CLAUSE 61.—(Additional Customs and Excise Duties on Spirits.)

§ Mr. HOBHOUSE

As I understand, the proposal is to leave the duty on certain articles which are specified in the Second Schedule as they are at the present moment. That would be a very difficult thing to do. The late Lord Ritchie when Chancellor of the Exchequer brought in a Bill in 1903 to try to do something of the sort. That Bill failed. The views held by the hon. Gentleman opposite were for some little time held by the Pharmaceutical Society which sent a deputation to the Chancellor of the Exchequer. They heard what was to be said by the Board of Customs and Excise on the question, and 735 they went away satisfied that the proposals embodied in this Amendment were impracticable for this reason. If you gave spirits duty free to chemists and hospitals, you could not subsequently control the disposal of the spirits by the person who was entitled to obtain the spirits duty free. He could destil the spirits out of the particular articles mentioned in the schedule, and you could not say whether they were used in a hospital or elsewhere. It would be impossible to say whether the chemist had disposed of them to the nearest public-house, or whether he really served them for the purpose of medicine. The objections, therefore, to giving the exemption are not so much theoretical as practical. The Government cannot accept the Amendment, and I hope the Committee will not agree to it.

§ Mr. AUSTEN CHAMBERLAIN

I am not surprised to hear the right hon. Gentleman say that the practical difficulties in the way of accepting this proposal would be very great. Nobody who has not had access to official information and advice is in a position to discuss the matter in the same way as those who are dealing with such affairs, or to say whether the difficulties could be overcome. For certain purposes they are overcome now. Under a Bill which was passed in, I think, the first Session of this Parliament—a Bill which I had previously tried to pass—spirit is allowed for certain manufacturing purposes to be issued duty free.

§ Mr. LLOYD-GEORGE

indicated dissent.

§ Mr. AUSTEN CHAMBERLAIN

The Chancellor of the Exchequer is thinking of the old Act which required that the spirit should be rendered impotable—denatured was the technical term—before it was issued. Substantially that met the case wherever it was possible to use denatured spirit. But the progress of science as applied to manufactures rendered it necessary in certain manufactures that pure spirit and not denatured spirit should be used. I believe it is called silent spirit. It is pure alcohol with neither taste nor smell out of which you can concoct whatever blend of spirit your customer may desire. At any rate, it was made clear that British commerce was hampered through our manufacturers not having the same facilities in regard to the use of this spirit as were enjoyed by their foreign competitors, and especially by the Germans, who have carried the application 736 of chemistry to industry to a very high point, and I did seek in my last year of office to pass a Bill to render the issue of pure spirit to our manufacturers possible where we were satisfied that it could be done without fraud. I was unable to pass that Bill, but it was passed, I am glad to say, by the present Prime Minister as Chancellor of the Exchequer, I think, in the first Session of the present Parliament. Therefore, for the purposes of manufacture, it is now permissible to issue pure spirit without payment of duty on whatever security the Excise require being given that the spirit shall be used for the purposes for which it is nominally taken. I am not quite clear about the position, but I think it is possible that that spirit disappears in the process of manufacture, and that therefore if there were to be any fraud it must be drunk before it is used in manufacture, as it cannot be extracted afterwards. If that is so it does make a distinction between the case of these drugs and such cases as are now within the limit of the law. Whether it would not be possible for the Excise to take sufficient security in the case of chemists, speaking without access to official information, I cannot say. I only hope that the Government have seriously considered the question before they decided that it was impossible to make that distinction. If they have seriously considered it and the statement made by the Financial Secretary is their considered judgment, I am not in a position to dispute it and I do not dispute it. But I do say that this is one more reason against adding to the very heavy Spirit Duties which have already passed. We think of this tax as a tax on spirituous liquors drunk for pleasure or comfort. But here it is working out as a very heavy tax on drugs, and on drugs which have to be used by all classes of people equally and by charitable institutions to a very great extent, and the addition which is being made will be a very serious tax upon hospitals, dispensaries and other institutions of that kind. It is an incidental result of the tax which of course the Government did not contemplate, and which, no doubt, they would be as glad as anybody else to avoid. But if they say it is unavoidable the conclusion to be drawn is that there are even more objections to the additions made to this tax than appear on the surface.

§ Mr. LYULPH STANLEY

I would like to say a word on this subject, having been at one time of my life a student of science. 737 I would like to point out to the right hon. Gentleman who has just spoken that there are certain processes of manufacture in which alcohol is used as a solvent, and can be recovered again and again. In the dyeing industry it is used very largely as a solvent, and can be recovered. But I rose mainly to speak of the articles contained in Part II. of the Schedule. I do not wish to pose as a greater scientist than I am, but anyone who has followed this subject at all will know that several of these articles cannot produce alcohol at all. Of course by a series of elaborate chemical operations you can get alcohol from them, but when you have got it it is not really potable in a form which can be drunk. Chloroform, for instance, would require a considerable series of operations before you could get alcohol, and there are several other things which it may be desired for fiscal reasons to tax, but which cannot produce alcohol which would compete, though they could produce it for the purposes of intoxication. I would urge upon the Chancellor of the Exchequer to reconsider the arguments used on the Front Bench against removing this tax, and basing it, as I think it properly could be based probably, on purely fiscal reasons.

