ever takes place at Risley is the annual match between Members of this House and representatives of the Chamber at the other end of the corridor. I have shot in that match, so I ought to know. The work that the National Rifle Association has done in the past for rifle shooting is well known. Eight years ago, when rifles were so much required, no one could speak too highly of the work that had been done by the National Rifle Association in training men to defend this country. Amongst the things the National Rifle Association has done may be mentioned the evolution of the modern small-bore rifle, a weapon with which all civilised countries are now armed. The evolution of that was entirely due to the scientific side of the National Rifle Association.

At the present time, the National Rifle Association, and the riflemen of this country through the association, are called upon to pay Entertainments Tax for the work that they do. Subscriptions, which are sent to the National Rifle Association, are not sent for the privilege of going to look at rifle shooting. No one would go to look at rifle shooting as an entertainment. It is one of the dullest things that one could possibly imagine. The subscriptions are sent to encourage rifle shooting throughout the Kingdom. The subscriptions go to that object and are sent for that purpose and no other. A certain amount of gate money has been collected during the past few years, but that has not been for letting people in, but rather for the purpose of keeping people out. At Bisley, during the meeting, as is customary in connection with functions of that kind, a very large number of undesirable people collect, and it is necessary to fence in the ground so that the men who are in camp there, under canvas, may not have their equipment and their things stolen by these very undesirable characters. The expense of fencing in the camp has hitherto been met by the small sum which is charged to the few people who go in. Rifle shooting to-day is every iota as important to this country as archery was in the Middle Ages. In the Middle Ages people were not taxed for practising archery. On the contrary, they were taxed for not practising archery. Anybody who did not practice archery on every Sunday was fined ld., which was a considerable sum in those days. This concession will cost nothing this year, because arrangements have already been made that no entrance fee shall be charged at the gate. Rather than submit to the clerical work entailed in filling in all the forms which have to be sent in, it has been decided this year to dispense with gate money. Should gate money be charged in some other year, then taking into account the subscriptions which people might send in to encourage rifle shooting throughout the country, it is possible that the Exchequer might lose between £25 and £30 in a year. If the Chancellor of the Exchequer cannot afford that sum to encourage rifle shooting, so that people may learn to defend their country, it is time that we got a more patriotic Chancellor of the Exchequer.

I did not expect the Chancellor of the Exchequer to accept this Clause. I felt that he was up against a number of ramifications and that if he had accepted it these ramifications would have sprouted on every branch. But I think that the Chancellor of the Exchequer must make a start—whether he makes it over rifle shooting or cricket does not matter. I say with all respect that he has got to get a move on. I am a strong supporter of the Coalition. I realise fully the terrible legacy which was left with the Coalition by the former Government in the matter of finance, to say nothing of the Irish situation to-day. I realise that the Co- alition Government has many difficulties but it has got to make a start. The Chancellor of the Exchequer should put on his considering cap. Taxation in this country is most unjust to every class.

These general observations would seem to be more appropriate to the Second Reading of the Finance Bill than to this particular Amendment.

I know that I am not quite in order. There is a certain amount of trouble in Ireland just now. But the present system of taxation in this country is far worse than anything which Sinn Fein has done.

I do not intend to take up the time of the Committee. [HON. MEMBERS: "Go on!"] I ask the Chancellor of the Exchequer to accept this Clause as a start. Let us begin from now on a new basis, and when the next Finance Bill is introduced, we must have a new system of taxation. First of all, let the Chancellor of the Exchequer bear in mind our national game, cricket. You cannot educate the youth of the country better than by teaching them cricket.

After the speech we have just heard I feel that the Chancellor of the Exchequer may have been moved further than by any previous speeches on this Clause. I appreciate very much the suggestion of the right hon. Member for Peebles (Sir D. Maclean) that one might be allowed to meet the Inland Revenue authorities for the purpose of trying to get from the Chancellor of the Exchequer a concession on this particular point. It happens that I once made some remarks on this subject when another right hon. Gentleman was Chancellor of the Exchequer, and it was then suggested that I should take that course. I had the privilege of accompanying various deputations from the people interested, with the result that some considerable advantage was got and no one was particularly hurt by it. I was impressed by and obliged for the very sympathetic tone of my right hon. Friend in offering to do what he can to meet our request. If the Committee will allow me, I would prefer now to withdraw the Amendment and depend upon the undertaking which the Chancellor of the Exchequer has given most definitely—an undertaking in which I trust absolutely.

Motion and Clause, by leave, withdrawn.

New Clause—(Profits Of Charitable And Other Companies Registered Without Word "Limited" Exempted From Corporation Profits Tax)

  • (1) Corporation Profits Tax shall not he charged on the profits of an association which is registered under Section twenty of the Companies (Consolidation) Act, 1908, as a company with limited liability without the addition of the word ' limited ' to its name, so long as it continues so registered.
  • (2) This Section shall be deemed to have had effect as from the first clay of January, nineteen hundred and twenty-two.—[Sir E. Bartley-Dennis.]
  • Brought up, and read the First time.

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

    The associations which are affected are such associations as chambers of commerce, university colleges and various other educational institutions, such as the Science and Art Society, also associations like the Air League and Navy League, and others which are incorporated under the Companies Act. They are associations which make no profit, and do not use the word "limited" after their name. As the tax is a Corporation Profits Tax, and as one of the conditions under which they are registered is that they are not to make a profit, it is rather an absurdity to tax the subscriptions that they receive as if they were profits. On that ground alone such an anomaly ought not to remain any longer on the Statute Book. Chambers of Commerce, for instance, have sometimes a balance in hand from their subscriptions, which are their sole source of income. That balance the Inland Revenue authorities regard as profit. It is nothing of the kind. I ask the Chancellor of the Exchequer kindly to consider whether the time has not arrived when an anomaly of this kind should be abolished. It will not cost much to adopt this proposal, and it will remove a clear injustice and an anachronism. At present, this is a tax upon the profits of companies which make no profits, which by law cannot make profits, and which cease to exist as such if they do make profits.

    I am prepared to accept this Clause. The sum involved is comparatively small, and I think the Clause only brings law into proper harmony with reason.

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

    Clause read a Second time, and added to the Bill.

    New Clause—(Repeal Of Entertainments Duty In Case Of Cinematograph Theatres)

  • (1) The present scale of Entertainments Duty as imposed by the Finance (New Duties) Act, 1921, as amended by any subsequent enactment, and so far as it applies to cinematograph theatres, shall be and is hereby repealed, and shall be substituted therefor an ad valorem rate of seven and a-half per cent, of the total sums received on account of admissions to such entertainments.
  • (2) A cinematograph theatre, for the purpose of this Section, shall be deemed to be any premises licensed under the provisions of the Cinematograph Act, 1897, and in which cinematograph films comprise not less than nine-tenths of the total time of each complete programme of entertainment.—(Mr. Newbould.)
  • Brought up, and read the First time.

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

    I found myself in sympathy with the various Clauses which have been moved in regard to the Entertainments Duty as it affects charities, sports, art exhibitions, and so on, but these matters can be satisfactorily dealt with if those interested in them will have, what I have had on many occasions—an interview with the Customs authorities. They can then discuss how the tax is to be properly and fairly applied. They will find on the part of the Customs officers the utmost sympathy with all these cases, and I feel sure most of them will be met by administration without any alteration in the law. I am sorry that in discussing the effects of the tax in these different respects we have not discussed its effect on the cinematograph industry. The Clause I now move has the effect of changing the present scale, with all its inequalities, into a flat rate. It is the same, in effect, as a Clause standing on the Paper in the name of the hon. Member for the Moseley Division of Birmingham (Mr. Hannon). Although the Clause I now move mentions 7½ per cent. as the flat rate in question, I would be quite prepared if it were in order to substitute for that a flat rate of 12½ per cent. which is mentioned in the Clause of my hon. Friend. It is not strictly in order however to talk of a flat rate of 12½ per cent., because it does in one section of the scale increase the charge.

    When I put down this Clause certain sections of the industry were opposed to the flat rate. Now, all sections of the industry have come together, and all the indoor sections, at any rate, have conveyed to the Chancellor their acceptance of the flat rate of 12½ per cent. The best way I can commend this Clause to the Committee is by endeavouring to anticipate and deal with the arguments which will probably be put forward against it. In fact, I think the Chancellor would agree at once there is only one argument of any substance which can be put forward against it. That is the argument which I anticipate the Chancellor himself will advance; he will say to the Committee, "This will cost the revenue so much money that I cannot afford it." I say to the Chancellor, as I said before, that he cannot afford to refuse this concession. If he does, the revenue derived from the tax will dry up like a wayside pool in a hot summer. It is already drying up. Last year the revenue from the Entertainments Duty from all sources fell by about £1,500,000, and that, in spite of the fact that from many sources the revenue was increased. From football and other outdoor sports the Chancellor of the Exchequer had a record year, but from the indoor side of the entertainment industry his revenue fell by about £1,500,000. It is estimated that some £900,000 of this decrease was attributable to the falling off in the cinema theatres.

    I would like to point out to the Committee that for every pound fall in the revenue derived from the duty, there is a fall of £4 in the takings of the theatres; that is to say, that the tax is roughly 25 per cent. of the gross takings in the case of the cinema theatres. Therefore, if the revenue from the cinema theatres fell, as I estimate it did last year by some £900,000, the takings of those theatres fell by four times that amount. All I can say is this—and the position of the industry to-clay proves it conclusively—that the industry never made that much profit; the industry never in one year made the amount of profit which they lost in takings in that year. The revenue from the cinema industry fell by some £900,000, and the takings must have fallen by some £3,600,000. The revenue is now falling at a much more rapid rate, but supposing it only falls during the course of the current financial year from the cinema theatres by £1,000,000, that means that the takings of those theatres will have fallen by £4,000,000, and after the fall of the previous year of, roughly, £3,600,000, you will have a decrease in your gross takings by cinema theatres of £7,600,000.

    There is only one possible end to that process, and the end is near; the end is in sight. This is the most flagrant case in modern times of over-taxation destroying an industry, and unless the Chancellor of the Exchequer can see his way to give a considerable and substantial concession to the industry, he will in a very short time have destroyed the source of his revenue. It is not a question as to whether the Chancellor of the Exchequer will get from this industry during this year £5,000,000, or £4,000,000, or £3,000,000, or £2,000,000; the question is, Will the industry survive? That is the question which the right hon. Gentleman has to decide to-night, and it is a responsibility which he must take on his own shoulders. This is a valuable industry; this industry is of very great value to the nation; it is a national asset. It is an industry in which at least £40,000,000 is invested. It employs some 120,000 people—musicians, attendants, and electricians. At the present moment these places are closing down at the rate of four a day. [HON. MEMBERS "Hear, hear!"] That is an attitude of mind which I am not surprised to find on that side of the Committee, but it is not shared by the Chancellor of the Exchequer or by the Members of the Government. Throughout the War and since the War, on every occasion of national emergency, the Government has come to the cinema industry for help and assistance. From the Prime Minister downwards, I can produce letters from every member of the Government thanking the industry for the valuable services it has rendered to the Government and the nation. Therefore, though some hon. Members opposite may think that this industry is not a valuable one, I am glad that this obsolete view is not shared by the Government.

    There is another argument that the Chancellor of the Exchequer will probably put forward why he cannot make any concession to this industry. He will say that it is only suffering from the industrial depression from which all other industries are suffering, and that when prosperity comes again that will be quite sufficient, and the cinema industry will probably revive very rapidly. That, unfortunately, is not entirely true. This is a new industry; it is suffering from growing pains, amongst other things; and while industrial depression is naturally affecting it seriously, it is not the whole cause of the difficulty. The fact is, there has been a somewhat lopsided development, due entirely to the War. The improvement and development in the production of films has far outpaced the improvement and development of the buildings in which they are shown. The reason for that is that the centre of film production is in America. During the War there was an enormous development in films in America, and there was also a corresponding improvement in the buildings in which the films were shown. Owing to the difficulty of building, the restrictions on building during the War, and the very high cost of building after the War, there has not been in this country the development in the buildings which is absolutely necessary to keep pace with the development in the films. Before the War, you could secure a film programme to present to your audience, for three or six days, at a cost of about £25, £30, or £40. Your people were quite content with a performance of from an hour to an hour and a half. Now, your films costs, instead of £30 or £40, £200, £300, and £400; and it is not an extravagant price, the value is there. While, before the War, films were produced for £2,000 or £3,000, they now cost £30,000, £40,000, and anything up to £100,000 to produce.

    Where, at one time, the average length —almost the maximum length—of a film was from 2,000 to 3,000 feet, it is now some 5,000 feet. The theatres to-day, in the main, are too small to hold the money to pay the price for the films that they have to show. During the War we survived that difficulty, for the reason that there were a large number of people, not only with the money in their pockets—that is the first essential—but there was another essential, they had time to spare. During the War and for two years after the War—during demobilisation—there were a great many idle people with money to spend. The result was that a number of these places started business at 11 o'clock in the morning, spreading their business over eight, nine, and 10 hours of the day, and during that period passed through their theatres a very large number of people. Now they have to concentrate the business into four to six hours, and the places are not big enough to hold sufficient people, in the hours at which they will attend, to pay for the cost of the films. That is one of the reasons why I say that it is not purely an improvement in the industrial conditions that is going to put this industry on its feet. The industry, in order to get on its feet, must attract capital, must show a sufficiently attractive return to be able to raise a considerable sum of money, in order to enlarge and improve its existing theatres, and, where that is impossible, to scrap the old ones, and build larger and better ones in their place. Until we arrive at that position, there is no real future for the industry. This tax, in its present form, being 25 per cent. of your box-office receipts, before you have paid rent, rates, taxes, wages, or anything else, makes it impossible to attract money, because financiers naturally say that to put money in an industry which has to pay away 25 per cent. of its earnings before it has paid any of its expenses is too highly speculative.

    11.0 P.M.

    There is yet another reason which the Chancellor of the Exchequer will no doubt give as to why he cannot give this industry any relief. He will say that it is not taxed in any different way from any other industry which deals in dutiable articles. I contend that that is not true. Those who sell tobacco or beer, which are dutiable articles, sell a separate article to each individual, and if they do not sell their complete stock this week, they carry it over to the next. We do not do that. We have to sell the same article to the public en masse. We present this article to the public, and it costs us just as much to sell the article to 100 people as it does to sell it to 10,000 people, and if we do not sell it to enough people within the three days for which we hire it, to pay the cost of it, we have no stock to carry over to the next week. It is lost, and lost for ever. That is entirely the difference between the effect of this tax upon our industry, and the effect of a duty on articles like beer and tobacco. While X number of people will pay our costs, X + 1 means 100 per cent. profit on the one, X - 1 means loss. X + 1 means success; X - 1 means failure. For the Chancellor of the Exchequer to take 25 per cent. of the gross takings, whether they are X + 1 or X - 1, makes little difference to him but is of vital importance to the industry.

