CO129-372 - Public Offices - 1910 — Page 345

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still be under the 1 per mille limit. For the native customs an all-round levy of 5 per cent. of the duty is proposed, and, finally, in taxing foreign shipping no distinction is to be made between inland waters' steamers and other vessels, the rate to be a uniform one of 23 candareens per ton. The commissioner estimates that these changes, if agreed to, will increase the annual revenue from the foreign customs, which is to be entirely devoted to the bar and Duck Island works, from 37,784 taels to 49,241 taels, to which sum should be added the collection on duty-free goods.

These proposals have been considered at a meeting of the consular body and have been generally approved, and the Foreign Chamber of Commerce is also in favour of them. The only objectionable feature in them, in my opinion, is the increased tax on steamers plying under inland navigation rules. This trade is mostly carried on between Lungkow and this port, and is mainly a passenger trade. To try and divert it to the leased territory the Kwantung Government has subsidised a rival line between Lungkow and Dairen, and has reduced the railway rates from Dairen for through passengers into the interior to the level of those from Newchwang. It would be suicidal under the circumstances to increase the expenses of the local steamers.

The reply, however, which the consular body has sent to the taotai is that, while we shall be very glad to submit his proposals in due course to the foreign Ministers at Peking for their favourable consideration, before doing so we wish to be assured that satisfactory arrangements have also been made to meet the cost of the upper river improvements, for, until we are in a position to inform our respective Ministers not only that the provision made for the purpose is adequate, but that the money needed is not to be raised in such a way as to neutralise the good effect of the scheme in general, it would serve no useful purpose again to address them on the subject.

Since then we have received a further communication, dated the 17th May, from the taotai, informing us that he has sent a full report on the question to the Viceroy, and that he has suggested to his Excellency that be should memorialise the Throne to instruct the Board of Finance to furnish the 200,000 dollars required for dredgers and preliminary expenses, and that the Viceroy has replied, stating that he is consulting with the board in question as to the correct mode of procedure, and will communicate again with him shortly.

I have, &c.

Enclosure 2 in No. 1.

F. E. WILKINSON.

Notes on the Senior Consul's despatch of February 2 re Liao River Conservancy Funds, &c.

THE proposals made in this despatch are not strictly equitable, for, if carried out, we should be collecting on the trade passing the foreign customs at a rate averaging about fire-eights of 1 mille ad valorem, while the trade passing the native customs would be paying a full 1 per mille ad valorem, a difference of three-eighths, or, in other words, an increase of 60 per cent. in the rate of taxation. I can see no justification for the statement "that in the case of the native trade there are not the same objections to collecting the tax on imports and exports on the actual value of the goods." I advise by all means that the rate of taxation should be, as near as practicable, the same for both custom-houses.

The original suggestions of the Chambers of Commerce were that all imports and exports should pay a tax of 1 mille ad valorem, and that the foreign shipping entering

the port should pay 24 candareens per registered ton. They certainly ought to know how much taxation the trade of Newchwang can stand without fear of its being driven elsewhere. I think therefore that, considering the amount of work to be done-the deepening of the bar, the dredging of the river in certain other places, and the Duck Island scheme-it would be unwise to attempt the business unless an annual revenue of about 50,000 Haikwan taels be available from the collection of the foreign customs alone, and to obtain this sum the rate of taxation must be, as near as possible, the figure proposed originally by the Chambers of Commerce. The rate given in the senior consul's despatch for the collection of the funds would have returned for the year 1908--a good average year for trade-the sum of 39,000 Haikwan taels only from the foreign customs. I am of opinion that 2 per cent. on the customs duties is too small for native imports and exports paying the old tariff duties, which were drawn up more than half a century back when values were a half or a third of what they

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are now. The rate is all right for foreign goods, as it will return about four-fifths of 1 per mille, but with native goods it will return on the average not over one-half of per mille. The adoption of a 2 per cent. on the duty rate moreover would result in unfair taxation, for with articles paying a 5 per cent. ad valorem duty it would mean a full 1 per mille, while articles paying tariff duty would escape with less than half that figure. I propose, therefore, to get over this unfairness by suggesting the adoption of a 4 per cent. on the duty rate for native goods either imported or exported paying tariff duties, retaining 2 per cent. on the duty for articles paying 5 per cent. ad valorem. This will equalise matters and place all goods on the same tax basis. It will also place the various branches of the trade on level terms, as you can see from the rough estimate I have drawn up of the collection based on the trade for 1908. For the native customs I would suggest an all-round levy of 5 per cent, on the duties. This will put that trade on practically the same footing as that passing through the foreign customs. The tax on the foreign shipping ought to be a uniform rate, and no distinction made between inland waters' steamers and other vessels. The senior consul's proposal of 1 candareen per ton for the former is not equitable, and is not in accord with the rate originally proposed by the Chambers of Commerce. The same is true of his proposed rate of 2 per cent. on the customs duties. He was no doubt under the impression that it would be a fair one, but such is far from being the case. Take, for instance, beancakes for the year 1908: 2 per cent, on the duty would give 3,208 Haikwan taels, whereas 1 per mille on the value would have given 10,174 Haikwan taels-over three times as much. This would mean that our largest article of export is taxed one-third of 1 mille! From the customs point of view it is just as easy collecting 4 per cent. on the duty as 2 per cent., and I can see no great objection to even fixing a specific rate for the principal articles (native) of import and export should the 4 per cent, on the duty not prove acceptable. To collect these funds there will, of course, be certain charges made by the customs, for it would be unreasonable to expect the staff to do extra work without some compensation, but how much this will be will have to be decided by the inspector-general of customs at Peking.

As suggested by you, I have drawn up two rough estimates showing what the trade of 1908 could have produced. One is based on the rates mentioned in the senior consul's despatch and the other on the rates I have suggested above.

In the first instance the foreign customs would have returned 37,784 Haikwan taels and the native customs 11,000 Haikwan taels, making a total of 48,784 Haikwan taels.

In the second the foreign customs would have returned 49,244 Haikwan taels and the native customs 9,207 Haikwan taels, making a total of 58,451 Haikwan taels.

FRANCIS A. CARL, Commissioner.

Custom-house, Newchwang,

February 25, 1910.

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