§ Mr. FELL

This tax will fall on these substances which have been mentioned, and surely it cannot be supposed that those who use these drugs would distil from

§ Mr. T. P. O'CONNOR

The hon. Member has given the Committee a number of figures to which I shall incidentally refer, but I will endeavour, as far as possible, not to repeat his statement. The figures which the hon. Gentleman has used refer mainly to the consumption of whisky. I would like the Committee to understand the point of view from which Members of the party in whose name I am speaking look at this tax, and that is not from the point of view of the consumption of whisky, but as a tax dealing a deadly blow at one of the very few manufactures left in Ireland. The very first figures I will quote will show that point of view. The average amount of spirits distilled in Ireland in 1906–7–8 was 12,105,499 gallons, and the average amount of spirits exported during the same period was 8,155,157 gallons. In round numbers it comes to this, that of the 12,000,000 gallons of whisky which were manufactured in Ireland, 8,000,000 gallons were exported. On this side of the House we have always contended that a large and pressing tax on whisky as compared with a small tax on beer was a preferential disadvantage to us, because, after all, whisky is the popular beverage of Ireland 744 and beer is the popular beverage of England. I do not want to dwell too much upon that fact, because I believe that statistics recently issued show that the consumption per capita in Ireland of whisky is rather lower than the consumption in England and Scotland. Although I hold the view that it is unfair to Ireland to tax its popular beverage gigantically higher proportionately than the popular beverage in England. I contend that the main strength of our position is that you are taxing in our case a manufacture as well as a beverage. I have given figures to show that of the whisky manufactured in Ireland, roughly, £12,000,000. £8,000,000 as an average are exported. On this question of taxing of whisky, we have maintained this position from almost the first moment the tax was brought into existence, and I regret to say that the history of the tax is far from creditable to the finances of this country and to those Gentlemen, to whatever party they belonged, who have been in charge of them. This tax was brought into existence in 1853 by the late Mr. Gladstone when he was Chancellor of the Exchequer.

Naturally, it is far from my desire to say anything which might seem in the least degree derogatory to the memory of Mr. Gladstone, for, whatever disservice he did to Ireland in the earlier stages in his career, he more than made up for it by his passionate devotion to the cause of that country; but, at the same time, looking on Mr. Gladstone purely as a financier in 1853, I am sure in unconsciousness and in ignorance of the facts of the tax and of the conditions of Ireland, he inflicted upon Ireland one of the heaviest blows it ever received from the legislation of this country. In that year he established this tax and inflicted upon Ireland an additional burden of £2,500,000 of money. That is a very large addition to the taxation of a poor country at any time, and the hardship on that particular occasion was aggravated, according to the confession of every man, including, I believe, Mr. Gladstone himself, because this enormous addition to the taxation of Ireland was inflicted when she was just beginning to emerge from all the sorrows and sufferings of the famine which began in the year 1846. To show how even a humane man like Mr. Gladstone could, ignorant of the conditions of Ireland, inflict such a grievous injury upon the country, I have only to recall to the memory of the Committee what was painfully familiar to us on these Benches 745 that, at the very moment he added £2,500,000 of taxation to Ireland, people were flying from her shores at the rate of from 100,000 to 200,000 a year. I do not want to make the present Chancellor of the Exchequer responsible for all the errors and sins of his predecessors, but we feel we have on this question a great and grievious historic wrong. We have therefore, whenever a proposal has been made to increase this tax, always opposed the Government of the day. If I am not very much mistaken, it was on a proposal of the late Mr. Childers to increase the tax in 1885, that we defeated a great Ministry. After that defeat, Chancellors of the Exchequer left us alone for a while. There then, however, came the war, and Sir Michael Hicks-Beach, looking round for revenue, made an addition to the tax on whisky. What was the condition? I am sure the Chancellor of the Exchequer must look with something like scorn on the timid modesty of his predecessor, for while he adds 3s. 9d. to the duty Sir Michael Hicks-Beach only put on 6d., and he excused his action on two grounds: First, he said it was a war tax. Of course a great war justifies taxation which would be unreasonable in times of peace. The second ground of excuse was that it was only a temporary tax. Sir Michael Hicks-Beach's words were:— I look upon it (the 6d. additional duty) as a temporary addition to existing taxation, and I hope merely for the coming year. That was the statement which was made in 1890; yet the tax which was to be imposed for one year only has remained ever since on this Irish manufacture, and the only realisation we have of the promise held out to us by Sir Michael Hicks-Beach is not the remission of the extra sixpence, but an addition to the tax of 3s. 9d. That is briefly the history of this taxation. Anybody who like me has represented in this House the ancient City of Galway, or who spent much of his boyhood there, must feel very acutely on this question. One of my earliest recollections is of the hideous skeleton of what was once a prosperous distillery. There is scarcely a town in the British Empire which bears upon its streets a more eloquent imprint of the disastrous results of decreasing trade and population. Every one of my friends who has visited that place will corroborate me when I say that there are in the centre streets a number of ghastly ruins of once reputable and decent houses. These ruins were to be seen in Galway when I was a boy: they are still to be seen there 746 and many others have since been added to the large number already in existence. But up till a few years ago there was one distillery left there. Now, however, that has disappeared, and anyone who has an idea of the hideous and crying want of employment in that poverty-stricken city will appreciate what it means when still another place of manufacture is closed.

My hon. Friend and successor in the representation of Galway tells me that no fewer than 100 men were thrown out of employment by this last disaster. I knew very well the proprietor of that distillery, Mr. Henry Persse. He was a good old County Galway landlord and Tory. He told me the history of that distillery, and one of the most interesting chapters was this: In order to make the whisky as good as possible and to put it on a level with the best whiskies produced in Scotland, he came over to England to the place of business of a most respected Member of this House who died a few years ago—the late Col. Webb—and got from him the best barley seed that could be produced. Then he went back to County Clare and there created a new barley industry. Therefore I still adhere to my main position that you are interfering with a manufacture, and everybody will see who will pursue the facts of this case, that it is not only the manufacture of whisky that 13 paralysed or considerably prejudiced by such proposals as these, but a large amount of unemployment is created. This is true not only in regard to distilling, but that want of employment pursues Ireland in other directions, such as agriculture and the diminution of the crop of barley, which is one of the Irish farmer's best sources of revenue. Is it fair to Ireland at the moment when she is still suffering from the effects of the paralysis of her industries by the selfish lgislation—admitted to be selfish by every man in this House—of this country in the eighteenth century, that Ireland should be left with only a few manufactures, and you should inflict this deadly blow upon the manufacture of whisky and all the industries which are allied and associated with its manufacture. That is my objection to this tax from the point of view of the manufacturers; but I also venture to find fault with my right hon. Friend—though it is rather daring for me to do so—from the financial point of view, and here again, although I have not the exact words, I quote Sir Michael Hicks-Beach, who, when he was urged by some people to increase 747 the tax upon whisky, speaking strictly from the financial point of view of the Chancellor of the Exchequer, said that his reason for not increasing the tax on whisky was that he found that if you increase the tax beyond a certain point on such a product as whisky, the result was not the increase but the decrease of the return from that article, and my hon. Friend behind me, although I do not recollect it myself, says that Sir William Harcourt, also a great financial authority, said the same thing. Surely if ever prophecies were proved to be true by subsequent events these two prophecies of these two distinguished financiers have been realised. Of the many figures that were quoted by my hon. Friend I will only give just one, which, I understand, was drawn from an answer given from the Treasury Bench, and according to it the reduction of revenue from spirits from May, 1909, to August, 1909, as compared with the same period of the previous year was no less a sum than £2,489,000. I know that like the hon. Member, whom I once ventured to call the Robespierre of the Temperance Party, there are a certain number of men who would say that the fact that revenue was diminishing from whisky was "glad tidings of great joy."