    I want, as briefly as I can, to point out to the Chancellor what, in my opinion, will be the effect if this tax is retained in its present form, and what will be its effect if he accepts the new Clause. In the first case the Chancellor will seriously damage, if not irretrievably destroy, the industry which is of great value, or it will be given a blow that it will not recover from for many years, and it will throw out of employment many people now employed. It will cause tens of thousands of investors to lose the money they invested before the tax was imposed, and before such Measures as the Daylight Saving Bill came into operation. I believe in daylight saving; it is an excellent thing. I would not oppose it; but I would point out to the Chancellor that it means a vast sum of money to the industry for which I am speaking. It also means that the right hon. Gentleman loses a considerable amount of revenue arising out of dutiable articles, carbons, etc. If the Chancellor makes this concession of a 7½ per cent. flat rate he will first of all destroy the inequalities of the present system, which are obvious to every Member of the House. The duty varies from 16 to 40 per cent. on the lower priced to 11 to 16 per cent. on the higher priced seats. We ask for a flat rate, so that all sorts of indoor entertainments shall be on an equality in this matter. In acceding to this, the Chancellor will destroy the unfairness and injustice of the incidence of the tax. He will encourage the development and expansion of the industry, and employment will be found for a large number of men in the building trade and the allied trades. The decorative, fibrous plaster, wood and stone carving, carpet and tapestry making, upholstery, electric equipment will get an immediate and much needed stimulus if this tax is remitted. I think the Chancellor of the Exchequer will find that it will have an immediate effect upon the volume of unemployment, because some thousands of men will instantly find employment, and the unemployment benefit will consequently be saved to the country. The right hon. Gentleman will also save the investments of the shareholders. Altogether, if he looks carefully at the two sides of the picture, he will have no hesitation in making the concession for which I am asking. The Chancellor of the Exchequer, disguised in a cloak and a mask and armed with a dagger, may slit the gizzard of the unfortunate taxpayer in a dark lane to-night, but to-morrow, when ho appears in a more sober and conventional garb, he will find himself the chief mourner at the funeral of a generous and longsuffering taxpayer. I would ask the Chancellor of the Exchequer to depict this dual role before the film camera, and if he would do this, even if he did not succeed in reviving the fortunes of the industry, he would put a substantial sum into his own private purse and enhance at the same time the amount of revenue he would derive from this duty.

    I do not know whether I can still claim the indulgence accorded to a maiden speech, as I have already taken part on a former occasion in Debate in this House, but, nevertheless, I think I can rely upon the indulgence of the Committee. I sincerely trust that the Committee will reject this Clause. The measure of the weakness of the case of the hon. Member who moved this new Clause may be judged by the length of his speech. I shall be very brief. When any industry or any organisation comes to the Chancellor of the Exchequer and prays for relief, it should at least show that, so far as it is able, it runs its business upon an economic basis. It is because the cinema business does not that I hope the Committee will reject this Clause, because, in the first place, the Exchequer is very hard pressed for money, and secondly, because any relief given to the industry will not benefit the consumer but will only enable that industry to pay grotesque salaries to artistes in a foreign country which will not be spent in our country. I dare say other hon. Members have, like myself, received a communication from the cinema industry —I do not know why they call it an industry—to the effect that hon. Members who do not support this Clause will he subjected to a form of campaign on the screen which can be described as little less than blackmail. I listened with great interest to the arguments of the hon. Member who moved this Clause. He told us that picture palaces had been put up at great cost—far greater cost than in normal times—yes! in competition with the building schemes of the Government for the provision of housing accommodation.

    I withdraw, of course, but it certainly was the impression on my mind that the industry had since the end of the War felt severely the expense of building.

    I said the cost of building was so great that they could not afford to build.

    Well, I leave it to the judgment of the Committee. All I ask is that we, Members of the House of Commons, should not give way before an agitation which is based upon a misapprehension of, and a failure to understand, the character of the people. We all know that the Exchequer is hard up. I listened to the arguments used by the hon. Member and to his picturesque phrases about the pools that will dry up. Some of them might well dry up. Let the Government resist this Clause. I have no doubt that by efficient administration of their own so-called industry the cinema people can make economies which will in no way impair either their receipts or the revenue from this duty.

    I have no interest whatever in any cinema undertaking, although, unfortunately, I once, at the suggestion of a friend, invested a small sum of money in a cinema, and it disappeared. I represent, however, one of the most intelligent constituencies in this country, and in that constituency I discovered a great number of people who were interested in this industry, and I have been, as I am sure have most hon. Members, deeply impressed with the value of the picture-house as an educa- tional institution. Whether hon. Members disagree with everything that is manifest in the modern picture-house or not, it has come to stay in this country as an institution, and the danger at the moment is that the excessive taxation imposed upon the cinema theatre, which is one of the main educational and recreational opportunities of the people in these days, is crushing it out of existence altogether. I took the opportunity, when I became interested in this question, to make inquiries as to the extent to which these picture-houses were menaced by the existence of the tax, and I found a very extraordinary state of things, which I commend to the consideration of the Chancellor of the Exchequer.

    One almost feels ashamed to make further appeals to the right hon. Gentleman. Having asked him for all sorts and conditions of things, one is very reluctant to continue to press further upon his good nature. What one finds, however, is that these picture theatres are steadily being closed down, and the ethical activities associated with them are gradually disappearing, while it is a fact that a very large number of people who were employed in connection with these enterprises are being put out of employment. I have had some examples given to me from the actual balance sheets of these theatres, showing the losses that are being made, and indicating the difficulties under which they operate. One concern, for example, paid £36,300 in tax last year, and made a profit of £100. I recommend my hon. Friend opposite, who severely criticised the anxiety of the people interested in this industry to try to protect themselves, to try to understand the attitude of mind of anyone who is in that position. Again, two theatres paid £12,000 and £10,000 in tax, and lost respectively £7,000 and £5,800. There has been a steadily growing stream of unemployment as a result of the disappearance of these theatres, and I am assured on excellent authority that, unless a substantial concession is made by the Chancellor of the Exchequer, a further number of these houses will disappear. Hon. and right hon. Gentlemen may think that is a good thing, but, properly managed, there is no institution in this country that can do more to stabilise national life, and give people opportunities of seeing something of the greater world outside their own small sphere, of acquiring wider knowledge, and getting in touch with human progress abroad, than the picture theatre, and I am persuaded that it would be a misfortune, in many of the localities where these houses exist, that they should, under the pressure of this tax, be obliged to close their doors. I have had made for me, by the representatives of this industry in six areas in England, a series of investigations showing the losses which are being sustained in connection with these theatres under the pressure of the tax. It is very difficult for the Chancellor of the Exchequer to justify charging the working man 41 per cent. of his entrance fee into one of these picture houses as against the 11 per cent. which is charged to the rich man who can afford to go to a theatre. This afternoon the Solicitor-General, who has shown extraordinary ability in assisting the right hon. Gentleman in dealing with the Finance Bill, said all taxation ought to be fairly distributed having regard to taxable capacity, or words to that effect. Will anyone justify the incidence of a tax which inflicts 41 per cent. upon a person less able to bear it and 11 per cent. on a person who is much more competent?

    The hen. Member and the mover of the Clause have spoken of the ad valorem duty on the higher priced seats in theatres as compared with cinemas. How does that ad valorem duty on cinemas compare with the ad valorem duty on pit seats in the theatre?

    At any rate, I do not think there is much point in the question he has put to me.

    I ask the right hon. Gentleman to assist this industry and deal out to it a measure of fair play, and give it an opportunity of continuing its useful work without being overburdened by this abnormal taxation. I associate myself with the proposer of the Amendment in suggesting to the Chancellor of the Exchequer that if he gives the industry a flat rate of 12½ per cent. all parties will be perfectly satisfied. There may be an immediate loss of between three to four millions of revenue, but he will give further opportunities of expanding these enterprises, and their taxable capacity will be increased. I hope he will consider this very carefully. I have no personal interest in the matter, but I think a great public institution of this nature, which all over the country has been utilised during and since the war for propaganda for educational purposes, should not be placed in the position it occupies now because of this abnormal burden of taxation.

    I am sure the Committee will congratulate the intelligent theatre owners of Birmingham in having secured the advocacy of the hon. Member for the purpose of saving the cinema industry the burden of the Entertainments Duty, but. I think he put one part of his argument in a form which is not quite accurate and not quite fair. He talked of the large amounts paid to the Exchequer by certain theatres, when, in point of fact, they were only making a very small margin of profit, or actually incurring heavy losses. That does not quite represent the facts. It is putting the situation as though the tax were one like the Income Tax, which is a tax upon income, or other taxes which are taxes upon profits. The Entertainments Duty is not a tax of that kind. It is a duty like the beer duty. It is paid by the consumer—if I may so speak of the person who attends the entertainment —so long as the article can be sold at a price which enables the seller of the article to make his ordinary profit and also sell at a price which enables the consumer to pay the full amount of the tax. But when the consumer is in a position in which, through falling wages or decreased salaries, he is no longer willing to spend so much upon the article, then, obviously, the supplier of the entertainment must supply more cheaply, and he may find himself compelled to forego his margin of profit, and even sometimes to endure loss in order to keep in existence the industry to which he belongs. That is precisely the situation which was revealed last night in some of the speeches relating to the Beer Duty, where it was represented that many people to-day were making losses, although they have to pay a very high duty upon the commodity they sell; that is a proper analogy. This duty ought not to he described as a tax upon profits when, indeed, no profits are being enjoyed.

    Let me turn to the proposal which the hon. Member for West Leyton (Mr. Newbould) has made in this Clause, the Clause suggests a fiat rate duty of 12½ per cent. upon the proceeds of each particular theatre, when, in point of fact, the Amendment to which he spoke was one for a flat rate duty of 12½ per cent. He could not put that upon the Paper because it is out of order. While I was perfectly willing to answer an argument that upon 12½ per cent. the Committee must address its mind to the proposal for altering the duty to one of a. flat rate of 7½ per cent.

    Why? The whole of my argument was upon the 12½ per cent. The right hon. Gentleman knows quite well that the 12½ per cent. is out of order on the Paper, but by permission of the Chairman I was allowed to talk on the 12½ per cent.

    The Chairman was tolerant enough to allow my hon. Friend to proceed in that way, but the Committee can only vote for the Clause on the Paper. To alter the Entertainments Duty to a flat rate of 7½ per cent. would be to deprive the Exchequer of, even upon an estimated increased attendance, £5,900,000. If the duty were one of a flat rate imposed at 12½ per cent. the loss to the Exchequer would be £3,700,000. I have no objection at all, in principle, to a flat rate, and if that would relieve the people who supply entertainments of part of their present difficulty I should be very ready to agree to a reasonable flat rate. I put it to those whom I said, that if they could get me by a flat rate as much money as I get now, I should be willing to alter the arrangement by which the duty was imposed. The difficulty is that there are divergencies of interest in the entertainment trade. Theatres, on the one hand, take an entirely different point of view from the cinema owners.

    The hon. Member said that an agreement had been come to, and the agreement, if ever it was made, certainly did not embrace the whole of the theatres, or even most of the im- portant theatres of this country. Immediately after it was announced upon the instigation of my hon. Friend the Member for Moseley (Mr. Hannon) that some such understanding had been arrived at, I received from the Theatrical Managers' Association a communication in which they said that they strenuously objected to a flat rate and desired that the scale should continue. They say:

    "My association, while objecting to entertainment duty in any form and while in discussions on the subject maintaining the view that the amount of the admission should be kept separate from the tax, by resolution at the general meeting on Thursday last reaffirmed their objection to a flat rate being substituted for the scale, and I am desired to inform you of this decision."
    It is plain that the theatres and the cinemas do not see eye to eye on this subject. If I impose a flat rate I shall please the cinema people and I shall disappoint the theatre owners.

    I am afraid this is not a case in which you can talk about what is just. You can only talk about what is expedient, what is least damaging or burdensome to the industries involved. As I have said, having a flat rate of 12½ per cent. would deprive the Exchequer of £3,700,000 revenue. We cannot afford to forego that amount. But my hon. Friend drew a very sad picture of the decline of this industry, and he assured me that in appropriate mourning garb I should be attending its funeral within a short period.

    I would ask the Committee to consider for a moment what is the precise position of this industry. I do not think that it is nearly so bad as my hon. Friend has suggested. What was the expectancy of an industry of this kind? This was a new industry. It has had an amazing mushroom growth. One would expect that an industry which had got a rapid stride at a time when the mass of the people of the country had more money to spend than now would have had a profitable time which would he mitigated to a certain extent when a more normal period arrived. That is exactly what you have. In the period during which this industry has been in existence 3,500 cinemas have been set up in this country. You could not expect that all these would survive in the ordinary course, even in normal times. But I would ask the Committee to remember that not only was this a mushroom growth of a new form of entertainment in this country which must necessarily become depressed to a certain extent as time went on and as the poorer establishments got weeded out, but recollect that they were also 3,500 new centres of entertainment added to all the centres of entertainment which already existed in the country and which had previously supplied the people of the country with all the forms of entertainment which they seemed to require. [HON. MEMBERS: "No!"] After all, supply is generally equal to demand, though sometimes a new supply in itself creates a demand. At any rate, when you recollect that the people of the country only have a certain amount of money to spend upon entertainments, it stands to reason that if you enormously increase the supply of possible entertainments, either the people must have far more money to spend or else all these places of entertainment cannot survive. Accordingly, we should have expected, even though we were in normal times now, that some of these theatres would disappear. In fact, we are in the most depressed times we have ever known. Is it surprising that you should find this particular industry in a state of some embarrassment and difficulty? Is there any industry which is not in a state of embarrassment at the present time? Is there any industry which is not feeling the heavy burden of taxation? Let me make a short reference to a speech by a very distinguished gentleman well known in this House, Lord Ashfield. Chairman of the Provincial Cinematograph Theatres, Ltd. Speaking on 25th April of this year, at the annual meeting of this company, he stated that, whereas in the previous year their profits amounted to £224,000, they had dropped in the current year to £100,000, and he went on to say:
    "When I recollect that many of your theatres are situated in industrial centres. and that the number of unemployed has reached 2,000,000, or 16 per cent. of the workmen of the country, and when I recollect the number who are employed only part-time, I am startled at the moderateness of the decline."

    Will the right hon. Gentleman go on to read the quotation from the same speech about the Entertainments Duty?

    Certainly; I have no difficulty at all about that. Naturally he says that if you get the Entertainments Duty off under depressed conditions, there will be more money for the company. That is obvious. So, also, if you took off the Beer Duty there would be more money for the people who brew beer, and if you took off the Tea Duty more money for the people who import tea. But the fact is that he points out, with regard to this trade, that it has suffered seriously because of this depression through which we are passing, and because people who otherwise would he spending part of their wages upon entertainment are in fact unemployed and have not the money to spend. That is not all. Just as my hon. Friend pointed out that many other considerations have gone to the depression of this industry, namely, increased cost, unsuitable buildings and enormous priced for film hire, so Lord Ashfield points out that these are the large items which in fact have robbed the company of the profits which it would otherwise have. He says this:

    "There is the extravagantly enhanced cost of films. The increase under this head is £84,000."
    In fact this Company, whose whole profit for the previous year had been £224,000, which had dropped to £100,000, had an increased cost between the two years of £84,000 for film hire.

