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Tobacco

Volume 436: debated on Tuesday 15 April 1947

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Finally, in this field, I have something to say about tobacco. We are now smoking one-third more than before the war. Current consumption exceed, 250,000,000 pounds weight a year—an enormous amount—or more than 100,000 tons of tobacco a year. This represents, though it is hard to credit it, about 100,000 million cigarettes, and about 700 million ounces of pipe tobacco, to say nothing of cigars and snuff. About 80 per cent. of our tobacco is imported from the United States; and, to satisfy this insatiable demand, we are drawing heavily and improvidently on the dollars which we earn with our exports, as well as on the proceeds of the American line of credit. It is hardly to be believed, but the whole total of our exports to the United States at this time barely exceeds, in value, our own consumption of American tobacco. The thing has become fantastic, and must be stopped. It is quite clear that we are smoking much more, as a nation, than we can afford, and I have been pressed, from many quarters for some time, to cut down this much too heavy bill. I now, therefore, propose, and I believe that both the Committee and the country as a whole will back me up in this, to make a very steep increase in the tobacco duty.

Most of our tobacco imports come in as unmanufactured leaf, on which I propose to raise the Customs Duty from tomorrow by about 50 per cent.—from 35s. 6d. a pound to 54s. 10d. a pound, with corresponding increases in the rates for other kinds of tobacco. The existing preferential margins will remain unchanged. The effect of this increase will be that the price of a packet of 20 cigarettes will be raised from 2s. 4d. to 3s. 4d., or from 1s. 9d. to 2s. 6d.

The price of most kinds of pipe tobacco will go up by about 1s. 2d. an ounce.

When the Tobacco Duty was last raised, in 1942 and in 1943, Members of the Armed Forces were allowed to buy' limited quantities of cigarettes and tobacco in their canteens at pre-Budget prices. In present circumstances, I regret that this special arrangement can no longer be justified, and I propose that it should now be discontinued from the 27th of this month.

It is not easy to estimate how much of a drop in smoking might be expected to result from this deliberate and very heavy increase in the duty. [Interruption.] I mince no words; I tell the hon. Member the truth. It does him good to hear it for once. In the jargon of the professional economist, the demand for tobacco is highly inelastic, which means nothing more than that men and women will give up quite a lot to get a smoke. They would spend more money on tobacco, if the price went up, even if it meant spending less on other things. This is a time when we must seek to influence, in the national interest, the individual inclinations of tobacco smokers. I regard the saving of dollars as much more important than an increase in the revenue in this connection, and I suggest to any smoker who may feel a grudge against the Treasury, or against myself personally, that the best way to satisfy it is to knock off smoking altogether, thus depriving me of one of my principal sources of revenue. If that seems too stringent, he might cut down his smoking—

No, I cannot give way; I have been on my feet too long. He might cut down his smoking by one-third. He will then be spending about the same amount of money as now, and I shall only be getting very little extra revenue. Even this, however, might seem too great a sacrifice to some smokers. So I set my target, at a reduction of 25 per cent., or one quarter, in the total national consumption of tobacco. I hope that it will be regarded as a national duty to reach this target, especially in view of our most difficult overseas deficit. Nothing less will be much good. I appeal, and I hope others who have pressed me on this subject will support my appeal, to all our fellow-citizens to regard this particular economy as a minimum and 4s a patriotic duty at this time. When this appeal has been made before, it has not failed. I do not think that anyone need suffer seriously, even in morale, if he should smoke this year three cigarettes, or three pipes, instead of every four last year. All we need to do is to smoke a little slower. We must throw away our stubs a little shorter, and knock out our pipes a little later. All this might even be quite good for our health and might steady our nerves.

On the basis of the 25 per cent reduction, for which I ask, I estimate that I shall get £77 millions more revenue in a full year, and £75 millions more this year, but—and this is far more important—I estimate that we should save some 30 million dollars this year, and a bit more if, as a consequence of slower sales, we could run down our stocks. I do not hesitate to emphasise once more that I would much sooner get a large saving of dollars and less revenue, but I cannot exclude the possibility that things might go the other way, though I hope they will not.