I do not take quite the view that the reduction in the consumption of whisky necessarily means even an increase in temperance. What it does mean, and has meant in Ireland, is that people drink less whisky and more porter. That seems to me a very inverted kind of temperance indeed. But the peculiar position in which Ireland is placed is this: that if the consumption remains stationary then the customer has to pay the additional tax. If the export remains stationary or goes down, as it has done, Ireland again is damnified because of the reduction of the profits upon what is now one of her few remaining industries. I had hoped that the Chancellor of the Exchequer would see his way, taught by the falsification of his anticipations, to do away with this addition to the tax altogether. This tax has created in Ireland a feeling of disappointment—I might almost say of despair. If from a Government, many Members of which are friendly to the political opinions of the Irish Party, we are to get so crushing a blow as this, it seems almost to drive us to the conclusion that it is hard to expect on this whisky tax justice from any Ministry, whatever be its political complexion.

§ Sir JOHN DEWAR

If there is a strong case for the Irish distiller there is a stronger one for the Scotch distiller, because if the tax hits Ireland unfairly, it hits Scotland very much more unfairly. If there is a reduction of something like 25 per cent. in the manufacture of Scotch distilleries, it is a very serious thing for the Scotch manufacturer. But I want to speak more from the point of view of the user, and how it is going to affect Scotland and the taxpayer in Scotland as a whole. I think it will result in inconvenience to the one and injustice to the other. I know the Chancellor of the Exchequer will say that although economically this may not perhaps be easily defended, still, morally, it is a good tax. I believe the Chancellor of the Exchequer ought to keep in view the moral effect of the tax just as well as the economic effects of it, but at the same time I do not think the moral effect of this tax justifies the economic unsoundness of it. I believe its effect will be to send those who at present use spirits to use what is, to many of them, a much more objectionable and injurious form of stimulant. I know that since the Budget was introduced a return has been got from Scotland showing that the arrests for drunkenness have very materially decreased. Well, you cannot impose an additional tax of 33 per cent. on an article without having very unexpected results.

It is possible, of course, to make alcohol so expensive that nobody could afford to drink it, but there are many who will drink whether they can afford to do so or not. Those men who drink too much will have it whatever it may cost. The reduction in the consumption will take place not among the intemperate users of spirits, but among the temperate users. The increase in the duty will drive people to seek stimulants in illegal ways. I do not know whether the Chancellor of the Exchequer has discounted the chance of an increase in smuggling. The methods adopted for checking smuggling in Scotland have been very effective. I do not believe that it is so flourishing an industry as it used to be. In Ireland there are many seizures of smuggling apparatus. In the east ends of great towns some smuggling is carried on, and I should not be surprised if the change now to be made in the duty were to lead to an increase in that illicit industry. It is not difficult to make spirits. All you require is a kettle and a few yards of tubing. In that way spirits can be obtained which can be used by people who are not particular 749 about quality. It is a good thing that the Chancellor of the Exchequer takes the view that this tax may be defended on moral grounds, for on economic grounds it cannot be defended. It has been proved that it is economically unsound. We are all in favour of taxing luxuries, but this of all luxuries was the least able to bear it. It is already taxed 800 or 900 per cent. on the cost. Other kinds of alcohol are taxed on a very different scale. The spirit in beer, which is the drink of Englishmen, is taxed 2s. 2d. per proof gallon; in wine, 4s. 2d. to 7s. 4d. per gallon; while spirits are now to be taxed 14s. 9d. per gallon. It would seem, therefore, that of all luxuries spirits is the one which ought not to have been taxed. Over and above that the demand for spirits is steadily declining, and an article which is becoming less popular is surely not the one which should be singled out for increased taxation. Beer has increased in popularity, and is being more largely consumed. [An HON. MEMBER: "The consumption of beer has gone down."] It increased last year. No other article would have been treated in this way. The Chancellor of the Exchequer might have been warned by what happened when the duty on spirits was last increased, but in the face of that the duty is to be increased 3s. 9d. per gallon, or about 33 per cent. The result may be that instead of getting the £1,600,000 additional revenue which the Government hope to receive, the increase will yield to the revenue nothing at all. It is very likely that the duty will yield much less at 14s. 9d. than last year when it was 11s.

One word as to how it affects Scotland. It hits the manufacturer. It means a reduction of something like 25 per cent. in the working of various distilleries. Those distilleries are mainly in the Highlands and the poor districts. There is a large group of them on the west coast, but they are mostly in Morayshire, Banffshire and Inverness-shire, in the very poorest parts of the country. Now as to how it affects the Scotch taxpayer. The Scotch taxpayer is taxed at a very much higher rate for the article he consumes than any other inhabitant of these islands. The Englishman consumes 4.6 proof gallons of alcohol in the year, and the Scotchman 3.2 proof gallons. The Englishman consumes it in the proportion of four parts of beer to one of spirits, and the Scotchman three parts of beer to four parts of spirits. The Englishman for his 4.6 proof gallons of alcohol pays 16s. 10d. to the 750 revenue, while the Scotchman for his 3.2 proof gallons pays the revenue 22s. The Scotchman consumes 1.4 gallons less and contributes 5s. 2d. more. Take the consumption for the whole of the country. Last year England consumed 22 million gallons of spirit, Scotland consumed 7 million gallons, and Ireland 36 million gallons. England consumed a great deal more than the other two put together.