    Surely that is a bagatelle point. Let us keep to the point we are arguing. I do not think there was any change in the Customs Duty between the one year and the other. There are the facts. You had an industry which was of recent growth, finding itself suffer in a time of depression by greatly increased costs and new demands on its resources, and with enormously increased prices for films. What could you expect but depreciated profits, and, indeed, in some cases losses? I do not think the industry is so depressed as the hon. Member would like the Committee to believe. I will conclude by making reference to some indications, I will not say of prosperity, but at least of capacity to carry on, which I find by turning to "The Bioscope," the journal of this industry, for 1st June, 1922. The issue of that week contains announcements of a number of openings of new cinemas and intimations of many similar projects nearing completion. A very optimistic article winds up thus—

    "With easier money and the continual drop in building materials it should not be long before we have at least 5,000 cinemas in operation."
    That is not bad for an industry which is going to its grave and the funeral of which I am expected to attend.

    Did I not understand the right hon. Gentleman a moment previously to say there were too many? He cannot have it both ways.

    My hon. Friend will forgive me for saying that I catch him both ways. I do say that one would expect—especially in a time of depression and in the case of a crippled trade—the number to be on the decrease, but I say it is a very remarkable thing that one of the leading journals of this trade tells us, in point of fact, that they think things are doing well enough to lead them to expect that the number will not only be increased, but will be greatly enhanced.

    If the shareholders have the admiration for my hon. Friend which I have, and if they read his speeches as carefully as I do, they would not be bluffed. On the contrary, the foolish would all be selling out and wise men would be picking up the shares. In the same number of this journal I find announcements relating to almost every leading town in England of new cinemas—magnificent palaces. In Leeds there is the "Wonder Cinema," costing some enormous sum of money—I think £200,000 is invested in it. There are other new cinemas in Manchester, Bolton and other centres. Even Birmingham, the home of decaying cinemas as we are told, is starting a new venture at a cost of £74,000. T believe with my hon. Friend the Member for West Leyton that the industry has been crippled to some extent, like every other industry, by the depression through which we are passing. I believe, like every other industry, there are places in which, by good management and enterprise, new ventures can still succeed. With every desire in the world to meet the embarrassments of this industry and to help it if we can, in the particular circumstances in which we find ourselves there is no greater justification at the present time for giving special relaxation to this industry than there is in the case of any other industry.

    I am sure the speech of the right hon. Gentleman has impressed every Member of the Committee with its adroitness and ability. If his statement were to be taken alone, without having regard to the close relationship of certain other facts which he has not stated, one might come to the conclusion that this was a very prosperous industry with rosy prospects. During the whole of this discussion the right hon. Gentleman has been overflowing with pity for every claim made to him. In fact one must say of his career as Chancellor of the Exchequer, that, so far, his way has been paved with good intentions. I wish to remind him there is a complement to that, which very often leads to a place where there is weeping and gnashing of teeth.

    The right hon. Gentleman went on to point out that, according to one of the trade papers, a number of theatres were being built. He said that 3,500 had been built during the short career of this new industry. That is perfectly true, but this year, alone, 320 have been closed, and 1,200 are living upon credit. An hon. Gentleman waxed very eloquent and sarcastic in regard to this industry paying large salaries to the artists who produced the pictures, but he overlooked the fact that so far as the exhibitor is concerned his relationship is with the middleman, who is termed the renter. Twelve hundred of these cinemas are being kept open by middleman to-day, and unless some speedy relief is given to the industry they will go the way of the 320 to which I have referred and will have to be closed.

    The right hon. Gentleman seemed to assume that the present depression was merely a phase that affected every other industry, and that the cinema industry had everything in common with them and nothing peculiar to itself. Before this industry came into being, other forms of entertainment met the requirements of the community. The cinema has appealed to a section of the community which had neither the opportunity nor the money to attend those forms of entertainments that existed before it came into being. A large number of the people who go to the cinema are women and children. They have now been given the chance of getting away from their sordid surroundings and of obtaining some glimpse of life and travel in other lands. Yet of these cinemas, 320 have already been closed and 1,200 more are only hanging on by the grace of the renters.

    The right hon. Gentleman referred to the Provincial Theatre Company. Be knows, as well as I do, that the Provincial Theatre Company are more than purveyors of pictures; they have hotels and tea rooms. It is a notorious fact that these agencies—in most cases, not in all of them—have been the one means of preventing a total loss throughout the industry. The rest of the theatres are either living upon these ancillaries to the industry or upon credit. It is beyond dispute that the industry is to-day in a most deplorable condition.

    Apart from the position of the cinema people themselves, let us take a wider view. If the cinemas are closed, the women and children, who constitute the great mass of the people who attend them, will be denied this form of recreation. You will be helping to disturb, in a disturbed world, people who are looking for some relief, not only from their drab surroundings, but from the memories of the experiences through which they have passed during the last seven years. Apart from the economic side of the pictures there is the social side. If the right hon. Gentleman thinks that, in the financial stress of the Exchequer, he can, with impunity, close these places of amusement, then the spirit of unrest, which is all too prevalent to-day, will extend to the women, because you cannot expect these people to be contented with their surroundings as they exist to-day. I appeal to the right hon. Gentleman. He said he had sympathy with a flat rate. Will he consider, before the Report stage, the application of a flat rate? Some figure can be arrived at. The right hon. Gentleman gave an assurance to the deputation which saw him that he would be willing to meet them, if possible, on the question of a flat rate. I ask him not to thrust it on one side, but to give it further consideration, because I can assure him that this industry, as it exists to-day, is going towards a crippled condition which will bankrupt hundreds. If he can give some little hopes of a flat rate, I believe he will not only lead those people from destruction, but give them some hope of being able to carry on until better times come. I ask him to invite the Trade to meet his representatives, and I am sure he would not be dissatisfied with the return coming from a flat rate.

    So far in this Debate we have heard nothing at all of the point of view of the public. I am not concerned either with the cinema or with the theatre, and the merits of the one as against the other need not come into the discussion at all. I simply want to ask the Committee a very simple question, whether it is fair that those people who can only attend the kind of entertainment which is provided at a cheap price should have to pay as much as a 40 per cent. tax on admission, while other people —who can afford a different kind of entertainment—should only pay 11 per cent..? Where is the common fairness in a system which requires people in one district to pay on an average 25 per cent in tax—and some pay as much as 41 per cent—while not very far from this House we have an area where the average is 11 per cent.? It seems to me that there is a very important public question involved in this which has nothing whatever to do with the merits or otherwise of the cinema or theatre.

    I am very sorry that the Chancellor of the Exchequer has taken up such an uncompromising position on this question, and has not addressed himself to what I venture to say is the general public aspect of the question. The fact that a flat rate, which has been suggested of 12½ per cent., would leave a deficit of £3,500,000, is not really an argument which ought to be used in support of the present system on which this tax is based. The fact that here is still another tax which is already overloaded, which is already charged on a basis which causes hardship to those who pay for it, is another of those questions which, I hope, will impress on the Government that the present rate of taxation in every direction, especially in the one now under consideration, is more than the public can stand, and the only alternative is to reduce expenditure.

    I want to support the speech of the hon. and gallant Member who spoke last. This is, I think, a question which has suffered considerably in the way it has been brought before this Committee. There is no real difference between the rate of taxation paid by the person who attends the cinema and the rate of taxation paid by the person who enters the pit seats of the theatre.

    Therefore, the question is not a question between one industry and another. We have heard "Industry, Industry, Industry!" the whole time. The question is one between the man who goes to a cheap entertainment and the man who goes to an expensive one.

    That is not the Clause we are discussing. The Clause before the Committee is with regard to the substitution of a flat rate for the present system.

    I quite quite realise that, but I do not think it is unfair to say that, in the minds of the large numbers of the public who go to the cinema rather than to the theatre, this Amendment is identified with that differentiation between the cheap form of entertainment and the expensive forte, and the flat rate proposal before the Committee is designed in essence to equalise the amounts paid.

    Surely the Noble Lord must see, that if you put on a flat rate, each cinema proprietor will be at liberty to charge what he likes, and it will not ensure any equality amongst the various entertainments, or amongst districts, and still less in the same districts, and amongst the various cities.

    I am sorry if I did not understand the point raised. But I do think there is a serious feeling throughout the country on the whole subject, and it does behold this Committee to consider very carefully whether the present taxation is just as between the amusements of the poor and the amusements of the rich.

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

    The Committee divided: Ayes, 70; Noes, 158.

    Division No. 187.]


    [12 m.

    Banton, GeorgeHarmsworth, Hon. E. C. (Kent)Poison, Sir Thomas A.
    Barker, G. (Monmouth, Abertillery)Hayday, ArthurRandall, Athelstan
    Barnes, Major H. (Newcastle, E.)Hayward, EvanRichardson, Lt.-Col. Sir P. (Chertsey)
    Bowerman, Rt. Hon. Charles W.Henderson, Lt.-Col. V. L. (Tradeston)Richardson, R. (Houghton-le-Spring)
    Briant, FrankHerbert, Col. Hon. A. (Yeovil)Royce, William Stapleton
    Bromfield, WilliamHolbrook, Sir Arthur RichardSeddon, J. A.
    Bruton, Sir JamesHolmes, J. StanleyStanton, Charles Butt
    Cairns, JohnJames, Lieut.-Colonel Hon. CuthbertSwan, J. E.
    Carter, W (Nottingham, Mansfield)Jodrell, Neville PaulThomson, T. (Middlesbrough, West)
    Churchman, Sir ArthurJohn, William (Rhondda, West)Thorne, G. R. (Wolverhampton, E.)
    Collins, Sir Godfrey (Greenock)Jones, G. W. H. (Stoke Newington)Walsh, Stephen (Lancaster, Ince)
    Curzon, Captain ViscountJones, Morgan (Caerphilly)Walton, J. (York, W. R., Don Valley)
    Davidson, Major-General Sir J. H.Kenworthy, Lieut.-Commander. J. M.Ward, Col. L. (Kingston-upon-Hull)
    Davies, A. (Lancaster, Clitheroe)Kidd, JamesWard-Jackson, Major C. L.
    Davies, Thomas (Cirencester)Kiley, James DanielWatts-Morgan, Lieut.-Col. D.
    Dawson, Sir PhilipLawson, John JamesWhite, Charles F. (Derby, Western)
    Doyle, N. GrattanLort-Williams, J.White, Col G. D. (Southport)
    Edwards, C. (Monmouth, Bedwellty)McNeill, Ronald (Kent, Canterbury)Wignall, James
    Entwistle, Major C. F.Mallalieu, Frederick WilliamWilliams, Penry (Middlesbrough, E.)
    Finney, SamuelManville, EdwardYoung, Sir Frederick W. (Swindon)
    Foot, IsaacMoore-Brabazon, Lieut.-Col. J. T. C.
    Faxcroft, Captain Charles TalbotMyers, Thomas


    Goulding, Rt. Hon. Sir Edward A.Naylor, Thomas EllisMr. Hannan and Lieut.-Colonel Nall.
    Gretton, Colonel JohnNewbould, Alfred Ernest
    Grilles, W. G. HowardNewman, Sir R. H. S. D. L. (Exeter


    Agg-Gardner, Sir James TynteGoff, Sir R. ParkRemer, J. R.
    Amery, Rt. Hon. Leopold C. M. S.Green, Joseph F. (Leicester, W.)Roberts, Rt. Hon. G. H. (Norwich)
    Armitage, RobertGreene, Lt.-Col. Sir W. (Hack'y, N.)Roberts, Samuel (Hereford, Hereford)
    Armstrong, Henry BruceGreenwood, Rt. Hon. Sir HamarRobinson, S. (Brecon and Radnor)
    Baird, Sir John LawrenceGreenwood, William (Stockport)Rose, Frank H.
    Baldwin, Rt. Hon. StanleyGreig. Colonel Sir James WilliamRoundell, Colonel R. F.
    Banbury, Rt. Hon. Sir Frederick G.Guest, Capt. Rt. Hon. Frederick E.Royds, Lieut.-Colonel Edmund
    Barker, Major Robert H.Hacking, Captain Douglas H.Sanders, Colonel Sir Robert Arthur
    Barlow, Sir MontagueHarmsworth, C. B. (Bedford, Luton)Sessoon, Sir Phillip Albert Gustave D.
    Barnston, Major HarryHennessy. Major J. R. G.Scott, A. M. (Glasgow, Bridgeton)
    Beckett, Hun. Sir GervaseHerbert, Dennis (Hertford, Watford)Scott, Sir Leslie (Liverp'l, Exchange)
    Bantinck, Lord Henry Cavendish-Hinds, JohnSeely, Major-General Rt. Hon. John
    Bigland, AlfredHope, J. D. (Berwick & Haddington)Shaw, Hon. Alex, (Kilmarnock)
    Birchall, J. DearmanHopkins, John W. W.Shortt, Rt. Hon. E. (N'castle-on-T.)
    Bird, Sir William B. M. (Chichester)Horne, Sir R. S. (Glasgow, Hillhead)Smith, Sir Allan M. (Croydon, South)
    Borwick, Major G. O.Hunter, General Sir A. (Lancaster)Smith, Sir Harold (Warrington)
    Boscawen, Rt. Hon. Sir A. Griffith-Inskip, Thomas Walker H.Stanley, Major Hon. G. (Preston)
    Bowyer, Captain G. W. E.Jackson, Lieut.-Colonel Hon. F. S.Starkey, Captain John Ralph
    Breese, Major Charles E.Jephcott, A. R.Steel, Major S. Strang
    Bridgeman, Rt. Hon. William CliveJohnstone, JosephStephenson, Lieut.-Colonel H. K.
    Broad, Thomas TuckerJones, J. T. (Carmarthen, Llanelly)Sturrock, J. Leng
    Brown, Brig.-Gen. Clifton (Newbury)Kellaway, Rt. Hon. Fredk. GeorgeSugden, W. H.
    Buckley, Lieut.-Colonel A.King, Captain Henry DouglasSutherland, Sir William
    Bull, Rt. Hon. Sir William JamesLane-Fox, G. R.Sykes, Sir Charles (Huddersfield)
    Burdon, Colonel RowlandLewis, T. A. (Glam., Pontypridd)Terrell, George (Wilts, Chippenham)
    Campion, Lieut.-Colonel W. R.Lindsay, William ArthurThomas, Sir Robert J. (Wrexham)
    Carr, W. TheodoreLorden, John WilliamThomson, F. C. (Aberdeen, South)
    Cecil, Rt. Hon. Sir Evelyn (Aston)Mackinder, Sir H. J. (Camlachie)Thomson, Sir W. Mitchell- (Maryhill)
    Chamberlain, N. (Birm., Ladywood)McLaren, Hon. H. D. (Leicester)Townley, Maximilian G
    Churchill, Rt. Hon. Winston S.McLaren, Robert (Lanark, Northern)Tryon, Major George Clement
    Clay, Lieut.-Colonel H. H. SpenderMarks, Sir George CroydonTurton, Edmund Russborough
    Clough, Sir RobertMarriott, John Arthur RansomeWallace, J
    Coats, Sir StuartMason, RobertWalters, Rt. Hon. Sir John Tudor
    Colvin, Brig.-General Richard BealeMildmay, Colonel Rt. Hon. F. B.Ward, William Dudley (Soughampton)
    Cory, Sir. J. H. (Cardiff, South)Mitchell, Sir William LaneWaring, Major Walter
    Courthope, Lieut.-Col. George L.Mond, Rt. Hon. Sir Alfred MoritzWarner, Sir T. Courtenay T.
    Davidson, J. C. C. (Hemel Hempstead)Montagu, Rt. Hon. E. S.Watson, Captain John Bertrand
    Davies, David (Montgomery)Moreing, Captain Algernon H.Weston, Colonel John Wakefield
    Davies, Sir William H. (Bristol, S.)Morrison, HughWheler, Col Grenville C. H.
    Davison, Sir W. H. (Kensington, S.)Morrison-Bell, Major A. C.Williams, C. (Tavistock)
    Ednam, ViscountMunro, Rt. Hon. RobertWills, Lt.-Col, Sir Gilbert Alan H.
    Edwards, Major J. (Aberavon)Murchison, C. K.Wilson, Col. M. J. (Richmond)
    Edwards, Hugh (Glam., Neath)Murray, Rt. Hon. C. D. (Edinburgh)Windsor, Viscount
    Evans, ErnestMurray, John (Leeds, West)Wise, Frederick
    Eyres-Monsell, Com. Bolton M.Neal, ArthurWolmer, Viscount
    Falcon, Captain MichaelNicholson, Brig.-Gen. J. (Westminster)Wood, Hon. Edward F. L. (Ripon)
    Falle, Major Sir Bertram GodfrayNicholson, Reginald (Doncaster)Wood, Sir H. K. (Woolwish, West)
    Fisher, Rt. Hon. Herbert A. L.Pease, Rt. Hon. Herbert PikeWood, Major Sir S. Hill (High Peak)
    FitzRoy, Captain Hon. Edward A.Perkins, Walter FrankWorthington-Evans, Rt. Hon. Sir L.
    Fraser, Major Sir KeithPollock, Rt. Hon. Sir Ernest MurrayYounger, Sir George
    Ganzoni, Sir JohnPretyman, Rt. Hon. Ernest G.
    George, Rt. Hon. David LloydPurchase, H. G.


