Papers Relating to the Foreign Relations of the United States, Transmitted to Congress, With the Annual Message of the President, December 1, 1890
Mr. Lincoln to Mr. Blaine.
London , March 20, 1890. (Received April 5.)
Sir: With reference to your instruction No. 141 of December 6, 1889, relating to the income tax imposed in Burmah upon American missionaries residing there, I have the honor to acquaint you that on the 18th of December last Mr. White, then chargé d’affaires, addressed to Her Majesty’s Government a note, of which a copy is inclosed, and that I am now in receipt of a reply from the Marquis of Salisbury, dated the 18th instant, of which a copy (with its original printed inclosures) is also transmitted herewith, from which it will be seen that Lord Salisbury expresses his regret that the Government of India, after a full consideration of the case, are unable to make an exception in favor of the missionaries.
It seems that Mr. Bunker, who addressed you in the matter, complains especially that the tax is charged upon, not only that portion of their salaries paid the missionaries in Burmah, but upon that portion thereof which is arranged to be paid directly to their families remaining in the United States. It would appear that the law requires the tax to be assessed upon “income or profits accruing and arising or received in British India,” and that the Government of India holds that the income of a missionary residing in India accrues or arises there, though it may not be received there. I venture to suggest that the income tax act in India, in this respect, does not seem to be more rigid than was our own act of 1862 (sec. 90, chap. 119, 2d sess. 37th Cong.), under which a tax was laid upon the excess over $600 of the annual gains, profits, or income of every person residing in the United States.
I have, etc.,
Mr. White to the Marquis of Salisbury.
London , December 18, 1889.
My Lord: I have the honor to acquaint Your Lordship that a letter has been addressed to the Secretary of State by Mr. A. Bunker, an American missionary, of Toungoo, Burmah, who writes in behalf of 123 American missionaries in that country, stating that not only are they compelled to pay an income tax upon the allowances received for their support from the missionary boards in the United States, but that a recent order has been issued by the Indian Government, in virtue of which they will be compelled “to pay income tax upon all moneys paid for the support of our (their) families in America.”
It is hoped by the Department of State that Her Majesty’s Government will be so good as to look into the case of these missionaries, which, as stated by Mr. Bunker, appears to involve serious hardship and injustice to a meritorious class of persons, who are engaged in labors which have always received the encouragement and support of the United States and British Governments, and many of whom are believed to have no other source of income than the aforesaid allowances.
I have, etc.,
The Marquis of Salisbury to Mr. Lincoln.
Sir: With reference to my note of the 28th of December last, relating to the income tax paid on their salaries and family remittances by American citizens resident in [Page 326] Burmah who are engaged in missionary work, I have the honor to transmit to you the accompanying correspondence on the subject which has been received from the Government of India.
You will observe, from a perusal of these papers, that a similar question has been raised with respect to other classes of persons resident in India whose incomes are derived from other countries, and that it has been decided that such incomes are liable to the tax. I have to express to you my regret that the Government of India, after a full consideration of the case, are unable to make an exception in favor of the missionaries.
I have, etc.,
Government of India, department of finance and commerce.
no. 383—5 a, dated 13th september, 1889.
From H. T. White, esq., officiating chief secretary to the chief commissioner, Burmah.
To the secretary to the Government of India, department of finance and commerce:
I am directed to forward copies of the letters cited in the (1) letter from missionaries to financial commissioner; (2) Messrs. Moylan and Eddis’s letter No. 161, dated 4th September, 1889; (3) letter No. 377—5 A., dated 25th July, 1889, from secretary to financial commissioner to commissioner income tax Rangoon town district, being representations made in the matter of income tax by the American Baptist mission resident in Burmah, and the employés of the Irrawaddy Flotilla Company, limited. In these cases exemption is claimed for a portion of the incomes on the grounds that such portions are drawn either in America or in England.
- A reference to letter No. 377—5 A, dated July 25, from secretary to the financial commissioner to commissioner income tax, Rangoon town district, will show that the financial commissioner ruled that, under section 3, clause 5, of the income tax act, “income” includes “income and profits accruing and arising or received in British India,” and that the servants of the Irrawaddy Flotilla Company, limited, and the American Baptist missionaries in Burmah were accordingly liable to income tax in respect of any part of their salaries received out of but accruing in British India. The servants of the Irrawaddy Flotilla Company and the American Baptist missionaries were, however, informed by the financial commissioner that, should they wish to petition the Government of India in the matter, their petitions would be forwarded.
- I am to say that, in the opinion of the financial commissioner, Burmah, in which the officiating chief commissioner concurs, the servants of the Irrawaddy Flotilla Company, limited, and of the American Baptist mission are liable to pay income tax on the whole of their incomes wherever they may be paid, unless they are specially exempted under section 6 of the income tax act, and no reason is apparent why in these cases any exemption to the general rule should be allowed.