The Prime Minister reading out an answer to a question seemed to think that that was a complete answer to the accusation that they were taxing Scotland unfairly. But those are the very figures to which we object. The proportion of taxation which ought to be contributed to the revenue is—England 80 per cent., Scotland 11 per cent., and Ireland 9 per cent., but of the taxation England contributes only 61 per cent. instead of 80, Scotland 21 per cent. instead of 11, and Ireland 11 instead of 9. These are the proportions for last year. The extra 3s. 9d. would make it infinitely worse now. In a full year England would contribute £4,100,000 more, Scotland £1,300,000, and Irleand £680,000 extra. Scotland would thus pay £610,000 more and Ireland £130,000 more than its fair share. England is thus paying upwards of £700,000 less than its fair share. I know that the Chancellor of the Exchequer, in reply to a question, pointed out that on the Licence Duties England contributes a very large sum, which ought to equalise those duties, but since that the Licence Duties have been modified, and in that event we are entitled to ask for a modification of the Spirit Duty. I think the Chancellor of the Exchequer recommended that the licence holder should put the extra profit he got on the increase in price of spirits towards paying any Licence Duty in view of that. I was a little surprised to hear the Chancellor of the Exchequer say to-day that he did not think the Licence Duty was ultimately paid by the consumer.

My point is this: If, as the Chancellor of the Exchequer says, this question is put right by the Licence Duty being much more largely contributed to in England than if he modified the Licence Duty, then at the same time, in fairness, he ought to modify the Whisky Duty. If the extra duty, this sum which the Chancellor of the Exchequer requires, had been raised from beer, what would the effect have been. Beer stands in a very much better position than spirits. The reason which the Chancellor of the Exchequer gives is that he could not 751 put such a sum on beer as would justify the retailer in putting on a halfpenny per glass. I am surprised that the Chancellor of the Exchequer should think that any disadvantage. The present duty on beer is only one halfpenny on three glasses, and yet it is paid by the consumer. How is the extra duty on spirits paid? It is not paid in every case by putting on one-halfpenny per glass. Some retailers have raised the price, some have reduced the quantity, some have reduced the quality, and some, I dare say, have done all three. But that will regulate itself ultimately. Competition between traders will ultimately put that right, and the result will be that the consumer will certainly pay all the duty, and probably a little more. If this had been put on beer instead of whisky, Scotland would have paid a million pounds less than she now pays by this form of tax, and that means 5s. per head for every man, woman and child in that country. It is a very serious thing. I am sorry the Prime Minister is not here, for I wished to draw his attention to the constituency of East Fife, which is a fair specimen. On a moderate computation it will mean something like £15,000 contributed by East Fife, and something like a million pounds contributed by Scotland more than its fair share. I have only this further to say, that, seeing the return from 14s. 9d. is to be less than the return from 11s., if the Chancellor of the Exchequer will accept the Amendment which is proposed by the hon. Member opposite, he will get not less but more revenue from this tax.

§ Mr. HOBHOUSE

The three speeches to which we have listened from an hon. Member opposite, from an hon. Gentleman below the Gangway, and from my hon. Friend behind me have been very much to the same effect, all couched in very similar language, all breathing a very similar spirit, and all making complaint, not, I am happy to say, that some extra contribution should not be made by the consumers of whisky, or the producers of whisky, as the case may be, but all agreeing that there should be some increase while deprecating the necessity for that increase which is involved in the new proposal.

§ Mr. T. P. O'CONNOR

I did not express any such wish.

§ Mr. HOBHOUSE

No, but the hon. Gentleman who moved this Amendment to 752 insert 1s. instead of 3s. 9d., so that at all events he agrees that a tax of one shilling is not unjust or unfair to put on the consumers of whisky, because after all the producers or manufacturers invariably do their best to transfer the tax to the consumer. The hon. Gentleman who moved the Amendment gives the House a number of very interesting figures which it was rather difficult to follow. [Mr. T. M. HEALY, "Oh!"] They occupied twenty minutes and I confess I was perfectly unable to follow them, and I think the majority was in the same position as myself. The hon. Gentleman opposite has a copy of it, and it is easier for him than anybody else in the House to do so. As far as I could understand, his principal complaint was that we had very much underrated the decrease in the consumption and the consequent fall in revenue which resulted from the increase in the tax. I have answered on behalf of my right hon. Friend a great number of questions put to me from every part of the House for at least three or four months trying to prove that the small increase which was estimated by my right hon. Friend was an improperly small increase, and that we were deliberately and unjustifiably putting down the increased revenue which we might expect from the increased tax, and that we were, to that extent, trying to mislead the House of Commons and the country by our anticipations. From the point of view of revenue unhappily we were only too sanguine with our estimate. There have been two quite clear and easily understood reasons why there has been a great falling off in the apparent consumption of whisky, and the withdrawal of whisky from bond, and the falling off in revenue. One is due to the anticipation that took place previous to the present financial year, and in the second place the anticipation which took place between the 1st of April and the 30th of April of this year. The statement was made somewhat later than usual, and the trade being excited by some extra tax on whisky the result was that there were large forestalments swelling the revenue of last year and depleting the revenue of this year; from both causes to which I have alluded. But in addition to that which is the normal case whenever an increase is anticipated—

§ Mr. T. M. HEALY

Can you give us the figures of the withdrawals?