    Gibbs, Colonel George AbrahamRae, Sir Henry N.Colonel Leslie Wilson and Mr. McCurdy.
    Gilmour, Lieut.-Colonel Sir JohnRaw, Lieutenant-Colonel Dr. N.

    Clause—(Private Brewers' Licences)

    The following provision shall be substituted for the provision in section six, subsection (1), of The Finance Act, 1919:—

    Provided that where the brewer is the occupier of a house of an annual value of twelve pounds or less, he may in any year obtain without payment of duty a licence to brew a quantity not exceeding four bushels of malt, or the equivalent thereof, for his own use.—[Mr. Pretymon.]

    Brought up, and read the First time.

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

    I hope the, Chancellor of the Exchequer may regard this suggestion favourably. The point is that in the agricultural districts—particularly in East Anglia—agricultural labourers have been in the habit. of brewing a small quantity of home-brewed beer. Their right to do so is at present restricted to a certain season of the year, and they may brew only from two bushels of malt. Their present position is rather unfortunate, because through the fall in the price of barley they have had to submit to a reduction of wages. The price of barley in the past year has fallen from 72s. to 44s., and that has been a powerful factor in the decline of the agricultural labourers wages, and although the price of barley has thus fallen, there has been no redueion in the price of the beer which they buy at the public-houses. Therefore I hope the Chancellor of the Exchequer may sec his way to make this small concession, the cost of which would be quite negligible, although the concession itself would he very highly appreciated in the rural areas, especially in East Anglia. We ask that the assessable value of the occupier's house should be raised to £12, and that the brewing should be allowed at any time of the year.

    I will accept the Clause if my right hon. Friend will agree to substitute £8 for £12 as the assessable value of the house.

    If the right hon. Gentleman cannot go beyond £8, although in late years assessments have been raised considerably, I will gratefully accept that concession, and thank them very much for it.

    Before we decide this matter I should like some information in regard to it. Do the labourers make anything out of it? I should have thought there are very few householders who do not pay more than £8 a year. How much is the Chancellor of the Exchequer going to lose by this? I understand that in the United States every householder now runs his own private still or vat. If this concession be granted, shall we not have householders wanting to distil spirits as well as brew beer without paying any duty? I cannot see the justice of this. Because the right hon. Gentleman has a number of agricultural voters in his constituency, who are in the habit of brewing their own beer, I do not see why they should he granted this privilege. What about the poor fellows unemployed in our towns who are paying through the nose for their beer?

    Surely the hon. and gallant Member understands that this is not a new thing. It is only the amount of malt which is allowed to be used that is altered.

    That may be so, but who knows what will come next? The right hon. Gentleman next year, if he is successful now, may come along with another demand to double the quantity of malt to be brewed from.

    I hope the Chancellor of the Exchequer will also agree to a small reduction in the taxation on cider, which would be greatly to the advantages of the agricultural labourers in the West Country.

    What is this concession going to cost? We are entitled to be told that.

    Yes, I want to ask that as well. It is a perfectly legitimate question. The Chancellor of the Exchequer appears always to have something in his pocket for certain applicants for relief, and what will this particular application cost the revenue?

    I really cannot say, but my hon. and gallant Friend may take it that the cost will be infinitesimal.

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

    Clause read a Second time.

    Amendment made: Leave out the word "twelve" ["twelve pounds or less"], and insert instead thereof the word "eight."—[ Mr. Pretyman.]

    Clause, as amended, added to the Bill.

    New Clause—(Exemption From Entertainment Duty)

    Where the entertainment is provided by a society which is established solely for the purpose of promoting the interests of agriculture, or some branch thereof, and which is not conducted for profit, the fact that a band is provided as an accompaniment to such show shall not disqualify the society from claiming a certificate of exemption from entertainment duty in respect of such entertainment.—[Mr. Turton.]

    Brought up, and read the First time.

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

    This is a very small Amendment, and I am almost tempted to apologise for bringing it forward. As hon. Members are well aware, agricultural shows are very properly exempted from payment of the Entertainments Tax, but it seems that if the village band is brought on the scene at a small agricultural show, at once that extortionate person the Customs officer claims payment of the tax. The question was raised on the Budget last year, and although we got a very unsympathetic reply from the Chancellor of the Exchequer, we secured a very good Division. As on this occasion I hope for still more support, I propose to press this new Clause to a Division. I ask the Chancellor of the Exchequer how he can reconcile it with his conscience that he is so entirely in favour of assisting us in the poor agricultural districts and when we get up for the purpose of advancing agriculture and for the good of the agricultural community a small show in a village, because the village band comes to play without any charge whatever, he swoops down and claims entertainment duty? That is an injustice which I hope the Committee will not fail to remedy, even to the extent of defeating the Government on an Amendment of such substance as this.

    It goes both to my heart and conscience to refuse the request, but the truth is that if you once begin to make this kind of exception—

    Everything will follow upon it although it stands by itself. It will extend to everything else, and it will be impossible to draw a line of demarcation between one form and another, between whether a band is to play and whether it is not, and in the case where the band is the chief feature and where many people desire to see some trade show. We have to exclude all these shows. If we begin with agricultural shows it will extend to everything else until the whole Entertainments Duty wilt be wrecked. I hope the hon. Member will take my assurance that I would not resist it but for the fact that though it seems a small thing it will become in the end one of great gravity. I cannot accept the proposal.

    I hope the hon. Member will press this to a division. This is a subject which really affects not the entertainment of the people but largely the condition of agriculture.

    If the right hon. Gentleman heard some of the bands in my part of the country he would not regard it as an entertainment. This is not a question of merriment but a real substance. The amount the Chancellor can possibly hope to receive from shows of this description is so small that it is not worth considering in comparison with the amount of benefit agriculture receives from competitive shows. Agriculture has no relation to any other form of show of this description. It is something quite separate and distinct and I hope the right hon. Gentleman will not prevent these shows, many of them purely local, in villages where the funds are used exclusively for prizes in connection with shows and in addition they are largely supported by contributions from outside. I hope the right hon. Gentleman even now will see his way to make an exception in the case of agricultural shows.

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

    The Committee divided: Ayes, 49; Noes, 131.

    Division No. 188.]


    [12.20 a.m.

    Banton, GeorgeHinds, JohnPerkins, Waiter Frank
    Barker, Major Robert H.Holbrook, Sir Arthur RichardRendall, Athelstan
    Barton, Sir William (Oldham)Hopkins, John W. W.Richardson, R. (Houghton-le-Spring)
    Bell, Lieut.-Col. W. C. H. (Devizes)Hunter, General Sir A. (Lancaster)Rose, Frank H.
    Bowerman, Rt. Hon. Charles W.John, William (Rhondda, West)Royds, Lieut.-Colonel Edmund
    Bromfield, WilliamJones, Morgan (Caerphilly)Swan, J. E.
    Bruton, Sir JamesKenworthy, Lieut.-Commander J. M.Thomson, T. (Middlesbrough, West)
    Carter, W. (Nottingham, Mansfield)Kiley, James DanielThorne, G. R. (Wolverhampton, E.)
    Cope, Major WilliamLane-Fox, G. R.Walsh, Stephen (Lancaster, Ince)
    Courthope, Lieut.-Col. George L.Lawson, John JamesWatts-Morgan, Lieut.-Col. D.
    Davies, Thomas (Cirencester)Lort-Williams, J.Williams, Penry (Middlesbrough, E.)
    Davison, Sir W. H. (Kensington, S.)Lyle-Samuel, AlexanderWills, Lt.-Col. Sir Gilbert Alan H.
    Edwards, C. (Monmouth, Bedwellty)McLaren, Hon. H. D. (Leicester)Windsor, Viscount
    Entwistle, Major C. F.Morrison-Bell, Major A. C.Weimer, Viscount
    Foot, IsaacMyers, Thomas
    Gritten, W. G. HowardNewbould, Alfred Ernest


    Harmsworth, Hon. E. C. (Kent)Pennefather, De FonblanqueMr. Tartan and Mr. Royce.
    Hayday, Arthur


    Agg-Gardner, Sir James TynteGreen, Joseph F. (Leicester, W.)Rae, Sir Henry N.
    Amery, Rt. Hon. Leopold C. M. S.Greene, Lt.-Col. Sir W. (Hack'y, N.,Raw, Lieutenant-Colonel Dr. N.
    Armitage, RobertGreenwood, Rt. Hon. Sir HamarRemer, J. R.
    Armstrong, Henry BruceGreenwood, William (Stockport)Richardson, Lt.-Col. Sir P. (Chertsey)
    Baird, Sir John LawrenceGretton, Colonel JohnRoberts, Rt. Hon. G. H. (Norwich)
    Baldwin, Rt. Hon. StanleyGuest, Capt. Rt. Hon. Frederick ERobinson, S. (Brecon and Radnor)
    Barlow, Sir MontagueHacking, Captain Douglas H.Roundell, Colonel R. F.
    Barnston, Major HarryHannon, Patrick Joseph HenrySanders, Colonel Sir Robert Arthur
    Bigland, AlfredHarmsworth, C. B. (Bedford, Luton)Sassoon, Sir Phillip Albert Gustave D.
    Birchall, J. DearmanHenderson, Lt.-Col. V. L. (Tradeston)Scott, A. M. (Glasgow, Bridgeton)
    Borwick, Major G. O.Herbert, Dennis (Hertford, Watford)Scott, Sir Leslie (Liverp'l, Exchange)
    Boscawen, Rt. Hon. Sir A. Griffith-Holmes, J. StanleySeddon, J. A.
    Bowyer, Captain G. W. E.Hood, Sir JosephSeely, Major-General Rt. Hon. John
    Breese, Major Charles E.Horne, Sir R. S. (Glasgow, Hillhead)Shaw, Hon. Alex. (Kilmarnock)
    Bridgeman, Rt. Hon. William CliveInskip, Thomas Walker H.Shortt, Rt. Hon. E. (N'castle-on-T.)
    Broad, Thomas TuckerJohnstone, JosephSmith, Sir Allan M. (Croydon, South)
    Buckley, Lieut.-Colonel A.Jones, J. T. (Carmarthen, Llanelly)Smith, Sir Harold (Warrington)
    Burdon, Colonel RowlandKellaway, Rt. Hon. Fredk. GeorgeStanley, Major Hon. G. (Preston)
    Campion, Lieut.-Colonel W. R.Kidd, JamesStanton, Charles Butt
    Carr, W. TheodoreKing, Captain Henry DouglasSteel, Major S. Strang
    Cecil. Rt. Hon, Sir Evelyn (Aston)Lewis, T. A. (Glam., Pontypridd)Sturrock, J. Leng
    Chamberlain, N. (Birm., Ladywood)Lindsay, William ArthurSugden, W. H.
    Churchill, Rt. Hon. Winston S.Mackinder, Sir H. J. (Camlachie)Sutherland, Sir William
    Clay, Lieut.-Colonel H. H. SpenderMcLaren, Robert (Lanark, Northern)Thomson, F. C. (Aberdeen, South)
    Coats, Sir StuartManville, EdwardThomson, Sir W. Mitcheil- (Maryhill)
    Colvin, Brig.-General Richard BealeMason, RobertTryon, Major George Clement
    Davidson, J. C. C. (Hemel Hempstead)Mond, Rt. Hon. Sir Alfred MoritzWallace, J.
    Davidson, Major-General Sir J. H.Montagu, Rt. Hon. E. S.Walters, Rt. Hon. Sir John Tudor
    Davies, David (Montgomery)Moore-Brabazon, Lieut.-Col. J. T. CWard, William Dudley (Soughampton)
    Doyle, N. GrattanMorden, Col. W. GrantWard-Jackson, Major C. L.
    Ednam, ViscountMoreing, Captain Algernon H.Waring, Major Walter
    Edwards, Major J. (Aberavon)Morrison, HughWatson, Captain John Bertrand
    Edwards. Hugh (Glam., Neath)Munro, Rt. Hon. RobertWhite, Col. G. D. (Southport)
    Evans, ErnestMurchison, C. K.Williams, C. (Tavistock)
    Eyres-Monsell, Cont. Bolton M.Murray, Rt. Hon. C. D (Edinburgh)Wilson, Rt. Hon. J. W. (Stourbridge)
    Falle, Major Sir Bertram GodfrayMurray, John (Leeds, West)Wise, Frederick
    Fisher, Rt. Hon. Herbert A. L.Nail, Major JosephWood, Hon. Edward F. L. (Ripon)
    FitzRoy, Captain Hon. Edward A.Neal, ArthurWood, Sir H. K. (Woolwich, West)
    Foxcroft, Captain Charles TalbotNewman, Sir R. H. S. D. L. (Exeter)Wood, Major Sir S. Hill-(High Peak)
    Fraser, Major Sir KeithNicholson, Reginald (Doncaster)Young, Sir Frederick W. (Swindon)
    Ganzoni, Sir JohnParry, Lieut.-Colonel Thomas HenryYounger, Sir George
    George, Rt. Hon. David LloydPease, Rt. Hon. Herbert Pike
    Gibbs. Colonel George AbrahamPercy, Lord Eustace (Hastings)


    Gilmour, Lieut.-Colonel Sir JohnPollock. Rt. Hon. Sir Ernest MurrayColonel Leslie Wilson and Mr. McCurdy.
    Goff, Sir R. ParkPretyman, Rt. Hon. Ernest G.

