2
There is one other point on which I am not quite easy in my mind. It is whether the Board of Finance is quite within its rights under the loan agreements in directing the Viceroy to draw its contribution of 200,000 dollars out of the customs revenue at this port. According to the taotai, the surplus revenue, over and above the amount annually set aside for the service of the loans, is in any case remitted to the Board, which has merely chosen the most convenient method of handing over the money. If the statement is correct there is some excuse for the Board, even if its action is technically wrong.
I have, &c.
Enclosure 2 in No. 1.
F. E. WILKINSON.
Consul Wilkinson to the Doyen of Diplomatic Corps, Peking.
Your Excellency,
Newchwang, July 28, 1910. ON the 3rd February last the late consul for Russia and senior consul at this port, M. Beltchenko, had the honour to submit to your Excellency, for the con- sideration and approval of the diplomatic body at Feking, a scheme for the conser- vancy of the Liao River which had been proposed by the taotai at this port, and which, with certain modifications, the consular body was willing to accept subject to the approval of the foreign Powers.
Your Excellency's reply, which is dated the 21st March, states that the diplomatice body endorses in principle the views on the subject of the consuls at this port, and directs them to continue their negotiations with the taotai.
These instructions have been carried out by the consular body, and a compromise has now been arrived at, for which the approval of the diplomatic body is again requested.
As explained by my predecessor, the conservancy works which it is proposed to carry out and their estimated cost are as follows:-
Dollars.
1. Deepening the bar at the mouth of the Liao and otherwise improving
the approaches to the port
482,974
2. Protecting Duck Island bend
44,000
150,000
Running expenses (annually)
28,000
3. Improving the upper river-dredgers, &c.
The view taken by the consular body was that the cost of the bar and Duck Island works should be borne by the foreign, or steamer, trade of the port, that is, the trade passing the foreign customs, and the cost of the upper river improvements by the native, or junk, trade, that is, the trade passing the native customs, aided by a contribution of 200,000 dollars from the provincial Government.
To provide the necessary funds for the bar and Duck Island works it was suggested that for a period of twenty years the following additional taxes should be levied by the foreign customs and devoted to the purpose, viz. -
1. A tax of 1 per mille ad valorem on the imports and exports of the port, to be collected by the uniform addition of 2 per cent. to the duties.
2. A tax of 2 candareens a ton on the registered tonnage of all vessels entering the port, excepting steamers plying under fuland Navigation Rules, for which the tax was to be 1 candareen only.
These taxes, it was estimated by the consular body, would furnish an annual revenue of not less than 39,000 Haikwan taels, on the security of which a loan could be raised which would be sufficient to cover the cost of the works.
The revenue from the native customs available for the upper river improvements The taxes to be levied was estimated at about 16,000 Haikwan taels per annum. were to be the same as at the foreign customs, but as, in the opinion of the consular body, there were not the same objections at the native as at the foreign custom-house to collecting the tax of 1 per mille on the actual value of the goods passing the customs, it was suggested that it should be so collected instead of by a fixed addition to the duties. This arrangement would slightly increase the revenue, which, with the contribution of 200,000 dollars asked for from the provincial Government, would likewise be adequate for the work.
3
These proposals of the consular body were communicated by my predecessor to the taotai, at the same time that he submitted them to your Excelleney for the consideration and approval of the diplomatic body.
The taotai, in reply, while approving our proposals generally, has raised objections to the basis on which we suggest that the taxes shall be collected. His views on the subject are fully stated in the memorandum drawn up by the Commis- sioner of Customs, of which I have the honour to enclose a copy. He is opposed, in the first place, to the uniform tax of 2 per cent, ad valorem on the duties which we have substituted for the tax of 1 per mille on the value of the trade. His opposition is based on the ground, firstly, that it is not an equitable arrangement, since for articles paying a per cent. ad valorem duty it would mean a full 1 per mille of their value, while articles paying tariff duties would escape as a rule with less than half that figure, and, secondly, that it will not give us sufficient revenue for our purpose. He also demurs to the distinction made in the tax on shipping between inland waters steamers and other vessels.
In place of the plan suggested by the consular body the taotai has now proposed a taxation scheme of his own which, without exceeding the limits stipulated by the chambers of commerce, or adding appreciably to the difficulties and expense of collection, will increase the total revenue from the taxes at the foreign customs from 37,784 Haikwan taels, his estimate of the collection under the consular body's scheme, to 49,244 Haikwan taels, exclusive of the revenue from day-tree goods.
His scheme may be summarised as fo lows: In the case of foreign imports, the tariff duties on which average very nearly 5 per cent. ad valorem, the 1 per mille tax will be collected, as originally suggested by the consular body, by adding 2 per cent. to the duties, which will also be the method followed in the case of all goods for which no specific duties are laid down in the tariff, and which therefore pay duty at the rate of 5 per cent. ad valorem. The rate of levy, on the other hand, in the case of native imports paying full duty, and of exports, will be 4 per cent. in lieu of 2 per cent. of the duty, and in the case of native imports paying half duty, 8 per cent, in lieu of per cent. These increases, the taotai considers, are justified by the fact that native imports and exports passing the foreign customs both pay the old tariff duties, which were drawn up more than half a century back, when values were a third or half what they are now, so that even with a 4 per cent. on the duty rate they will still be paying less than 1 per mille ad valorem,
4
For the native customs, where, the taotai maintains, there are the same objections as at the foreign customs to collecting the tax of 1 per mille on the actual value of the goods passing it, he suggests an all-round levy of 5 per cent. on the duties, which will put the junk trade on the same footing as the steamer trade.
The rough estimates of the collection under each scheme attached to the Com- missioner of Customs' memoraudum show very clearly the differences between them.
These counter-proposals of the taotai have been communicated by the consular body to the foreign chamber of commerce, which, with one reservation, has approved them. The reservation relates to the dues on inland waters steamers, which, in the opinion of the chamber, should remain at 1 candareen a ton, the reason given being that the heavily subsidised competition of other ports, for the passenger traffic in which they engage, leaves the local steamers so slender a margin of profit that the substantial addition to their running expenses which a 24 candareen rate would entail might very probably cause their withdrawal from the trade.
The scheme has also been carefully considered by the consular body, which, while it still believes that the revenue collected by the foreign customs under its own plan would be sufficient to cover the estimated cost of the bar and Duck Island works, agrees, nevertheless, with the taotai in thinking that a larger margin of reserve is desirable to provide against any eventualities which might cause Mr. Hughes's estimates to be exceeded, and for this reason is in favour of the adoption of the revised scheme with the reservation made by the chamber of commerce.
The taotai was accordingly informed that the consular body would be glad to submit the amended scheme to the foreign Ministers at Peking for their favourable consideration as soon as he could assure the consuls that satisfactory arrangements had been made by the provincial Government for the provision of the funds still needed for the upper river.
We are now in receipt of a despatch from the taotai, dated the 12th instant, informing us that the Board of Finance at Peking has consented, at the request of the Viceroy, to furnish the 200,000 dollars required for the purchase of the dredgers and other preliminary expenses in connection with the upper river improvements, and has
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