§ Mr. HOBHOUSE

My right hon. Friend, who will speak later, has got them 753 and will give them to the House. In addition to that usual forestalment there is a very considerable hope, on the part of at all events some of those who deal in spirits, that the duty will not be imposed. Some are hoping that the Chancellor of the Exchequer will mitigate what they deem to be the severity of the tax, and others hope, owing to an electoral decision, that the proposal may be nullified. Both those anticipations are, I think, false. The postponement of the withdrawal of whisky from bond and placing it upon the market, while undoubtedly depleting the revenue for the earlier part of the year, will only swell it in the later part. But however that may be, the fact remains that at the present moment the revenue is undoubtedly a great deal less than we had anticipated. As has already been pointed out, there has been a great decrease in the consumption of whisky. I do not know whether the fact is deplored by hon. Gentlemen opposite; it is certainly not by the great majority of Members on this side. The hon. Member for Inverness (Sir J. Dewar) said that this was not merely an economic, but a moral tax. It was not imposed by the Chancellor of the Exchequer with any view to morality, but if its fiscal operation leads to morality, I do not think any Member in the House could object to that result. With reference to another apprehension of my hon. Friend, I can assure him that there is no indication of any sort to lead the revenue authorities to suppose that there either has been or is any considerable prevalence of smuggling, at any rate in Scotland, and there has been no increase lately. The hon. Member for the Scotland Division of Liverpool (Mr. T. P. O'Connor) referred to the fact that when Sir M. Hicks-Beach, as he then was, put an extra 6d. on whisky, it failed to produce any more revenue, and led to the belief that the taxation of spirits had practically reached Lbs highest point. The folly, from the fiscal point of view, of putting on so small a tax as 6d. is that it is quite possible to defeat the intention of the Government by decreasing the strength of the whisky, by lowering the quality while adding to the quantity. One of the reasons which have led my right hon. Friend to propose so heavy an addition to the tax is the belief that it will be impossible to evade the imposition by decreasing the strength of the spirits sold. I have been taken to task for saying all taxes are unpleasant. I do not know that the taxation of whisky is more pleasant than any other taxation; but if one of the results of 754 the heavy taxation is to diminish the consumption of that spirit I do not think it is a fact to be altogether regretted by the House.

§ Mr. T. M. HEALY

The greater the inexperience of the Minister the more confident he becomes. So far as I know, both the Secretary to the Treasury and the Chancellor of the Exchequer are in their first year's Budget, and one would suppose, to listen to them, that they were Finance Ministers of 25 years' standing. Accordingly, these Gentlemen, who never had the taxation of the country in their hands before, get up into the box with absolute self-confidence, as if they had served an apprenticeship to the job, and deny the experience of generations, and throw to the winds the statements and suggestions of men of experience, Mr. Gladstone and Sir Michael Hicks-Beach. In this case they do so in face of the flattest contradiction of their own prophecies; in face of the falling revenue of millions, against their own estimate of increased revenue.

I want to call the attention of the House to the way Ireland suffers—I do not say that Scotland is not in the same case—from the Budget. Here we are in the month of September dealing with an overloaded Budget—a tired House, a tired Ministry, with fatigue as the fastest friend of the Government. What was the case before this system of Finance Bills had been invented, and invented apparently to cope with the House of Lords? Practically every tax was the subject of a separate Bill. Now you take up this question, affecting vitally one country out of three, or two countries out of three. And you, by the modern system of finance legislation, by introducing a whole number of other things in which the other countries are less interested, put the minor grievances of the larger and wealthier country in the foreground, and then you get not only an exhausted house, but an exhausted party, and naturally laxity of attention and Debates after midnight. As to the new system, take the case we heard to-night. You put first in this very Clause a tax on chloroform—on hospitals, on charity, and on photographers. The very drafting of this Clause is an offence, because you, in order that you may dawdle out the time, attempt practically a fraud on the House of Commons. Why, even your Schedule is better than your Clause. You put in your Schedule, page 53, an additional duty on spirits first. You put the duty on chloroform, and chloral hydrate in the second 755 Schedule. This is modern draftsmanship; this is modern finance. Of course all these things are cunningly contrived, just as the Minister cunningly contrives to put this tax into the sixty-first Clause of his Bill. Fancy a tax of this kind affecting-Ireland and being put number sixty-one in order! Of course English Members who are rich men can spend their time here; they have only to take a shilling hansom cab to come clown to the House. It is nothing to them, but perhaps if they lived four or five hundred miles away, and had to come here at great expense, and stay here at great expense, they might take a different view of the case. So much upon what I may call the fringe of the subject.

Let me come now to the prophesy of the Chancellor of the Exchequer. The Secretary to the Treasury conceded one thing which I perfectly believe. When the hon. Gentleman above the Gangway quoted the right hon. Gentleman's own figures, he said he was unable to follow them. I fully accept that statement. The extraordinary thing, however, is that these figures which were collated by hon. Members above the Gangway and by us, were extracted by a question of the hon. Member for North Meath, and were read everyone of them by the Secretary to the Treasury in the answer which he gave to the hon. Member. What does that prove? It proves that the right hon. Gentleman was a mere phonograph of the Treasury. He rattled them off without in the least taking the smallest interest in the fact that so far as some of the countries he is supposed to govern are concerned—these are vital statistics—and he does not understand them. That is modern finance: he does not understand his own figures, and he is quite proud of it. Another extraordinary thing is his whole reply was founded upon this fact. "Oh," said he, "it is all to be explained by anticipatory withdrawals." He is confident of that. I asked him could he give the figures of the anticipatory withdrawals. Not at all! His right hon. Friend the Chancellor of the Exchequer would give them when he came to speak. Is this the case of the Finance Minister that he is stuffed like a turkey for fattening? The Treasury clerks take a mass of figures and by some means or another he gets them into his system; he cannot assimilate them, and when his own figures are quoted he is really unable to comprehend them. I fancy I see Mr. Gladstone at that table—a man 756 who if he had to lay a tax of a farthing on the subject, would turn it over and over again in his brain, and when about it, would listen to you patiently, no matter what the hour of the day or night, and would take the fortune of the meanest subject of this realm into his great consideration. There is a large majority now, I quite agree, behind the Government. It makes an enormous difference in the way figures are handled, and in the way Statesmen behave on the Treasury Bench. I wonder sometimes they come into the House at all. Some of them do not, and I think they are quite right, having regard to the way their action is received by the present House of Commons.