    New Clause—(Repeal Of Duties On Table Waters)

    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

    New Clause—(Amendment Of 9 And 10 Geo V, C 32, S 30)

    Section thirty of The Finance Act, 1919, is hereby repealed so far—as it affects interest—accruing due after the commencement of this Act.—[ Lieut.-Colonel Royds.]

    Brought up, and read the First time.

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

    Eight years are allowed by law now for the payment of Estate Duty in respect of land, and the rate of interest by the Finance Act, 1919, was raised from 3 per cent, to 4 per cent. You are not entitled to deduct Income Tax, and it has to be added to the 4 per cent. interest which you pay now on the arrears a Estate Duty, which is equivalent to being at, the rate of £5 6s. 8d. per cent. This was much too high, having regard to the present value of money. The object of this Amendment is to repeal the Section of the 1919 Act to reduce the rate of interest again to 3 per cent. which, I think, is a fair rate. I know I shall be met by the statement that the Government cannot concede the point, because they have only just agreed to charge 4½ per cent. in respect of arrears of Excess Profits Duty. The two cases are not analogous because in the case of Excess Profits Duty that is a concession made. It was never intended that that should be an arrear but a concession. The case of Estate Duty is a statute by law, and was fixed at 3 per cent. It is now owing to the Income Tax not allowed to be deducted £5 6s. 8d. I hope the Government understanding the position will be prepared to concede the point I ask.

    We cannot accept this Clause. The rate was, as the Mover mentioned, raised from 3 per cent., not to 4 per cent. in 1919. I submit to the Committee that it ought to stay there. It is essential, where the Government is allowing money to stand out which eventually is to be paid to the Government., whether voluntarily or under Statute, that there should be no inducement to the debtor to postpone payment in order to get the use of the money when it is wanted by the State, If you charge a low rate of interest, you necessarily give him an inducement. The only thing to do is to charge interest rather higher than the market rate. A rate of 5⅓ per cent. is by no means an undue rate of interest for the purpose.

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

    A new Clause ( Option as to payment of estate duty in. certain eases) stood on the Order Paper in the name of Mr. Ormsby-Gore.

    On behalf of my hon. Friend the Member for Stafford (Mr. Ormsby-Gore) I desire to move—

    That is impossible until the end of the new Clauses. If Members whose names are against any particular Clause are not present, it cannot be moved.

    New Clause—(Payment Of Super-Tax By Instalments)

    The provisions of Sub-section (1) and of paragraphs (a) and (c) of Sub-section (2) of Section one hundred and fifty-seven of the Income Tax Act, 1918 (which relates to the (late when the payment of Income Tax shall become due, and provides for the payment of Income Tax by instalments in certain cases) shall apply to the case of Super-tax charged under Part II of the Income Tax Act, 1918, as they apply to the cases mentioned in paragraph (b) of Sub-section (2) of that Section, and the provisions of the income Tax Act, 1918, applied for the purposes of the collection and recovery of Supertax by Sub-section (6) of Section seven of that Act shall be read and construed with the necessary modifications accordingly.—[Mr. Lane-Fox.]

    Brought up, and read the First time.

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

    I desire to make the arrangements for the payment of Super-tax the same as in the case of Income Tax. It is obvious that in these days the Government are having difficulty in collecting Super-tax at all. A system of payment by instalments would be far better, because owing to the present high rate it is impossible to pay it in one instalment.

    Again I regret to say it is impossible to accept this Amendment. To accept it would mean a loss of £14,000,000 out of this year's revenue. The proposal is to change the date of payment from 1st January, which falls within the year, and substitute for that one-half payment on that date and a half payment in the following July, three months after the end of the financial year. That would mean a postponement of payment and a loss to the revenue of £14,000,000 in the financial year for which the Chancellor has budgeted.

    Of my own knowledge private individuals have found with reference to the payment of Super-tax and indeed in reference to Income Tax that the representatives of the Treasury have been most considerate. I would like to know whether the uncompromising "No" of the Solicitor-General means that there is to be no relaxation in the coming year of that consideration which has been shown but that the broad spirit with which the matter has been dealt with will be continued and that there is to be no harsh treatment of individuals.

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

    New Clause—(Amendment As To Moneys Payable Under Policies Of Life Insurance Effected For Purposes Of Estate Duty)

    If any person makes an insurance on his life or on the life of any other person with any insurance company legally established in the United Kingdom or in any British possessions or lawfully carrying on business in the United Kingdom and the policy of insurance expressly states that such insurance is made with the primary object of providing for estate duty which may become payable on the death of the assured and that so much as the holder of such policy or his legal personal representatives may direct of the capital stun payable thereunder will, on the death of the assured, be payable by the insurance company direct to the Commissioners of Inland Revenue for the purpose of being applied in or towards the payment of such estate duty, then, to the extent to which such capital sum is so paid and applied the same shall not for the purposes of death duties he deemed to be property passing on the death of the assured.—[Mr. Lane-Fox.]

    Brought up, and read the First time.

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

    This Clause was moved last year and I hope that now more favourable consideration will be given to it. When Death Duties were first instituted it was suggested that persons should insure their lives for the purpose of leaving their property less severely taxed.

    A great many individuals have insured their lives under the encouragement of the Government, and the effect of that is that higher duties have to be paid. In view of the constant encouragement given in favour of this insurance it is very unfair that the rate of taxation should thereby be increased.

    Again I regret that the Government cannot accept this Amendment. The hon. Member who moved the Clause said that hopes were held out in 1894 that, if the risk was insured, some compensation by way of relaxation in favour of those who insured might be looked for in the future. I think that is an incorrect version of what took place at the time. I have before me a note of what Sir William Harcourt said when introducing his proposals. He said such a proposal was not practicable. The matter came up again in the spring of 1916, when the present Prime Minister was Chancellor of the Exchequer, and he pointed out that in order to carry it out it would be essential to ear-mark the proceeds of the policy for the payment of Death Duties, and he explained that to do so would mean that the amount received under the insurance policy would be exempt altogether from Death Duties. That is the real difficulty. If you do not exempt the policy moneys from Death Duties then they are on the same footing as any other investment. One man may like to save by means of insurance, and another by investments of a different kind. Why should one kind of investment be exempt from Death Duties and not another kind of investment? If it be suggested that the policy moneys, which of course are part of the estate which passes at death, are to be treated as not being a part of the estate, then it is giving a very large exemption from Death Duties to one particular form of investment. These are the broad reasons why the proposal has never been capable of adoption, although primâ facie there is a good deal to say in its favour. The loss if the proposal were adopted would be over £3,500,000.

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

    New Clause—(Reduction Of Licence Duty On Certain Liquor Licences)

    The duties chargeable on the following excise liquor licences, that is to say, retailers' on-licences for spirits, beer, or wine, retailers' off-licenees for spirits, beer, or wine, shall be reduced by fifty per tentum.—[Colonel Sir A. Holbrook.]

    Brought up, and read the First time.

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

    This Clause, I hope, will meet with the sympathy of the Chancellor of the Ex- chequer, because it affects mainly a very large number of men who cannot he in any way regarded as profiteers—ex-service men who on retiring from the navy or the army have invested their all in a small public-house or beer-house. The character of these men as a rule is beyond question, because before they take these houses they have to pass an investigation of character by the brewers and the police, and, except in the case of Carlisle which is under the control of the Government, they have to go before the magistrates and get the permission of the justices before they can take over their licences. They are deserving of sympathy in all respects. The present rates of these duties were imposed by the Finance (1909–10) Act, 1910, at a time when retail licensed houses were entitled to remain open for periods varying according to the locality from 19½ to 17 hours on weekdays. Under the operation of the Licensing Act, 1921, the corresponding hours vary from 9 to 8 hours. The hours on Sundays have been reduced in similar proportions. The principle has always been accepted by the Legislature that licence duties should he imposed with reference to the number of hours during which liquor could be sold under the licenses. For instance, the Licensing Act, 1872, provided that for a licence under which liquor could not be sold on a Sunday the duty should be reduced by one-seventh. Again, the Licensing Act, 1874, made a similar provision with regard to early closing licences under which the sale of liquor had to cease one hour earlier than in ordinary circumstances. Finally, the Finance Act (No. 2), 1914, granted a rebate of licence duty in respect of those houses where hours of sale were curtailed by the orders of the Central Control Board and this was gradually increased until it reached 75 per cent. of the full duty. On this principle which is obviously fair, seeing that the present permitted hours of sale are about one-half of those in force when the present heavy rates of duty were imposed, the claim that these duties should be reduced by a similar proportion seems unanswerable. The provisions of the Licensing Act, 1921, having reduced the hours of trading, equity demands that a revision of the license duty charge should he considered by the Chancellor of the Exchequer, and the principle of the Finance Act, 1917, Section 7, given effect to in the form of a reduction of charge, instead of, as then, a rebate where hours had been reduced, and I therefore ask for reduction as a quid pro quo for lessened trade as the outcome of over 50 per cent. less trading hours. I would point out that in present circumstances, owing to the houses being closed for the greater part of the day, the holders of licences for wayside inns situate in the Division which I represent lose much of the travelling trade which they held under the old system, and have to depend therefore on the village trade alone. If the Chancellor cannot see his way to making a 50 per cent. reduction of present license fees, I hope that at any rate he will display the same sympathy as he has done to clubs, and grant a very deserving class of men some relief from their present burdens.

    I am afraid I cannot agree with the proposals made by my hon. and gallant Friend.

    If you cannot give me the whole reduction, can you not not give me 25 per cent.?

    I am afraid I cannot. The proposal which the hon. and gallant Gentleman has made would cost the Exchequer over £1,750,000, so that I am afraid it is impossible in the situation to-day. May I just say one word on the view that the restricted hours should involve compensation in respect that it is not as easy to make a living. In point of fact, the reduction in the hours does not really operate to any appreciable extent. It is true of this as of every other trade. It is suffering from the diminution of the earnings of the people, and therefore of their spending power, and the result is that not so much is being spent on liquor than was the case a year ago. But I think it is true that the public have accommodated themselves to the new hours, and that there is no real reduction due to the lessened hours, but due to the depreciation of trade from which we are suffering. When we recover from the trade depression the question of the restricted hours will no doubt get attention.

    There is one issue I want to bring to the notice of my right hon. Friend. He has given a concession to the clubs earlier in the Debate, and there is a great deal of dissatisfaction among licensed victuallers upon the competition of these clubs, and I should like the Chancellor to consider carefully that injustice and to reconsider his decision in the light of the facts.

    Whereas in the same period the increase in the levy upon clubs has been from £6 to £34, the increase in licence duty on public houses was only from £35 to 237, so that while the duty was increased almost six times in the case of the one the increase in the case of the other was infinitesimal.

    There are many public houses who are hard hit by the restrictions. Perhaps the Chancellor will remember the great canals throughout the country, and that many of the public houses on the banks of these canals are in great stress because the people who use these houses want to use them when they pass the house. Another thing is that, as far as my constituency is concerned, it is a fact that unless a man who keeps a public house has some other enterprise, so that what he loses on the swings he gains on the roundabouts, he is in danger of going very shortly into the bankruptcy court.

    Having regard to the statement made by the Chancellor of the Exchequer, I beg to ask leave to withdraw the Motion.

    Motion and Clause, by leave, withdrawn.

    New Clause—(Allowance To Children)

    Any allowance granted to a widow in respect of a child or children under the Royal Warrant of the second day of July, nineteen hundred and twenty, shall he, and shall be deemed always to have been, exempt from Income Tax.—[Mr. Rendall.]

    Brought up, and read the First time.

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

    This is really rather an important Clause. Yesterday we were discussing widows' allowances and we asked the Chancellor then to exempt these allowances from taxation. He said it would cost £100,000 and that it had been discussed 20 times previously and the House had refused to exempt this money. He also said it was unreasonable to put them in a better position now than they were four years ago. None of these arguments apply to this particular claim, because these are compassionate allowances. They were granted for children during the War, and after the War was over and while they were called compassionate allowances there was no tax upon them. The Chancellor of the Exchequer got no Income Tax on these allowances given to the children until last year. The reason they did not bear Income Tax was that they were not made to the widow, but were made for the maintenance of the child. They were paid to the widow merely as guardian or trustee, and were for the benefit of the child. The Chancellor of the Exchequer shakes his head, but the words of the Royal Warrant are perfectly plain. Before the Royal Warrant there never was any doubt. The Army Council Lad absolute powers to pay these allowances to anybody. At no time had the widow any right to them. It then became the duty of the Ministry of Pensions to pay them, and they paid them to anybody they regarded as a fit and proper person. That was the position during the War and after the War was over. In July, 1920, it was decided by the Ministry of Pensions to put this matter on to a more permanent basis by issuing a Royal Warrant. The Royal Warrant abolished the compassionate allowance, and it was decided that the income of the widow should be increased by £36 a year for each child, but it was to be paid to her for the maintenance of the child. The point arises: Is this her income or is it not? The answer to that question has got to be decided, I think, according to the wording of the Royal Warrant itself. In Article 12, paragraph 5, the Royal Warrant says:
    "In any case in which, in the opinion of the Minister of Pensions, it may be necessary to secure the proper care of the child on behalf of whom an allowance is payable, the allowance, instead of being paid to the widow, may be administered under such conditions as the Minister may determine."
    Those words make it clear to me, and I think to the Committee, that this is not a part of the widow's income. These words show that it is not intended for her benefit, that it is paid to her merely because she happens to he the nearest relative of the child, and the most convenient person to administer the money. Also, it gives the Ministry of Pensions absolute power to pay that money to another person if the widow is found not to be a fit and proper person. But in spite of that paragraph the Chancellor of the Exchequer says, "It is the widow's income. The Royal Warrant uses the words 'widow's income.'" But I hope he will pay attention to what, I think, are very important words in the Preamble of the Royal Warrant:
    "No grant to an officer, or to the family or relative of an officer, or of a nurse, shall be re-assessed to their own disadvantage."
    These words plainly show that when this Royal Warrant was prepared it was understood by the Ministry of Pensions and by all those who had to do with the preparation of it that no person who was to receive money under these allowances was to be assessed for any tax if he had not been formerly assessed. Therefore it seems to me that the Chancellor of the Exchequer is doing a most unjust thing in allowing the Treasury to apply for tax on these sums. He is taking advantage of some loose wording in the Royal Warrant and trying to get money which he ought not to claim. I hope the Committee will allow this Clause to go forward and that the Chancellor of the Exchequer may 'be able to accept it. It is simply because the framing of the Royal Warrant is a little different from what it ought to have been that he is able to make this claim at all. In correspondence with the Ministry of Pensions I asked why the Royal Warrant, had been drawn so carelessly. The Ministry of Pensions, I am given to understand, has had a long controversy with the Treasury on this matter, and was very surprised when the Treasury allowed the claim to be made. The Minister of Pensions, in writing to me, is not prepared to tell me all the facts about the controversy with the Treasury, but he does use this sentence in a letter written last March. He says:
    "It is probably the case that those who were responsible for framing the Warrant did not give special consideration to the point whether these allowances should be liable to tax, as this was not a matter within their competence to decide."
    There is plain evidence that the Ministry of Pensions thought, in framing this Warrant, that it was not going to make these small allowances to children liable to tax.

