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may adhere to this treaty. But those Powers which have relinquished their right to take part in the determination of China's Customs Tariff shall be debarred from participating in the commission.
4. The senior Chinese delegate shall act as chairman of the commission, the chair being taken in his absence by the Chinese delegate next to him in seniority. 5. No restriction shall be placed on the numbers of each delegation, but each delegation shall only have one vote.
6. In view of the necessity of obtaining the consent of all the delegations to any addition to or alteration in the tariff schedules and rules, all decisions taken by the commission must be unanimous.
7. The chairman shall appoint a secretary to the commission, whose duty it will be to supply the delegations with copies of the minutes of meetings, copies of proposals for alteration in values or reclassification, and all notices regarding time and date of meetings.
8. The commission shall make their own rules of procedure in conformity with these rules.
9. The Tariff Revision Commission shall have power to assess the duty paying value of articles subject to a specific duty and to fix the duties thereon in accordance, with the rates agreed to by the Special Conference, to transfer articles to the ad valorem or unenumerated list, and vice versa, to reclassify articles of the tariff and to revise the rules attached to the tariff.
10. In assessing the revised duty paying value of articles subject to a specific duty the values of goods to be adopted shall be the average values ruling during the (twelve months) previous to the assembling of the Tariff Revision Commission.
11. On completion of the work of revision the new schedules shall be published by the Chinese delegation for general information and the revised rates of duty shall come into force two months after the date of such publication, due notice of the date of coming into force of the new tariff being given by customs notification a fortnight in advance. Goods shipped from the country of export before the date of enforcement of the new tariff shall be subject to the old rates of duty, and those shipped subsequently to that date shall be subject to the new scale of duties.
12. The present rules having been approved by the Special Conference provided for by article 11 of the Customs Treaty of Washington, are binding on the Chinese Government and on the Powers who are represented at that conference.
ANNEX (M). Memorandum.
The attached paper presents a Scheme for the Abolition of Internal Taxation and Fiscal and Financial Reconstruction in China," formulated in accordance with Foreign Office instructions. For convenience of handling the subject, the scheme is presented in the form of a rough draft of a treaty in fulfilment of the objects contemplated in the Washington China Customs Tarif Treaty, with the modification of the introduction of additional taxation on wine and tobacco products as the result of developments in the taxation question in China since the date of the signature of the Washington Treaty.
The scheme provides for the attainment of the objects in view, abolition of internal taxation and fiscal and financial reconstruction, in two stages, for which purpose the treaty is divided into two parts. Part I provides for the immediate carrying into effect of the stipulations of the Washington China Customs Tariff Treaty, i.e., steps in preparation of the way for the speedy abolition of li-kin, &c., and for such measures of financial reconstruction as is possible with the funds available; while Part II provides for the fulfilment, after the Chinese have shown themselves able to carry Part I into effect, of the principles laid down in the commercial treaties of 1902 and 1903 in a modified form to suit the altered conditions of the present day, and for the more complete financial reconstruction rendered possible by the increased revenues available, and for eventual tariff autonomy.
The scheme is based on the preliminary outline proposals already submitted, with certain modifications, mainly on the lines of attempting to keep within the limits of what is really practicable. The general principles followed are those of compensating the provinces for the abolition of internal taxation by allocating to them a proportion of the national revenues, including those from the taxation of
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foreign imports, and of consolidating the unsecured debt on the increased customs revenues. The following is a summary of the contents:-
PART I.
Article 1-Preliminary steps towards the abolition of internal taxation by means of the reorganisation of the transit pass system and allocation of transit pass dues to the provinces, the abolition of coast trade duties, and the levy and allocation to the provinces of special inland taxes on wine and tobacco products.
Article 2.-Levy of surtaxes on dutiable imports.
Article 3.-Arrangements for the consolidation of the debt on, and custody of,
the customs revenues.
Article 4.-Levy of excise on manufactured articles, including wine and tobacco products.
Article 5.-Undertaking against discrimination against foreign goods. Article 6. Creation and reorganisation of Excise, Wine and Tobacco, Stamp Tax, and Salt Administrations. allocation of their revenues between Central Government and provinces, and declaration against further hypothecation of these or other national revenues.
Article 7-Declaration regarding railway reorganisation.
Article 8-Undertaking to negotiate a settlement of outstanding claims and understanding regarding native agency trade.
Article 9.-Abolition of land frontier preferential duty treatment. Article 10-Declaration regarding provincial acceptance of the treaty.
PART II.
Supplementary Article.-Complete abolition of all internal taxation, further raising of the customs tariff, levy of an inland tax on all foreign imports and native manufactures and allocation of the inland tax revenues to the provinces.
Annex I-List of places open to foreign residence and trade. Annex II. Schedule of luxury articles for purpose of surtax.
Annex II. Schedule of indemnity and loan obligations to be charged on the customs in the order of their priority.
Annex IV-Schedule showing reduction of interest and extension of amortisa- tion of certain loans.
Annex V-Memorandum regarding reforms to be introduced into the Salt Administration.
Annex VI.-Estimates of revenues available under the scheme.
be as follows:—
The taxation to be borne by the foreign import trade under these proposals would
Under Part I.
Ordinary Articles: 7 per cent. import duties plus 2 per cent. transit dues, amounting to 10 per cent. in all, and a possible further 24 per cent. destination or consumption tax after the goods have reached the hands of the Chinese shopkeeper in the interior.
Luxury Articles: 10 per cent. import duties plus 24 per cent. transit dues. amounting to 12 per cent, in all, and a possible further 24 per cent. destination or consumption tax after the goods have reached the hands of the Chinese shopkeeper in the interior.
Wine and Tobacco Products: 15 per cent. import duties plus 10 per cent. inland tax, amounting to 25 per cent. in all, and no further taxes whatsoever.
Under Part II.
Ordinary Article: Import duties (graduated) up to 10 per cent. plus 5 per cent inland tax, amounting to a maximum of 15 per cent. in all.
Luxury Articles: Import duties (graduated) up to 25 per cent. plus 5 per cent. inland tax, amounting to a maximum of 30 per cent. in all.
Wine and Tobacco Products: Import duties up to 40 per cent. plus 10 per cent inland tax, amounting to 50 per cent. in all. No further taxation whatever.
G 2 [13577]
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