1.0 A.M.

I now come to the estimates that have been formed. May I say that nobody was more pleased to see the Chancellor of the Exchequer achieve his great position than myself, and I feel sure that after he has had a little more experience he will regret this Budget. I cannot believe that any man, no matter how able, can jump in a year and six months to the great position which Mr. Gladstone once occupied. The Chancellor of the Exchequer has had a very arduous Session, and I greatly sympathise with him. Although I may think the right hon. Gentleman in some of his proposals is wrong, I recognise that at the bottom and foundation of his action there lie those considerations upon which he and I take common ground. I am not blaming his intentions or the spirit in which he carries out his duty, but I do say it is inevitable when a Minister comes for the first time into a great position he falls absolutely into the hands of the officials. Who made all these prophecies? Who made these estimates? The right hon. Gentleman himself a year or two ago would not have ventured to have made such prophecies as he has now made. At any rate what he has prophesied, as I understand it, is that there will be an increased yield for the year of £1,900,000. That was a prophecy in which he must have been assisted by someone. Has he forgotten Sir Michael Hicks-Beach's statement that taxation on whisky had reached the highest point, and that was at a time when he was putting this tax on as a war tax? What war tax are you going to raise in Ireland when you have exhausted these duties? Will you tax bread and salt and stirabout? I say that unless you can justify this as a war tax there is no justification for it; and as a war tax where would you be if, relying on an extra yield of £1,600,000 for the production 757 of armaments and pay of men, you find instead of that additional yield you get a loss of £1,700,000. Grattan once said: "You cannot argue with a prophet; you can only contradict him." But here you have the prophet falsified. It is a strange thing that the falsification of the prophecy of the right hon. Gentleman takes place in England. Let me ask this—suppose your tax were on wine, and you carefully avoided taxing whisky? The Secretary to the Treasury says that he is sure that his hon. Friends below the Gangway would be very pleased if whisky should cease to be drunk. Have any of them drunk a bottle of champagne themselves? It is pretended that the poor man's liquor may be attacked, and that the rich man's liquor may be left untouched. You treat the Budget as though it were a sacrament of reconciliation, some incense you offer on the altar of morality. I think it was Artemus Ward who displayed his moral waxworks. This is a moral Budget. Suppose this were a tax on wine, and that a friendly Government in France—where, remember, there was recently, owing to the exactions and mistakes of the Central Government, something almost like a revolution in the wine country—supposing that the French Government were able to show that England, her largest customer, had practically brought about the destruction of the wine-growing industry in the Gironde or other wine districts of France, what remonstrances would come to the Treasury from the French Ambassador! You are taking up one little manufacture which your laws have left to Ireland—and you have left in many places nothing but ruin—and what is going to happen? I have a distillery in my district. For twenty years it has not paid its way, and the consequence of this Budget will be to starve out something like a hundred families. These people and their fate will not affect England. Should the distillery of Persse of Galway come to an end there would not be a ripple of feeling throughout all broad England on the subject. When distilleries in Ireland are destroyed, the work will be gone, the capital gone, the factory gone, the machinery sold, and you never can resuscitate the distilleries. Remember that these are old trades which have lasted for hundreds of years, and that each distillery has its special secrets—it was a question of moment at one time whether the excellence of the article was due to brewing, distilling, purchasing of grain, or mashing—all these things, to which generations 758 of men for hundreds of years have given their time, you propose for your miserable necessities of the moment to wipe out and to send the manufacturers abroad to America or Australia. And why? On the prophesy, the false prophesy, of the Chancellor of the Exchequer that he may get more money. And if he does not, what will the explanation he-will give be? "Oh, it was the month of April"; "it was withdrawals"; "it was the March hares of March," or some other futile consideration. Why had not such explanations been substantiated by the production of the figures of withdrawals? The Secretary to the Treasury said that the figures will be supplied in due time by the Chancellor of the Exchequer. I look back to the day of Mr. Gladstone's Government.

In June, 1885, this House was packed and excited, it was a Debate in June; many Members found themselves unable to come beyond the Bar, and it was all on the question of putting a sixpence on whisky. On this question Mr. Gladstone's Government was hurled out of Office. The Government of that day were able to take up the question in June, the present Government are only able to take it up in September. In the long period of delay some people thought that the Chancellor of the Exchequer was going to drop the tax, while others relied upon a General Election. I believed, from all I read in the Irish Press of the efficacy of what is called judicious negotiation, that the Chancellor of the Exchequer was going to yield. I have been waiting here for a considerable time to see when the concessions to Ireland are going to be given. On every Clause you hear that there is going to be some concession made to Ireland. Now we are at Clause 61, and when is the concession to Ireland going to come? The extraordinary thing about it is that the Chancellor of the Exchequer, who is the responsible Minister, delegates his refusal to—I hope it is not offensive to say so—to an underling who came down flat-footed and said, "I am thinking imperially; I refuse to-give this foreign beer any concession; and the Chancellor of the Exchequer and Mr. Bung will say ditto." At what special date did the Treasury Moses strike the rock? Remember that you are racking the tax out of the people who are expected to sell this commodity and to pay you more money for the right to sell it, although by your own confession they have sold millions of gallons less than you expected. So that not only is the consumer to be charged 759 extra for the product, but the vendor of the product is to pay a higher Licence Duty for selling less of the article. I am not going into the question of the difference between Scotland and England and Ireland.