    The hon. Member has founded an elaborate argument on the selection of certain passages from the Royal Warrant and drawing the inference that the pension was a pension given direct to the child and not to the widow. That is an entire contradiction of my reading of the Royal Warrant, or the reading of everybody who advises me on that topic. It is true, as he has said, that previously the matter was in the hands of the War Office, and they acted more or less in loco parentis to the child in dispensing the pension which the child got in respect of the dead father. When the matter was put into the hands of the Ministry of Pensions the whole scale of pensions was re-adjusted: a larger sum was given. The Royal Warrant, as it seems to me, explicitly declares that the pension is given to the widow. May I remind the hon. Gentleman of the phraseology of the Royal Warrant. It says:

    "The widow of an officer awarded a pension under the preceding article may be granted—"
    "—a further allowance at the rate of £36 a year for each child maintained by her."
    Accordingly, it, is perfectly plain that the allowance for the child is a further allowance to the mother for the child maintained by her. It is perfectly plain that it forms part of the mother's income and not part of the separate income of the child.

    It may be taken away-from the mother if the Ministry of Pensions thinks she is not using it properly for the child's benefit. How can that be the mother's income?

    But just in the same way as in the case where a child has to be maintained separately by its parent. If the parent cannot maintain it, nevertheless a certain sum can be derived from the father by process of law which he is bound to pay for the upkeep of the child. In order to show that there is absolutely no injustice about this matter, apart altogether from what is provided by law, the Royal Warrant clearly states it by phraseology. Let me remind the Committee. In respect of the children the mother is granted remission of Income Tax. Take the case of a private soldier. In every case of a private soldier more remission in Income Tax is granted to the mother in respect of the child than the child can possibly obtain by way of pension—for the first child £40 and for every child thereafter £30. But no child of a private soldier gets a pension to so great an extent, as that. Accordingly, the class which most requires the money their case is entirely met by the abolition of Income Tax that is given under the Order of the Finance Statute. Take the case of the officer. There the mother of the first child has greater remission in the way of Income Tax than the child could possibly obtain by way of pensions by several pounds. In the case of the second child the pension given would be rather more than the remission Income Tax. Thereafter for all succeeding children the difference is comparatively slight. Income Tax would not be paid upon more than a sum in respect of each of something like 15. Accordingly it cannot be treated both ways. If my hon. Friend's Motion were to be carried out, the mother would have to give up remission of Income Tax or else she has to bear this burden. In the case of the private soldier the widow would have to bear a greater burden in every case and by reason of my hon. Friend's Amendment I venture to put it to the Committee that there is no real ground for urging this.

    Only yesterday I was reminding the Committee, and the Chancellor of the Exchequer took exception to my words, that the further we get from the War the less was the remembrance of what we owe to those who suffered during the period of the War. Only to-night the Chancellor of the Exchequer is seeking, as far as my limited intelligence is able to follow mm, to put the children of the widow in the same position as the children of ordinary married persons when both parents are alive. The difference I seek to make is this: If the widow has children and if a separate grant is made to her or an allowance is made to her in respect of those children because her husband died, either was killed in the War or died because of injuries or illness suffered in the War, then the widow and her children ought to have not only the ordinary deduction in respect of her children, but ought to have the full rights of what the State gives as additional to what she would otherwise enjoy. There is one point which I think really brings the whole matter home. Is the Ministry of Pensions in agreement with the right hon. Gentleman, or is the Ministry of Pensions in disagreement with him. As far as I am led to suppose, not only does the Ministry of Pensions disagree with him, but the whole of the ex-service movement throughout the country are unanimous on the subject and they consider the matter as one of vital importance. What I would ask the Chancellor of the Exchequer to do, irrespective of what he is going to do to-night, is that between now and the Report stage h?, will consult the Minister of Pensions whether the mistake has not been over the wording of the Royal Warrant of July, 1920, because, if we were correct in saying that the Ministry of Pensions has power not to appoint the mother as the administrator of the pension given to the children but to appoint another guardian, it stands to reason that the State cannot seek to recover from the mother Income Tax from any grant or pension which can be administered by a third party appointed by the Minister of Pensions as guardian of the children. I do think that absolutely differentiates the case from the example given by the Chancellor of the Exchequer when he sought to make these children and parents in the same position as the children of parents who did not suffer in the War, and both of whom were alive to-day.

    I am very much in agreement with the last speaker, but I should like to carry a point he made rather further. I would like to put this to the Chancellor of the Exchequer. Suppose one of these children die the allowance stops, and that, to my mind proves that the allowance is made to the child and not to the mother. That is the great difference. This, I respectfully submit, proves, at any rate, to a very large extent, that the allowance is personal to the child.

    I think my hon. and gallant Friend who spoke last does make a differentiation between the ordinary individual and the case of a widow whose husband was killed in the War. We are dealing now with War orphans. I was one of the Select Committee who had a good deal to do with the framing of the recommendations, and I am sure it was not in the minds of that Select Committee that these allowances to children should be reduced by Income Tax. I think the suggestion a good one that the Chancellor of the Exchequer between now and the Report stage should consult the Minister of Pensions and try to arrive at something which is really fair and reasonable in all the circumstances of the case.

    This matter, although a small one as far as money is concerned, is one of very great importance, and causes a tremendous amount of irritation and grievance. The reason is that for years no tax was claimed on these lives, and now after a period of years, when the War is being forgotten, the Inland Revenue comes down to seek to get Income Tax on these allowances. The real crux of the whole thing is that these allowances should be treated as income of the children. If the children have an income over the Income Tax allowance they will be taxed, but if they receive something under £125 it will not be taxed. I want to give the Chancellor of the Exchequer an instance of where these children of officers killed in the War are in a worse position than the children of civilians who have died. Any Member of this House who was reasonably prudent and anxious to make provision for his infant children would provide that the money should be held by trustees, the income to be paid for the benefit of the infant children. The money would go to the widow, exactly in the same way as this money, but because it would be treated as the income of the child it would not be regarded as the income of the widow, and she would not have to pay Income Tax on it. I feel this is a strong point and there is little money in it. It is not a question of changing the law, but of making it clear that this is the child's income and not the widow's.

    I hope the Chancellor of the Exchequer will meet the point of the allowance to the widow for the child, or will arrange with the Ministry of Pensions to meet the point of this deduction. He must recognise that to grant to a widow whose husband fell in the War an allowance for a child and then to deduct something from the allowance by way of tax is repugnant to the public conscience.

    I am very willing, as everyone knows, to consult with any- body who wishes to consult with me. Therefore, I shall be glad to see the Pensions Ministry and talk over the matter, but I cannot hold out any kind of hope that it is going to make any difference in the situation, because I know precisely where we stand in relation to the Pensions Ministry. If I find that there is any injustice or misunderstanding, I shall be very glad to alter it, but I cannot at the moment give the Committee any reasonable ground to believe so. All the aspects of this have been investigated, both my myself and those who advise me.

    Can the Chancellor of the Exchequer say whether he has any figure to show what this most reasonable concession would cost?

    Division No. 190.]


    [1.57 a.m.

    Armitage, RobertFrance, Gerald AshburnerRae, Sir Henry N.
    Barker, Major Robert H.Goff, Sir R. ParkRichardson, Lt.-Col. Sir P. (Chertsey)
    Barnes, Major H. (Newcastle, E.)Hayday, ArthurRichardson, R. (Houghton-le-Spring)
    Benn, Captain Wedgwood (Leith)Henderson, Lt.-Col. V. L. (Tradeston)Roberts, Samuel (Hereford, Hereford)
    Bigland, AlfredHolbrook, Sir Arthur RichardRoyce, William Stapleton
    Birchall, J. DearmanHolmes, J. StanleySwan, J. E.
    Bowerman, Rt. Hon. Charles W.Hood, Sir JosephThomson, T. (Middlesbrough, West)
    Bowyer, Captain G. W. E.John, William (Rhondda, West)Thorne, G. R. (Wolverhampton, E.)
    Brown, Brig.-Gen. Clifton (Newbury)Jones, Morgan (Caerphilly)Walsh, Stephen (Lancaster, Ince)
    Bruton, Sir JamesKiley, James DanielWard-Jackson, Major C. L.
    Cope, Major WilliamLawson, John JamesWatts-Morgan, Lieut.-Col. D.
    Davidson, Major-General Sir J. H.Lyle-Samuel, AlexanderWhite, Col. G. D. (Southport)
    Edwards, C. (Monmouth, Bedwellty)Mallalieu, Frederick WilliamWilliams, Penry (Middlesbrough, E.)
    Entwistle, Major C. F.Myers, ThomasWolmer, Viscount
    Foot, IsaacNall, Major Joseph
    Ford, Patrick JohnstonNewbould, Alfred Ernest


    Foxcroft, Captain Charles TalbotNewman, Sir R. H. S. D. L. (Exeter)Mr. Rendall and Mr. Pennefather.


    Agg-Gardner, Sir James TynteGeorge, Rt. Hon. David LloydMoore-Brabazon, Lieut.-Col. J. T. O.
    Amery, Rt. Hon. Leopold C. M. S.Gibbs, Colonel George AbrahamMorden, Col. W Grant
    Armstrong, Henry BruceGilmour, Lieut.-Colonel Sir JohnMoreing, Captain Algernon H.
    Baird, Sir John LawrenceGlyn, Major RalphMorrison-Bell, Major A. C.
    Barlow, Sir MontagueGreene, Lt.-Col. Sir W. (Hack'y, N.)Munro, Rt. Hon. Robert
    Barnston, Major HarryGreenwood, Rt. Hon. Sir HamarMurchison, C. K.
    Bell, Lieut.-Col. W. C. H. (Devizes)Greenwood, William (Stockport)Murray, Rt. Hon. C. D. (Edinburgh)
    Borwick, Major G. O.Guest, Capt. Rt. Hon. Frederick E.Murray, John (Leeds, West)
    Boscawen, Rt. Hon. Sir A. Griffith-Hacking, Captain Douglas H.Neal, Arthur
    Boyd-Carpenter, Major A.Hannon, Patrick Joseph HenryNicholson, Reginald (Doncaster)
    Bridgeman, Rt. Hon. William CliveHarmsworth, C. B. (Bedford, Luton)Pease, Rt. Hon. Herbert Pike
    Broad, Thomas TuckerHennessy, Major J. R. G.Percy, Lord Eustace (Hastings)
    Beckley, Lieut.-Colonel A.Herbert, Dennis (Hertford, Watford)Perkins, Walter Frank
    Burdon, Colonel RowlandHinds, JohnPollock, Rt. Hon. Sir Ernest Murray
    Campion, Lieut.-Colonel W. R.Hopkins, John W. W.Raw, Lieutenant-colonel Dr. N
    Carr, W. TheodoreHorne, Sir R. S. (Glasgow, Hillhead)Remer, J. R.
    Clay, Lieut.-Colonel H. H. SpenderHunter-Weston, Lt.-Gen. Sir AylmerRoberts, Rt. Hon. G. H. (Norwich)
    Courthope, Lieut.-Col. George L.Inskip, Thomas Walker H.Robinson, S. (Brecon and Radnor)
    Cowan, D. M. (Scottish Universities)Kellaway, Rt. Hon. Fredk. GeorgeRoundell, Colonel R. F.
    Davidson, J. C. C.(Hemel Hempstead)Kidd, JamesSanders, Colonel Sir Robert Arthur
    Davies, Thomas (Cirencester)King, Captain Henry DouglasSassoon, Sir Philip Albert Gustave D.
    Doyle, N. GrattanLane-Fox, G. R.Scott, A. M. (Glasgow, Bridgeton)
    Ednam, ViscountLindsay, William ArthurScott, Sir Leslie (Liverp'l, Exchange)
    Edwards, Major J. (Aberavon)Locker-Lampson, Com. O. (H'tlingd'n)Seddon, J. A.
    Evans, ErnestLort-Williams, J.Seely, Major-General Rt. Hon. John
    Eyres-Monsell, Com. Bolton M.McLaren, Hon. H. D. (Leicester)Shaw, Hon. Alex. (Kilmarnock)
    Falls, Major Sir Bertram GodfreyMcLaren, Robert (Lanark, Northern)Shortt, Rt. Hon. E. (N'castle-on-T.)
    Fisher, Rt. Hon. Herbert A. L.Manville, EdwardSmith, Sir Allan M. (Croydon, South)
    Fraser, Major Sir KeithMond, Rt. Hon. Sir Alfred MoritzSmith, Sir Harold (Warrington)
    Ganzoni, Sir JohnMontagu, Flt. Hon. E. S.Stanley, Major Hon. G. (Preston)

    Can the right hon. Gentleman say whether the Royal Warrant contains a proviso for taking Income Tax off these pensions of children? Was it drawn in that way by some accident or error?

    I have no reason to believe there was any error in the drawing. It was constructed at the time when pension rights were being increased. The suggestion was made that this was a sudden change from the practice of years. I do not know what is meant by the practice for years. Allowances for children have never existed before in this country to the extent to which they exist now.

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

    The Committee divided: Ayes, 48; Noes, 111.

    Stanton, Charles ButtWalters, Rt. Hon. Sir John TudorWise, Frederick
    Steel, Major S. StrangWard, William Dudley (Southampton)Wood, Hon. Edward F L. (Ripon)
    Sturrock, J. LengWaring, Major WalterYoung, Sir Frederick W. (Swindon)
    Sugden, W. H.Watson, Captain John Bertrand
    Sutherland, Sir WilliamWheler, Col. Granville C. H.


    Thomson, F. C. (Aberdeen, South)Williams, C. (Tavistock)Colonel Leslie Wilson and Mr. McCurdy.
    Thomson, Sir W. Mitchell- (MaryhWills, Lt.-Col. Sir Gilbert Alan H.
    Tryon, Major George ClementWindsor, Viscount

    New Clause—(Relief In Respect Expenditure For The Welfare Employs)

    Where any person shall after the thirty-first day of December, nineteen hundred and eighteen, have expended any capital sum on buildings or equipment, or which shall be provided in pursuance of any statute or regulation, or which in the opinion of the General Commissioners shall be for the benefit of his employés, such person, in computing the amount of the profits or gains to be assessed to Corporation Tax and Income Tax in respect of his trade or business, may after the passing of this Act deduct such an amount as shall be equivalent to interest on such capital expenditure at the rate of five per cent. per annum.—[Mr. Hannon.]

