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and not upon the place where it may be found. If the packages have not been opened they are not liable to further taxation, even when transported to the interior; but if they have been opened the provisions exempting them from further taxation are of no effect, even in the Treaty port itself. The language of the Treaty is so explicit that this point need hardly be disputed.
In your Excellency's former note of the 12th November you observe that "the taxes suggested by the Board of Finance would be leviable on foreign opiun in a Treaty port and before reaching the place of consumption in the interior"; and to this the Board replied that the levy in question would be made "in places of consumption after the packages have been opened," and that "there was therefore no question of levying taxation in a Treaty port before the opium had been conveyed to the place of consump- tion in the interior."
The words "place of consumption" of course include any place [of consumption], and the words "there is therefore no question of levying taxation in a Treaty port before the opium has been conveyed to the place of consumption in the interior" are equivalent to saying, "there is no question of levying taxation in a Treaty port before the packages have been opened." The two sentences must be read together, and not divided as in your Excellency's note, which makes "there is therefore no question [of levying taxation] in a Treaty port" a sentence by itself.
Your Excellency also says that you gather from my note that the levy of these fees on foreign opium in Treaty ports would be admitted by the Chinese Government to be a contravention of Treaty, but I venture to hold that the language of the Board's note will by no means bear that interpretation. Your Excellency, I feel sure, is aware that the intention of the Board of Finance in suggesting this extra levy of permit fees is to suppress the use of opium by means of such additional taxation, and if it is imposed in the interior and not in Treaty ports it is difficult to see how the movement for the abolition of opium smoking can succeed.
I have the honour, therefore, in making this reply, to request your Excellency to give the matter careful and sympathetic consideration,
Your Highness,
I avail, &c. (Signed)
Prince CHING.
Inclosure 2 in No. 1,
Sir J. Jordan to Prince Ching.
December 14, 1908.
I HAVE received your Highness' note of the 8th December on the subject of the proposed levy of additional taxes on opium with some surprise. The arguments in that note are based on a misapprehension of the terms of the Additional Article of the 18th July, 1885.
Clause 2 explicitly states the treatment to be accorded to foreign opium in Treaty ports, and that treatment has been accorded now for over twenty years without question. The wording is: "It is agreed that foreign opium, when imported into China, shall be taken cognizance of by the Imperial Maritime Customs, and shall be deposited in bond, either in warehouses or receiving-bulks which have been approved of by the Customs, and that it shall not be removed thence until there shall have been paid to the Customs the Tariff duty of 30 taels per chest of 100 catties, and also a sum not exceeding 80 taels per like chest as li-kin." That is to say, after payment of duty and li-kin to the Customs in the Treaty port the opium may be removed to any place of business in the Treaty port and there sold, without payment of any further tax or duty whatsoever.
The quotations made in your Highness' note are from clauses 3 and 4, which indicate the treatment to be accorded to foreign opium sold in the interior and outside the Treaty port. A reference to the Inspectorate-General of Customs will satisfy your Highness that the facts are as stated above, and that they have been the basis of the treatment of foreign opium since 1885.
My two notes of the 12th and 24th November referred only to foreign opium sold in the Treaty ports, and not to foreign opium sold in the interior, and I have again to request your Highness to move the Board of Finance to make it quite clear that the levy of the proposed taxes in Treaty ports is not intended.
I avail, &c. (Signed) J. N. JORDAN.
ཌ་
(Translation.) Sir,
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Inclosure 3 in No. 1.
Prince Ch'ing to Sir J. Jordan.
Peking, December 29, 1908. I HAVE the honour to acknowledge the receipt of your Excellency's note of the 14th December on the subject of opium taxation in Treaty ports, in which you quote clause 2 of the Additional Article to the Chefoo Convention to show that after payment of duty and li-kin to the Customs in a Treaty port opium is not liable to any further taxation in the port.
The Board have the honour to observe in reply that the stipulations of clause 2 of the Additional Article have reference to the fact that foreign opium, when brought into a Treaty port, has to pay import duty and li-kin before it can be cleared through the Customs, but no provision is made that after the customs duty and li-kin have been paid, and before leaving the port, no other li-kin charges or dues can be levied.
If the terms of the opium transit certificate provided for under clause 4 of the Additional Article be examined, and which stipulate that "this certificate will exempt the opium to which it refers, wherever it may be found, from the imposition of any further tax or duty whatever, provided that the packages are unbroken and the Customs seals, marks, and numbers have not been effaced or tampered with," it may be seen that, whether in the interior or in a Treaty port, the question of immunity from further tax or duty depends entirely upon whether the package is unbroken or not.
Again, clause 5 says: << When the package shall have been opened at the place of consumption
any tax or contribution
Here no distinction is made
*
in the expression "place of consumption" between the interior and a Treaty port; and if the package is opened at the Treaty port for the purposes of retail sale, the Treaty port thereupon becomes the place of consumption.
The more carefully the matter has been considered by this Board the less have we been able to reconcile the language of the Additional Article with the arguments advanced in your Excellency's notes, and the most important point, after all, is that the proposal of the Board of Finance to collect this new contribution, while not infringing the Additional Article, is at the same time not intended to be utilized as a means of raising revenue but as a prohibitive measure, and as a method of reducing day by day the number of persons purchasing foreign or native opium.
With this object in view, it is to be hoped that we may have your Excellency's assistance and support, in fulfilment of the friendly interest you have taken in the question, and that finally, in the future, there will be no foreign opium at all upon which China can collect either customs duties or li-kin or other contributions, and that the Additional Article may be laid aside as no longer operative. This is the consummation that we seek.
I avail, &c.
Your Highness,
Inclosure 4 in No. 1.
Sir J. Jordan to Prince Ch'ing.
Peking, January 2, 1909. I HAVE the honour to acknowledge the receipt of your Highness' note of the 29th December, on the subject of an additional tax on opium in Treaty ports, from which I gather that, in your Highness' view, the Chinese Government are entitled under the Additional Article of the 18th July, 1885, to tax foreign opium upon which customs duty and li-kin have been paid, in a Treaty port, to the same extent as native opium.
This interpretation of the Additional Article is, as I have already given your Highness to understand, not tenable. The Article provides that foreign opium, after the payment of duty and li-kin, is free from all taxation whatsoever in the Treaty port, and, if covered by the transit certificates of which the form is given in clause 4, while in transport beyond the Treaty port and up to the place of consumption in the interior. That is the interpretation which has been acted upon by His Majesty's Government ever since the Additional Article was signed, and it will be my duty to insist in practice on the due observance of that interpretation by the Chinese Government at all the Treaty ports,
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