I say Ireland cannot stand it. I am satisfied Ireland cannot stand this tax. I leave aside the question that we shall not, practically speaking, get any benefit out of this tax. If England gets some benefit and Scotland gets some benefit (I suppose Rosyth will cost the taxpayers some millions of money), where do we stand? At any rate, some advantage goes to Great Britain. Oh! it is sickening. You will not find an Irish Member who in relation to old age pensions said one word on the subject. You will find that the attitude which we took up on old age pensions was most careful and guarded. And when you brought in the Old Age Pensions Bill it was said that you had stripped our clothes to pay for them. I am not going now into the comparative benefits to the various countries. But I would point out that a man in England pays twopence for a glass of beer and has three halfpennyworth of manufactured value, the Government getting one halfpenny; but if a man gets two pennyworth of whisky in Ireland, the Government gets 1½d. and he gets only ½d. But I refuse to argue the case by these considerations. I say you have bled Ireland white in point of taxation, and you, remember, profess to be the Party which stood by Mr. Gladstone's Royal Commission which 15 years ago gave a solemn decision that Ireland was paying three millions too much. And it is on the top of this and in face of that decision that your so-called Home Rule Ministry and by a Minister we used to count among our friends put this iniquity upon us.

§ Mr. G. YOUNGER

I think it is very much to be regretted that a tax of this kind should be discussed at this hour of the morning. I am bound to say that I am disappointed that the right hon. Gentleman has resolved to take this Clause up at such a late hour. I say so as the Member for a constituency which contains no less than 23 distilleries, the proprietors and others attached to which are extremely concerned about this tax, whose future welfare depends on the manner the right hon. Gentleman deals with it, and who will be unable to read a single word of this Debate to-morrow, for it is not 760 likely to be reported in the Scottish papers. Their representative, I think, is entitled to complain of the action taken by the Government. I have duplicated on the Paper the Amendment of my hon. Friend the Member for Hammersmith (Sir W. Bull) to reduce this proposed tax to 1s., because I am perfectly convinced that not only will the Revenue greatly suffer by the extent of the imposition proposed, but that my constituents will very greatly suffer; and seeing the position of affairs, I think it a very sad and serious thing that burdens should be put upon the shoulders of these unfortunate people who happen to be distillers in Scotland.

I think the object of the Chancellor of the Exchequer is far more likely to be achieved if he were to reduce the tax. After all, this is not a temperance measure. It is difficult to believe, no doubt, but it is a Finance Bill, though there are many peculiarities about it. Therefore, as this is a Finance Bill, and we are not now-dealing with the Question from any moral point of view, I believe the normal flow of trade could possibly be restored if something like an extra 1s. were asked for instead of the 3s. 9d. which the Chancellor of the Exchequer proposes. Even if the Chancellor of the Exchequer were to say he will reduce the tax at the end of the year, I do not think it will make an atom of difference in the withdrawals from bond between now and March 31st There is a general feeling that some sensible Chancellor of the Exchequer after an election will practically restore things. I have been interested in reading the speeches of the right hon. Gentlemen opposite, particularly those of the President of the Board of Trade, who I am sorry to see has gone to bed. He has told his audience on every occasion that the Budget puts no tax on industry. I wish he would go on an excursion with me to Campbeltown and stand up on a platform in Campbeltown and say that the Budget places no tax on industry. I should be sorry for his skin if he did so. There is an unfortunate pressure about what is proposed. These people are attacked, most seriously attacked, by this tax. They depend wholly or almost wholly on the distilling industry for a livelihood. It is not expected that a single gallon of whisky will be made there this winter. Of course there are large stocks in the country, but there are no orders coming in, and there will be no employment for these 6,000 or 7,000 people. There is nothing they can look to. They 761 live down in the Mull of Kintyre, far removed from the other parts of Scotland, except by steamer communication. These people cannot go into any other trade, and there is no casual labour for them, and they have a miserable winter to which to look forward, all because the Chancellor of the Exchequer has made a mistake and proposed to put on this tax, which has stopped all the demand, and ruined this trade, at any rate for the time being, and I doubt whether it will ever be able to recover its former position. The Financial Secretary to the Treasury, in making a case for the tax, said that the falling off was due to anticipation of the increased duty. I have dealt already with that. The right hon. Gentleman also said that the reason why the heavy tax was imposed was this: that if a light tax had been imposed, dilution would be practised, and the Treasury would not have got their money. That probably was true enough some years ago, and it would have been a good enough argument before the tax was raised to 11s., but since that time whisky has been and is now sold in public-houses all over the country at something so closely approaching the minimum standard which is allowed by law to be sold, that it is impossible to further dilute it. The right hon. Gentleman, the Secretary to the Treasury, ought to have known that. If he had consulted the Board of Inland Revenue they would have told him that whisky is now sold 24 under proof, and that the law forbids it being sold at less than 25 under proof. That was the position enacted by Sir Michael Hicks-Beach when he was Chancellor of the Exchequer, and I submit it is not now possible to depart from it. The fact is very well known to the Inland Revenue, and they ought to have informed the Treasury of it. The hon. Member for Inverness (Sir J. Dewar) ended by giving the Chancellor of the Exchequer some extremely bad advice. He told him he ought to have raised this money from beer, and he also said that beer was increasing in consumption, while that of whisky was decreasing. I cannot understand where the hon. Member got his figures from. Does he not know that the consumption of beer decreased last year by more than 1,000,000 barrels—I think the exact figure was 1,100,000? Even last month, although it is said that breweries have benefited by the Whisky Tax, the duty received was reduced by £130,000 or £140,000 in comparison with the corresponding month last year. Once bitten 762 is twice shy, and I do not think that the Chancellor of the Exchequer, with the painful experience he has had of taxing an article falling in consumption, is likely to go to another which is falling equally in order to obtain further sums for the Treasury. Even the right hon. Gentleman has too much wisdom for that, and I do not think he will try that game. Therefore, I do not think the advice the hon. Member for Inverness (Sir J. Dewar) gave will be accepted.