    Brought up, and read the First time.

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

    The Amendment is one which, I hope, will command at least the sympathy of the Chancellor of the Exchequer. We are giving him a great deal of credit for sympathy, but the net amount of his concessions during the Debate has been comparatively small. Nobody in this House realises more than he the value of the work that is being done by a great number of employers in this country in providing opportunities for recreation and for the general moral and educational improvement of their workmen, and I think that he investments which firms are making in order to provide these opportunities for improving the conditions of their workers ought to be treated with consideration by the Chancellor of the Exchequer. A great number of Members of this House were present at a meeting upstairs yesterday afternoon which I think was unprecedented in the annals of this House. A Member of the Royal Family came here and made a most striking speech on the importance of this industrial welfare movement. The Amendment asks my right hon. Friend to consider those employers who are desirous of supporting this work and have provided a certain investment for the purpose. I think they might expect to receive at the hands of the Exchequer the small amount asked for in relief.

    The Amendment is one that cannot possibly be accepted. It is a proposal to allow as a deduction on the calculation of income for Income Tax purposes capital expenditure. The whole scheme of the Income Tax Acts forbids any deduction whatever for any capital expenditure of any kind whatsoever. I am not quite sure whether the hon. Member who moved the Amendment regards the expenditure as one which is of a business character, or whether he regards it as a business expenditure for the purpose of promoting the interest of the business. No doubt welfare expenditure is of great value from a business point of view, and if it does it falls within the same category as all other forms of business expenditure. If, on the other hand, he says it is a form of altruistic or philanthropic expenditure, then, for additional reasons, it is outside the scope of any Income Tax allowance or deductions. Charity cannot be given by anybody at the expense and out of the pocket of the Exchequer. We all recognise the value of welfare work, and there is not a single Member of the Committee who is not anxious to see it promoted in every possible way, but, if you are dealing with taxation, deal with it from the only point of view possible, the fiscal point of view. In attempting by a back wind through taxation to deal with social reform or charity we are making a mistake.

    Surely the Solicitor-General is aware that it is possible for firms who contribute to hospitals and mental institutions to claim it, and if it is permissible in those cases surely the allowance can be made in the cases dealt with in this Clause?

    I think the Solicitor-General has mixed up the two points. It may be charity or it may be business, but from the point of view of this Clause it is an attempt to see that justice is done to those men who treat their workpeople as human beings. If the hon. Member carries it to a Division I will support him.

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

    New Clause—(Allowance For Bad Debts)

    If any person shall prove to the satisfaction of the Commissioners that debts taken as good in his final accounting period proved to be bad in whole or in part within six months from the end of that period and which had not already been allowed for, or were insufficiently allowed for in the accounts of his final accounting period, his profits or losses in the final accounting period shall be adjusted accordingly.—[Mr. Hannan.]

    Brought up, and read the First time.

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

    The Clause asks for an allowance in the case of bad debts. This question has assumed very serious consequences for a large number of firms. At the end of the last accounting period they took various debts as good. Later it proved impossible to collect those sums of money which were outstanding, and the result has been that they have become liable for Excess Profits Duty on profits they never, in fact, secured at all. My Clause asks that six months' grace be given and that any debts of that kind within that period after the end of the accounting period shall be allowed for. The Clause is so drafted that any debt already allowed for is not to be allowed for again. The time limit of six months ensures that debts must have become irrecoverable at any date in the past and so rules out the possibility of fraud. I submit that this is a very modest proposal, and it is of great interest and moment to a large number of firms. Really it does not go so far as to give them the fullest possible measure of justice to which they are entitled. This question was fully discussed on tile Finance Bill last year, and I hope my right hon. Friend, realising the great struggle through which a large number of firms are passing and the great sacrifices which have to be made in order to recover their position and maintain any sort of figure in our industrial life, will give the matter full and fair consideration.

    As my hon. Friend knows, by the arrangement I made in the Finance Bill last year I gave the greatest possible consideration to the plight in which the industry found itself. I met the traders of the country in every possible way. There was scarcely a suggestion which they made which I did not in some measure apply my mind to. Amongst other things, I extended the accounting period, the period in which they might calculate stock for the purpose of writing down and allowed them to put the losses they had suffered against previous amounts of Excess Profits Duty paid. My hon. Friend's new Clause now seeks to extend still further the accounting period so far as bad debts are concerned. Quite frankly I am not in a position to extend the period further. I have no doubt there are cases in which calculations have proved to be not entirely accurate or entirely justified, but, on the other hand, I am sure that many debts may have been written off as bad debts which, in fact, have proved to he good. We arranged the matter in the last Finance Bill. I have no doubt that in some cases traders suffered and in other cases the Exchequer, but I do not think I can extend the point for the purpose of granting this relief now.

    I wish to support my hon. Friend in asking acceptance of this Clause. The merchanting class of the West Riding of Yorkshire have suffered very severely indeed. Perhaps I may best put the point to the Committee by giving two concrete cases. In the case of one firm, which I will call A.B., the final accounting period was 30th November, 1920. This firm had a large number of accounts, both home and foreign accounts, which at that date were not paid. These accounts amounted to something like £8,516. At that time the merchants in the home trade were seemingly sound. The collapse that took place, look place after that date. The trading community generally did not believe that so many of the home trade merchants or of the foreign trade merchants would not be able to meet their liabilities. The débácle that came over the woollen and worsted trades was not expected, and when it did come the repudiation of contracts was greater than ever has been known in the history of the trade. This was not suspected in November, 1920, when this particular firm took stock. It did not make any reserve for possible bad debts on this £9,000. A short time after 30th November, when the stock was taken, and after the accounts had been audited, one of the principal customers of this firm had to call his creditors together. But because the accounting period of this firm ended on 30th November, 1020, they could get no allowance, and got no allowance to reclaim under the Excess Profits Duty, although the taxing authority took 60 per cent. out of the profits that they had made up to 30th November—that they were supposed to have made out of this particular firm who never paid the debt. There was another firm I will call C.D. Their accounting period ended on 31st March, 1921 they also did business with this particular firm. But before 31st March, 1921, this firm failed, and so they, C.D., did not pay the 60 per cent. on the profits that they had made. In the one case they, C.D., get out of the 60 per cent., and in the other the taxing authorities insisted upon the firm A.B. paying the 60 per cent. I put it to the Chancellor of the Exchequer, is it just in the one case to exact 60 per cent., and in the other case not to exact it? If the Chancellor of the Exchequer would put the period at which these duties shall be reclaimed, the same period that he agreed for the taking of stock, that is, 31st August, 1921, it would be a very fair proposition to make and would help trade very much. This proposition is not put forward in the interests of firms that have done well, and are doing well. It is put forward in the interests of firms that have suffered more than any other class of firms in the country. Unless we have these merchanting firms to go to to sell our goods throughout the world we are going to have very great difficulty in getting trade going, which we all wish to see. I do very earnestly press on the Chancellor of the Exchequer to agree that the period to which these had debts shall be reclaimed shall be 31st August, 1921, instead of the higgledy-piggledy system that has prevailed up to the present time.

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

    New Clause—(Mineral Rights Duty)

    An owner paying Mineral Rights Duty shall for the purposes of Income Tax and Super-tax be allowed as a deduction or as a repayment in respect of expenses of management or supervision one-eighth of the amount upon which he is assessed for such duty.—[Deut.-Colonel Wheler.]

    Brought up, and read the. First time.

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

    It is a simple point that I am asking for owners paying Mineral Rights Duty. As everybody knows, they have to employ a mines engineer or some competent person in order to make the assessment of the income. They have to incur a certain amount of expense and should be allowed a legitimate amount of deduction for Income Tax for these expenses that are so created. It seems to me unfair that any owner of these rights should be called upon to pay the tax on what he cannot possibly receive.

    May I on behalf of the Government say that we accept this Clause, subject to an alteration in the amount. The principle of the Clause is obviously right. It is consistent with the whole scheme of the Income Tax Acts, and the cost will be trivial.

    We are very much interested in knowing how much it is going to cost. The Clause has been on the Order Paper for some time, and surely the officials could have made some calculation as to the cost. Some hon. Gentlemen asked for an allowance on Income Tax for widows, and the amount involved, £50,000, was refused. Now the Solicitor-General accepts another Amendment moved from behind by supporters of a certain way of thinking, and we ought to know what he is giving away in the way of revenue in view of what he declined to give away on other Amendments.

    I am very sorry my Friend the Solicitor-General has accepted this Amendment. Surely these people have no claim to any reduction in Income Tax. The Solicitor-General must have forgotten that these people take all the money out of mineral rights and pay not one farthing in local taxation in any shape or form. We have raised the question and answer in the House selected from the various Departments as to their paying nothing towards what is being done locally, and they get clear of all this. In coming here and to ask for further reduction of taxation, it seems to me you are not dealing fairly with these people. The mine-owners and people who have risked their money and put it into mines, risking whether anything is to he got out or not—these people have not only to pay the taxes levied in this House but they have to pay the heavy local taxation.

    I think the hon. Member is under a misapprehension, and possibly other Members are, too. This is no concession; this is no relief from taxation of anybody. Mineral Rights Duty is a duty that is to be paid by royalty owners on the amount of royalties. In order to get the money into their own pocket they have to collect the royalties. The collection of the royalties, as those hon. Members who are familiar with mines know, involves the employment of surveyors in order to check the amount of coal got each three months or six months, as the case may be, and a considerable amount of expense is involved in this. It is to allow the expenses of collection so as to make the tax payable on the net royalty received instead of on a gross sum, the whole of which in fact is not received.

    I submit to the Solicitor-General these people are in no different position from other people who are engaged in industry. To give way in a matter like this is going to cause a tremendous amount of discontent in the country. This is the only way you get anything out of these people who get their money for little or no risk. I hope the Solicitor-General will reconsider his decision.

    I think we ought to he more clearly informed of what we are asked to do in respect to this Amendment. There are many people, probably, in this country who are in receipt of royalties on which they pay Mineral Rights Duty, and that at the present time they pay on the gross amount they receive, with no deductions allowed on account of expenses in ascertaining what amount is due to them and in collection. I understand that to be the position, and that the claim is put forward on the ground that, in respect of other kinds of income derived from other sources, deductions are made. All this Amendment does is to bring this particular kind of income under the same law applicable to other incomes. As a general proposition, I do not know that dissent can be offered, though question comes as to whether this amount here of one-eighth—

    I have said definitely we cannot agree to one-eighth. We must look into it very carefully in order to see if the allowance made is not more than the actual estimate for the cost of collection, so as to put it on exactly the same footing as expenses incurred in collecting any other form of income.

    On that point, I understand that what is going to be done is that an inquiry is going to be made between now and the Report stage into what is a fair thing to deduct, and that when the Clause comes before us on Report the Government will be in a position to put before us the results of their inquiry.

    The reception given to this proposal is a surprise to us. These people have absolutely no risks. They gather in enormous royalties, which are such a burden to all the industries of the country, adding to the cost of living and to the cost of our products in all the markets of the world. Now the Budget is to be re-cast in their favour.

    It would not be in order now to discuss the Mineral Rights Duty. The only question is the cost of collection, and whether any allowance should be made for that.

    What we are disappointed at is, that this matter should be considered at all. These people are extremely well off as they are. They have no financial obligation, but they gather in immense sums. In spite of that we find that the Chancellor of the Exchequer is prepared to give them even a larger amount than they are receiving to-day. In this Budget the only people who are going to get concessions are those who are saddling the nation with big burdens. it is a shame. More human considerations, that should have received relief, have been waived aside. We had hoped that these people would have been called upon to face their liabilities instead of being given concessions.

    In equity, what the Solicitor-General has agreed to is perfectly just. Royalty owners have to employ a large staff to look after the underground workings for the purpose of complying with certain laws and Regulations, and they are not allowed to charge the expenses. In the case of the colliery owner, who has to do the same thing, he employs a large staff and he is permitted to charge that against costs. It is perfectly just that what is right for one ought to he right for the other.

    This may be a small point, but it is a very great principle, and I am surprised that it has been conceded. Only a day or two ago, when we asked for some abatement for a man going by train to produce those minerals the Chancellor of the Exchequer refused. Now, when it comes to this, the Government give in. On other points, when they have refused, they have told us what the concession would cost. On this point they cannot tell us. I think the owners of royalties ought to be very glad to pay for the management of the money they are getting. We are now in the worst time, as a mining industry, that we have ever seen, but royalties come in just as before. The royalty owners are getting exactly what they got before, and they are now asking that the management should be paid out of the money that ought to go to the State. It is unfair and unjust, and we protest against it.

    What I am surprised at is that we should be surprised at what has happened after our experience with this Budget. The Chancellor has got great kudos. He has become a strong man. If he goes on he will be the strongest Chancellor of modern times. I am surprised that hon. Members moving these Clauses did not come to an arrangement with the Chancellor of the Exchequer and then go home and leave him to talk about little concessions that we know we will not get. Take the case of the workman who asks for a small concession for expenses. He has to be charged Income Tax upon his gross income, but in the case of persons who are reaping wealth as the result of mineral rights, I have never heard a single person in this country justifying a person of that kind being allowed to deduct this expenditure from the amount of his Income Tax. This is a much bigger question than the Chancellor of the Exchequer realises. If he is going to give anything at all, he will have to be very cautious about it. Some colliery owners are at the same time royalty owners. We have a right to ask what this is going to cost the Exchequer. Time and time again we have asked that question. I would like to ask the Chancellor what is the total amount of the grants that he has given to the classes behind him. I venture to say it will amount to many millions. He is well on the way to becoming.a strong Chancellor, but a few more Chancellors of that kind will stir up a spirit which will not be good for this country.

    I think we are entitled to a little more information as to the reason why this concession has been made. After all, it is about 12 years since the Mineral Rights Duty became part of the fiscal policy. I suppose the concession will be greater than the one-eighth that is asked him. It may be made one-tenth on the Report stage. We know that at least 7 million pounds per year is paid on coal royalties alone, as distinguished from Super-tax, which is also included in this particular Clause. I think we might easily say that beyond the actual payment for mineral royalties, plus the payment that would be due for Super-tax, there would be not less than 8 million pounds involved.

