487
22
In the province of Kirin, on the other hand, not only was the scale of taxation heavier, but there had been a constant effort on the part of the authorities to levy taxes on certificated goods. At Changch'un, and apparently all over the province, there were six different forms of taxes, for the exact description of which I beg to refer you to the memorandum. After citing a number of instances which had given rise to protests from foreign merchants, the report concluded by saying that the consular body at Mukden had little or no information as to the treatment of goods in the province of Heilungchiang.
After due consideration, my colleagues authorised me, as dean, to address a further protest to the Wei-wu Pu in reply to their uote of the 22nd February, 1910. In our note dated the 21st instant, of which the copy is enclosed, we have have pointed out that the Kirin authorities openly claim the right to tax foreign goods once they reach the hands of Chinese merchants. We contest this claim on the ground that the taxes enumerated directly affect the foreign importer or his agent, and we request the proper observance of the regulations of 1907 and the provisions of the Treasury.
We have also taken the opportunity of drawing the attention of the Wei-wu Pu to a matter brought to our notice by the Newchwang Chamber of Commerce. In November last year certain regulations drawn up by the Bureau of Business Taxes were issued and enforced at the trade mart of Changch'un for levying a so-called "business tax" on all imported merchandise as well as on exports of grain. The authorities in Manchuria have occasionally contended that beans are included in grain, of which the export abroad is prohibited, but we have successfully resisted this contention in the past. We maintain in our note that they are an article of produce, the export abroad of which is not prohibited, and that, as such, they are exempt under "internal taxes, article 12, paragraph 2, of the Japanese treaty of 1896 from all imposts, duties, charges, and exactions of all kinds" when purchased by foreign merchants in a treaty port. We point out that the imposition of this " business tax,' which amounts to about 3 per cent, ad valorem, is inconsistent with the spirit of the treaty provisions between the Powers and China, and we demand the abolition of the regulations and the tax.
It is, perhaps, too much to expect that our representations will lead to the total abolition of these levies, but I trust that they will have the effect of keeping taxation in Manchuria within reasonable bounds.
I have, &c.
(Translation.) Sir,
Enclosure 1 in No. 1.
Wai-wu Pu to Dean of Diplomatic Body.
J. N. JORDAN.
Peking, February 22, 1910. I HAVE the honour to acknowledge the receipt of your Excellency's note of the 10th December, 1909, in which you state
(Quotes note.)
The board accordingly communicated with the Viceroy of Manchuria and the Governors of Fengtien and Kirin, asking them to investigate and report on the matter. The following reply has now been received from the Viceroy of Manchuria and the Governor of Fengtien, viz. :-
"Goods under special exemption certificates imported to the trade marts by foreign merchants, as well as goods imported from the trade marts into the interior under transit pass, are by regulation exempt from duty, and no further duty has been levied in the past. Since tlie coming into force of the provisional regulations the various custom-houses have for a long time acted in accordance therewith, and there bas been no differential treatment. The action of the custom-houses in ordering payment of duty was due to the fact that either they did not receive the special permit or that the goods did not correspond with the special permit. We have never heard of a case of merchants being forced to pay a consumption tax when the goods and permit corresponded. Further, as regards goods imported into the interior from the trade marts, there have been cases where the goods were not covered by transit pass, or where the customs certificate existed, but the goods did not correspond. Again, there have been cases where the transit pass remained in one place and the goods in another, so that the examination could not take place immediately. Seeing
that the merchants have themselves broken the regulations, the action of the custom- houses and the li-kin barriers in levying duty is entirely according to regulation, and exception cannot be taken thereto. Subsequently, with regard to foreign and native goods imported to the Manchurian trade marts and from there into the interior, the question whether they are to escape paying duty or not will depend on whether or not they are covered by transit pass and special exemption certificate. If they are not so provided, then they must pay duty on arriving at the custom-houses and li-kin on passing a barrier. If, however, the goods are provided with transit pass and special certificate, and the custom-house has ascertained that the goods correspond with the papers and that there has been no false declaration or smuggling, then exemption from duty will be granted in order to comply with the established regulations."
The board has further received a reply from the Viceroy of Manchuria and the Governor of Kirin, in which they state as follows ----
"Foreign goods which have paid the full import duty at the Imperial Maritime Customs and which carry special exemption certificates on importation to the newly opened trade marts in Kiriù province have these certificates stamped by the custom- houses and the goods are released after examination. There has never been any case of a further levy of duty. Although certain taxes exist in Kirin province, yet it is only the capital and selling turnover of Chinese merchants which come especially within the scope of such taxes. Such taxes are not levied on goods, and still less do they affect foreign goods imported by foreigners themselves. We suppose that by the Kirin business tax mentioned by the Austro-Hungarian Minister, the Kirin 7-4 li tax on business capital and the 9 li tax on selling turnover is meant. As to the 7 li tax, there is a fixed regulation that on the business capital of every merchant a tax of 7 cash shall be levied for each tiao (1,000 cash), Kirin money, and of 7 li each Kirin tael. These are taxes which have long existed in Kirin. In 1892, owing to a shortage of ready money and as heavy losses were sustained by the melting down of small cash, the merchants themselves agreed to add on an additional 4 bao (0.4 li) to 7 li tax. This is the 7-4 li tax on business capital.
As regards the 9 li tax, rules have been fixed that on the selling turnover of any merchant 9 cash will be collected on every tiao. In 1900, owing to the large supples required by the military, the people were urged to establish a house-tax, and further, a tax of 6 li was collected on the selling turnover of every merchant. Subsequently the merchants, considering that the house-tax was vexatious, requested that the house-tax should be done away with and 3 li added to the 6 li. This is the 9 li tax on selling turnovers.
The above-mentioned taxes are still levied on the capital of Chinese merchants. They have been in operation for years, and have not been objected to by either Chinese or foreign merchants. With regard to the collection of 1 m. 5 e. per case of kerosene oil, this is levied on the business capital of Chinese merchants. Consequently the rules for special certificates have in no way been infringed. Further it has never been agreed in the treaties that Chinese merchants shall be freed from every sort of tax when they purchase foreign goods.
The board has the honour to state that goods under special exemption certificate or transit pass must, of course, be free from further taxation. But if the merchants do not observe the established rules, as, for instance, by having the goods in one place and the pass in another, or the goods do not correspond with the papers, they cannot complain if the goods meet with further taxation.
Transit passes and special exemption certificates are issued purposely to avoid li-kin en route and have no connection with the taxes levied on the capital and property of Chinese merchants invested in their enterprises. Taxes of this sort should not be quoted as a proof that further taxation is being levied.
I have the honour to address this reply for your Excellency's information, and to request that you will communicate it to your colleagues on the diplomatic body.
I avail, &c.