I appeal to the Chancellor of the Exchequer, even at this late moment, to reconsider this tax. I believe that if he could see his way to contemplate a certain loss by reducing this impost to 1s., and if he would study the trade—for they are perfectly willing to bear their share of the burden—there would be little chance of the duty being reduced in the next Parliament, and there would only be the ordinary withdrawals from bond instead of that hand to mouth withdrawal which is certain to take place and which will seriously affect the Revenue up to the end of the financial year. It will not only help the Treasury by conceding this moderate tax, but it will also give the licence holder the advantage he is entitled to, namely, to charge an advance of a certain sum in order to pay the new Licence Duty, a prospect now denied to him if he cannot sell whisky at a profit. The right hon. Gentleman, by taking the course I have suggested, will also do a service to the publican and some good to distillers in the North of Scotland, those who depend upon them, and those who grow barley. The barley grown in the north, in Morayshire for instance, cannot be sold there and will have to be sold in the south. This will no doubt help the brewers over the three-penny stile which the right hon. Gentleman has erected, but it will mean a loss to the farmer. Take it which way you like and look where you please, the tax will do the Scottish distilling trade and the agricultural industry great disservice. It will not yield an income to the Treasury, and from all points of view the proposal seems to me to be extremely bad and unfortunate.

§ Mr. P. J. POWER

We have heard various reasons adduced in speeches and in conversations why Ireland should support this Clause. It is said that if we are in favour of temperance it is our duty to support this Clause. I may mention in passing that even the most extreme advocates of temperance in Ireland are, as a body, 763 opposed to this unjust taxation. I have heard the argument used inside and outside this House that Ireland has derived such immense advantage from old age pensions that it is only just and right that she should contribute to the fund. I believe that is a most fallacious argument. We have again and again endeavoured to state the poverty of our country in this House. It is not a pleasant task for an Irish Member to do it, but we have to do it. I consider the very size of the sum which has come to Ireland for Old Age Pensions is a great corroboration of the statements we have made, and ought to be a proof to the Government of the intense poverty that exists in the country. So far from justifying the imposition of additional taxes on Ireland, I think the appalling poverty which the administration of the Old Age Pensions Act has proved should urge the Government to deal in a more lenient and more just way with us than they propose to do. I believe that the sum that comes into Ireland would be larger than it is were it not for the non-registration of births. There are hundreds and thousands who should be in receipt of old age pensions who have been cut off through the legislation of this House. Let us look at the matter from another point of view. In the admirable speech delivered by the hon. Member for the Scotland Division of Liverpool (Mr. T. P. O'Connor) he pointed out that the effects of the tax are far-reaching, and that it will reduce the area of the country under tillage. I wish Sir Edward Clarke were here in this House. He was a distinguished Member of it, and I remember hearing him deliver speeches on the subject of taxation in England as compared with that in Ireland, and he proved that in England the consumption per head was £4 2s., and the taxation levied was only 15s. 6d. per head, but that while the consumption in Ireland was only £2 13s. per head we contributed 13s. 6d. per head. This tax is imposed on one of the few remaining industries you have not crushed out of existence. By the action you are taking to-night I believe you will kill that industry. I remember very well that when the extra 6d. was put on whisky it was predicted that it would begin the process of killing the industry, and I think that the figures that have been published show that you have already taxed whisky too much, and that this extra tax is not only going to kill an industry, but that it will not bring in a farthing of the sum expected from it.

§ Mr. RENWICK

In the course of the Debate we have heard a good deal about the effect of this tax upon the distiller, but very little has been said about the injustice which it does to the consumer of whisky. The tax proposes to take out of the pockets of the consumers of whisky a sum of £1,600,000 in addition to the enormous sum of £21,000,000 a year already levied on spirits. That is to say, it proposes to increase the £21,000,000 to no less than £23,000,000. Who are the principal consumers of spirits, upon whom, be it remembered, this additional burden will fall? It is no reflection upon the working classes to say that they are the principal consumers of whisky, and whisky forms a very large proportion of the spirits which are taxed to the enormous extent I have indicated. If they are the consumers—a fact which nobody will dispute—they are the people who are asked to pay this taxation. I maintain that it is a manifest injustice to ask the working classes to contribute this enormously increased amount of taxation in respect of the alcohol they consume, especially as the burden they have to bear in connection with the old taxation is already very heavy.

I remember that in May last, when the Resolution in regard to the tax was under discussion in this House, the Prime Minister made an extraordinary admission. He said that the publican, the retailer of spirits, could recoup himself for the extra tax in one or two ways. He could add to the dilution, which was already allowed by law, and in that way he could take the tax off the consumer. The Prime Minister added that he was informed the publicans had done this deliberately, and were making an increased profit of £4,000,000. If you add that £4,000,000 to the £1,600,000, you arrive at the result that the working classes will be called upon to pay £5,600,000 more as the result of this tax alone. A statement of that kind, even when repeated some months after it was made, deserves attention, and I ask the Chancellor of the Exchequer whether it is a fact that in addition to the £1,600,000 which he expects to get for the revenue the publicans will be able further to tax the consumers to the extent of £4,000,000. The matter is very serious, and I commend it to the attention of the Labour Members, who ought to back me up in the demand I am making for an explanation. I do not expect they will do so, because they are bound hand and foot to the Government. They must recollect, however, that this question can 765 be raised in the country, and, as a matter of fact, has been raised already. Depend upon it, the consumers who are called upon to pay this enormous amount of extra taxation are people with votes, and when they have an opportunity to exercise those votes they will not forget this impost. It is very significant that every penny of this £1,600,000 which the Chancellor of the Exchequer expects to get from the addition to the tax will be collected in the current year. The Chancellor of the Exchequer has told us that next year he expects to raise upwards of £2,000,000. I would point out that the Government are proposing to spend £2,000,000 on the valuation of land, and it will bring in during this financial year probably only £50,000. I maintain, therefore, that the proposal as regards the tax we are now discussing is a gross injustice on the working classes as compared with the burden on the other classes who are proposed to be taxed in regard to their ownership of land. The latter class are not called upon this year to pay an amount anything like equivalent to that which is to be extracted from the consumers of whisky and is therefore to be taken directly out of the pockets of the working men. The matter is one of extreme importance to some of the poorest people in the country.

If it is immoral to drink whisky it is folly to think that you can make it