    We know more than the Sankey Commission. It is considerably more than 6 millions. One shilling in the pound is, I think, the charge; therefore upon the minerals alone there is 4;350,000 in the year. If you take it at one-eighth, there is at least £44,000 being given away in a breath, and I am not now talking of the Super-tax. I do say it is impossible for the Chancellor to say that under existing conditions of financial stress there is anything which can justify him in giving this concession, especially when for 12 years no claim has been made by the royalty owners. It is perfect nonsense to say that royalty owners have a large staff of people watching the conditions under which their royalty arrangements are to he conducted. A mining engineer can do the whole lot easily. This Committee is entitled to know from the Chancellor what the conditions are which make it possible to give these reductions. We do not think it is right, but quite, wrong, and we think, in face of the refusal which the Chancellor of the Exchequer has probably felt himself compelled to give, it is not right that the class of the community who toil not nor spin should he given this concession. I trust the Committee will vote against it.

    The Committee is entitled to receive from the Government some estimate of what this is going to cost the Revenue. As far as I remember, the Mineral Rights Duty includes not only coal but the royalties paid on ironstone, limestone, lead and all the other minerals that are gotten in this country. I believe the total of that duty to the Revenue amounts to over a million pounds. If the Government is going to give away one-eighth or one-tenth it is going to give away the tax on £100,000, and Income Tax and Super-tax on that may amount to £50,000 and must amount to over £25,000. That is really a large amount to give, considering our experience to-night. I would like to call attention to the manner in which these concessions are being given wholesale by the Government to their friends behind them.

    An hon. Member representing the landed interest gets up and proposes a new Clause which gives to his constituents the right to brew extra beer and he is welcomed with open arms. An hon. Member here gets up with a proposal for the reduction of the duty on soda water and he cannot have it. Now another hon. Member gets up and proposes a new Clause which will grant relief to owners of mineral rights and the Chancellor of the Exchequer accepts it at once. An hon. Member here gets up and moves a Clause which gives an exemption to widows from a small demand for Income Tax, and he cannot have it. It is not fair. The Government is treating the Opposition with contempt. We may be worthy of contempt, but I venture to remind the Government that they will not get their Finance Bill any the easier for treating us with contempt. We are entitled to know what this concession is going to cost, and unless the Chancellor of the Exchequer can give us the answer I beg leave to move to report progress.

    The last speaker is under some misapprehension as to what I said. I pointed out that, although we accepted the principle of the Amendment as we understood it, we were not sure as to the wording of it, and were not sure as to the figure of one-eighth. I said, in terms, that what we conceded as right was that the cost of collecting rents should be treated as a deduction, so that the tax should be paid only upon the net rent received, which, after all, is the man's income. I am not sure whether I used a phrase which was misleading to the Committee, but I want to call the attention of the Committee to the wording of the Clause proposed. It says:

    "the owner paying Mineral Rights Duty."
    That means the owner who is making an income out of the mineral rights or royalties, and therefore paying the Mineral Rights Duty shall, for the purpose of Income Tax and Super-tax, be allowed as a deduction, or as a repayment, in respect of the expenses of management or supervision, one-eighth of the amount upon which he is assessed for such duties. I am not sure what, the word "supervision" means. All we want to say to-night is that if this Clause be now withdrawn we will consider a form of words which will give the mere expenses of collection, so that the tax shall be paid only on the actual income the man receives, which is the ordinary principle of the Income Tax Acts. It is quite true that it has not been given before, but it. is an obvious injustice.

    I am sure the hon. Member will forgive me for saying that that is an entirely different thing. In this particular case the man has been taxed upon income he has not got; because a man does not get the gross income, but only gets the net income. The question of the widow is the question of giving exemption upon an income she does get. I told the Committee that I could not say at present what it costs and that we must look into it and see what it does, and on the Report stage the House must be informed as to what it will cost. That is why I am asking for the withdrawal of the Motion now.

    I must draw attention to this extraordinary state of affairs. A Clause has been on the Paper for weeks stating specifically what the allowance is supposed to be, and now the Solicitor-General informs us that he cannot really say what the loss of revenue would be if it were accepted. He has pledged the Government to accept it in this or some other form, and yet he cannot tell us what the loss of revenue is going to amount to. In the case of any Amendment he is opposing he knows at once. This is bitter to us who supported the Budget in 1909, because this is another hole, it is destroying another part of it—

    The hon. Member for Bridgeton (Mr. Macallum Scott) supported the imposition of the Mineral Rights Duty.

    This is an allowance in respect of Income Tax and Super-tax, and not of the Mineral Rights Duty.

    One thing has been said which has brought me to my feet, because I cannot let it pass. My hon. Friend the Member for East Middlesbrough (Mr. P. Williams) suggested that I had been treating my friends differently from what I had been treating hon. Members opposite. Practically all the instances he quoted as exemplifications of his statement were Motions which I had rejected. He instanced the case of the Mineral Waters Duty proposed by the hon. Member for Camlachie (Sir H. Mackinder), one of the strongest supporters of the Government in this House. Then the hon. Member for Moseley (Mr. Hannon) proposed a series of Amendments.

    And so I could go on. I venture to say that for every Amendment proposed from the Benches opposite which has been rejected there have been three or four rejected which were from supporters of the Government.

    Will the right hon. Gentleman deal with the question of the Beer Duty?

    3.0 A.M.

    Although the proposal was made by an hon. Member behind me, it is obviously not a proposal in his favour. It is a proposal in favour of the workmen living in his part of the country who find the burden of existence very severe. My hon. Friends opposite always make the mistake of supposing that there must be divisions between people which make them hostile to each other. I beg them to get rid of that notion as early as possible. As to what my hon. and gallant Friend the Member for Leith (Captain W. Bonn) has said, I should like him to read this proposed Clause. It does not deduct anything from the Mineral Rights Duty at all. It allows for Income Tax purposes expenses which he incurs in collecting his income. People do not pay upon the gross receipts that they get. In a shop they pay upon what they have got after deducting the expenses of running the shop. Let me take the case of the miners. They deduct from their income the cost of their tools. The case is not made any better for my hon. Friend, who says it has been so long delayed and that the allowance has been due for some time. What is proposed in this Clause is that there shall be deducted before assessment for Income Tax the expenses he is put to before he gets the amount that is included in his income. The thing is so patent, and the Royal Commission on Income Tax, which reported not so long ago, refers to the matter under Section 5. In regard to property-owning companies:

    "These companies shall be granted an allowance for their management expenses to the same extent as financial companies."
    With regard to owners of mineral or mineral rights:
    "The owner of Mineral or Mineral Rights shall be allowed the expenses of management or supervision."
    That Report is signed by several Labour Members of this House, none of whom took any exception to the general conclusion to which the whole Commission came. It is perfectly ridiculous to suggest that there is any new principle sought to be established. One of the hon. Member's coadjutors on that side of the Committee, who spoke with great experience of these matters, was obviously deprived of any argument on the matter. Accordingly, I venture to submit to the Committee that we ought now to he allowed to do what we have suggested, that the Clause should be withdrawn and that we should put down on the Report stage words which will be necessary to carry out the proposal. I wish to make known to the Committee that I cannot say accurately or even approximately at the present time the cost which will be involved in this proposal. In my view it will not exceed something like £25,000.

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

    New Clause (Increase Of Imperial Preference On Sugar)

    The preferential rate of duty to be levied on sugar consigned from and grown, produced, or manufactured within the British Empire shall be two-thirds of the full rate instead of five-sixths of the full rate as provided for under section eight of The Finance Act, 1919 (which relates to imperial preferential rates).—[Mr. Rioland.]

    Brought up, and read the First time.

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

    The idea in our minds in proposing it is not that we should get the Chancellor of the Exchequer to-night to accept this proposal, but that we wish to bring before him the great need there will be in the years to come to take further action with regard to the preferential rate that is now allowed upon all goods grown within the Empire. We passed a few weeks ago in this House the Empire Settlement Bill, and under that our people will be encouraged to make homes overseas, and we feel that in encouraging these men to make their homes overseas it will be our duty here in the homeland to encourage them to this extent, that whatever they grow within the Dominions that we here at home will take these products with a larger preferential duty than we give now. Three years ago this House decided that on all Customs Duty that we levied on sugar, tea, tobacco and other products, that one-sixth of that duty shall be rebated to the products grown within the Empire. The idea in this Amendment is that that one-sixth shall be increased by a further amount so that it will bring it practically up to one-third of the whole duty that is levied as rebate on goods grown within the Empire. I do feel that this matter is one of very great importance. I will point out that the reason why America got populated so fast was that when a man went to the States he found that 90 millions of people gave a preference to the things that he grew under the "Stars and Stripes." People did not realise why people went to the States in such large numbers and to Norway, Denmark and other parts in Europe. It was because of the preferential rates given to those who settled there. I want in the development of our Empire that there shall be that same feeling, and when men go to other parts of the Empire and produce goods that we require, it shall be understood that we shall give them better terms than we give some goods from foreign producers. I have pleasure in moving this new Clause.

    I do not gather that my hon. Friend really expects me to deal seriously with this Amendment at this hour.

    All I can say to the Committee is that at the present time such a Clause is not capable of acceptance.

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

    New Clause—(Excise Duties On Homegrown Tobacco To Cease)

  • (1) The duties of excise chargeable under section seven of The Finance Act, 1918, and sections eight and nine of The Finance Act, 1919, in respect of tobacco grown in Great Britain (in this section referred to as "non-dutiable tobacco") shall (except as regards goods in respect of which the said duties have been paid) cease and determine as from the commencement of this Act.
  • (2) Notwithstanding anything in any Act, the Commissioners of Customs and Excise may, subject to the prescribed conditions, permit a person manufacturing tobacco in bond to receive non-dutiable tobacco at his bonded premises and to deliver therefrom without payment of duty a corresponding quantity of tobacco.
  • (3) In this section the expression "prescribed" means prescribed by regulations made by the Commissioner of Customs and Excise.—[Viscount Wolmer.]
  • Brought up, and read the First time.

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

    What we are asking for is the protection of the industry of tobacco growing in this country until such time as it shall be able to establish itself. The reasons upon which this is put forward are, briefly, as follows: Tobacco was once grown on a very large scale in this country. It was once grown in no fewer than 31 different counties. In the year 1660 it was prohibited by Act of Parliament. In 1910 a Liberal Government made the growing again permissible, but the Government not only did that, but on 1st January, 1911, they granted a protective rebate of 30 per cent. to English-grown tobacco in order to establish the tobacco-growing industry, thereby following out the well-known maxims of Adam Smith and Cobden that an infant industry can be protected consistently with Free Trade principles. In 1913 the contribution was altered by a grant of 820,000 from the Development Commission for English-grown tobacco. That was not nearly so successful. The acreage under tobacco, which had reached 140 acres, declined in two years to about 40 acres, and the great bulk of the money of the Development Commission was spent on administrative expenses and unprofitable expenditure. But what has really put the English tobacco industry in such a ruinous condition—and this is the point I wish to bring before the Chancellor of the Exchequer—was not only the events of the War when all acreage was devoted to growing food that could possibly be devoted to it, but the policy of the Government themselves in regard to Imperial Preference. In 1919, the Lord Privy Seal, then Chancellor of the Exchequer, granted a preference to Empire-grown tobacco of one-sixth of the duty, and that preference was extended to English-grown tobacco as well. For all practical purposes English-grown tobacco and Empire-grown tobacco was put on an absolute equality, whereas under the Liberal Government English-grown tobacco had been given a rebate of 30 per cent. over Empire-grown tobacco. The vast bulk, more than 90 per cent. of the tobacco imported into this country, comes from America, and the utmost that either the English or any other growers who are trying to get the English market can hope to achieve is to get a very small share which can be blended with the American tobacco.

    Tobaccos coming from warmer countries, and chiefly because they belong to a longer established industry, are able to compete successfully at present with English-grown tobacco on level terms. The point is that if you want to establish an English tobacco growing industry you have to protect it in its initial stages, not only against American but also against Colonial tobacco. I would like to point out that that is perfectly consistent with the policy of Imperial Preference. That is what the Colonies have done themselves. They have given a preference to British goods over the foreigner, and a preference to their own goods over British goods. I, therefore, move that English-grown tobacco should be treated as the Government are treating English-grown sugar and exempt it- from Excise Duty, and give it a preference over Colonial imported tobacco. Unless the Government do that, it is impossible to establish the English tobacco growing industry. It is worth while establishing.

    It is an industry which was destroyed by Act of Parliament. It is an industry which gives a-n enormous amount of employment in countries in Europe. In France at this moment there are over 32,000 acres under tobacco, and they are all farmed by very small men. Indeed there are over 40,000 growers. [An HON. MEMBER "Divide!"] If the hon. Member does not wish to listen, he can go home. In Germany at the present moment there are over 25,000 acres under tobacco: in Hungary over 50,000 acres, and tobacco is even grown in countries like Norway and Sweden. It is a complete fallacy to think that tobacco-cannot be successfully grown in this country. At the present moment it is grown in my constituency. I have cigarettes here which were grown in my constituency, which I shall be delighted to offer to any hon. Member. The tobacco is very much like Rhodesian tobacco of a light sort.

    Yes, though personally I am a pipe smoker. There are other reasons why the tobacco-growing industry should he encouraged. Tobacco is grown on the very lightest soils. It is grown on the sands round Aldershot, which will not bear an ordinary crop. For that reason it is grown in parts of Berkshire and Norfolk. Therefore, if you encourage tobacco growing, you can bring a great acreage of soil under cultivation which you cannot do with any other crop, and that soil, subjected to high manurial treatment, becomes capable of growing oats, barley, and potatoes, and can, therefore, be made a potential food reserve in time of war. It is worth while establishing this industry, which was once flourishing and was destroyed by the action of the State. It gives employment to thousands of people in France, Germany, and other European countries. You cannot establish it unless you are to give it efficient protection, not only against American tobacco but against Colonial. That was recognised by a Liberal Government, and I ask that this Government should grant a remission of Excise Duty. If the Chancellor of the Exchequer feels that he cannot go the whole way in granting us what we ask, I would ask him to receive a deputation of growers, who will be able to show him that this is absolutely necessary if the industry is to be saved. This protection is necessary for at least. 10 years before you can ascertain the exact type of tobacco which will grow beat—there are over 30 different types of tobacco—until you have generated the necessary skill for the growing process and until you have found out exactly which type of manure and which treatment produces the best results. Until the industry has passed out of the experimental stage you have got to give protection, and efficient protection, and that can he done by the most wholehearted Free Trader.

    I admire the enthusiasm with which the Noble Lord defended a certain portion of his constituency. I fear that it is not altogether sufficient to make me accept this Clause. He has compared tobacco-growing with sugar-growing, but as far as I can see there is no real comparison between the two crops. Nor can it be suggested that there are the same hopes that the manufacture of tobacco can be carried out in the same way and with the same benefit as the manufacture of sugar. Tobacco has had a much longer opportunity than the sugar industry has had, and, unfortunately, the results up to now have not been very hopeful; so much so that the Noble Lord is constrained to say that he cannot see until 10 years elapse whether in point of fact the encouragement of this industry is going to have any fruitful results or not. In these circumstances I do not think it is fair to ask the Committee that the Excise Duty should he remitted. The Noble Lord has also asked me whether I shall be content to receive a deputation upon this matter. I am always glad to see representatives of any body of people in the interest of the country if I can find time, and I will readily agree to receive the deputation which he desires.