- Pending the decision of His Excellency the governor-general in council on this reference, the operation of the act, so far as it affects the portions of the salaries drawn by the petitioners out of British India, has, under the financial commissioner’s instructions, been suspended, and I am therefore to request that His Excellency in council may be pleased to issue early orders in regard to this matter.
in the court of the financial commissioner, burmah.
The petition of the American Baptist missionaries resident in Burmah.
Respectfully showeth: That your petitioners are citizens of the United States of America now residing in Burmah, and that they enjoy the protection of and assist in maintaining the laws in force in this province of Her Majesty’s empire.
- That the income of your petitioners is derived from salaries
received from the United States of America, paid them by their
society, being the donations of the benevolent people of their own
religious belief, and, with the two exceptions noted below, no part
of their income is derived from local sources or from sources within
Her Majesty’s domain. [Page 327]
- Exception (a).—The salary of the superintendent of their mission press in Rangoon is paid from the income of the press, and the income tax to be assessed upon this salary is not included in the subject-matter of this petition.
- Exception (b).—A few of your petitioners derive a portion of their income from personal estates or investments in Burmah, and the income tax to be assessed upon such income is not included in the subject-matter of this petition.
- That many of your petitioners have members of their families remaining in the United States who are dependent upon the salaries of your petitioners for their support, and others have other demands made upon them, compelling them to leave a share of their income in the United States. The portion so left in the United States is in many cases one-fourth of the appointed salary, in other cases one-half, and in still other cases as much as two-thirds the appointed salary.
- That by your decision, communicated to your petitioners by the deputy commissioner of Rangoon in his letter No. 9–14, dated 27th July, 1889, the practice of the collector of income tax for the past year has been reversed, and income tax is now assessed upon the whole appointed salary of each missionary, without reference to the question as to what part is actually received in Burmah and what part is not so received.
- That the portion of salary of each of your petitioners which he or she actually draws in Burmah is sent from the United States to the mission treasurer in Rangoon, and is by him paid to each. The portion of the appointed salary paid to members of families or otherwise in the United States does not in any way come into the hands of the mission treasurer in Rangoon, or of the missionaries in Burmah. It therefore never comes within the boundaries of Her Majesty’s domain.
- That the assessing of income tax upon income which never reaches your petitioners residing in Her Majesty’s empire, but which is held in your petitioner’s own country, is felt to be a hardship, especially so since it is firmly believed that Her Majesty’s laws enacted for India could not, when they were enacted, have contemplated the exaction of a tax from persons temporarily residing within Her Majesty’s power upon their property which never comes within the borders of Her Majesty’s realm and over which Her Majesty would naturally have no control.
- Wherefore your petitioners pray that your former decision may be reversed, and that you will order that income tax be assessed only upon such part of your petitioner’s income as actually comes into Her Majesty’s empire.
- Your petitioners further pray that if it may not be in your power so to construe the law as now in force, that you will be pleased to forward this, our petition, to the Government of India for such consideration and action as may in the premises be just and right.
And your petitioners will, as in duty bound, ever pray.
no. 377.—5 a, dated 25th july, 1889.
From the secretary to the financial commissioner of Burmah.
To the commissioner of income tax, Rangoon town district:
In reply to your letter No. 11–13, dated the 8th July, 1889, inquiring whether part iv of the second schedule of the income tax act, 1886, should be interpreted so as to include or to exclude portions of salaries accruing and arising in, but paid out of, British India, I am directed to say that section 3, clause 5, of the income tax act makes “income” include income and profits accruing and arising or received in British India, and that the servants of the Irrawaddy Flotilla Company, limited, and the American Baptist missionaries in Burmah are accordingly liable to income tax in respect of any part of their salaries received out of British India. If the servants of the Irrawaddy Flotilla Company and the American Baptist missionaries wish to petition in the matter, I am to say that the financial commissioner will forward their petitions for the orders of the Government of India.
(2) A ruling has been given on a reference made by the commissioner of Pegu on the question raised in your letter.
no. 6108, dated december 3, 1889.
Resolution by the Government of India, department of finance and commerce.
Proceedings of the government of Bombay in the financial department for February, 1887, No. 265.
Letter to the government of Bombay, No. 6665, dated 19th December, 1887.[Page 328]
Letter from the chief commissioner of Assam, No. 122, dated 11th January, 1888.
Letter to the chief commissioner of Assam, No. 1424, dated 13th March, 1888.
Letter from the chief commissioner of Assam, No. 1042, dated 9th April, 1888.
Letter to the chief commissioner of Assam, No. 6348, dated 28th November, 1888.
Letter from the chief commissioner of Burmah, No. 383—5 A, dated the 13th September, 1889.
Resolution.—In its proceedings for February, 1887, the government of Bombay, on the advice of the legal remembrancer, decided that those portions of the salaries of certain mechanics employed in cotton mills in Ahmedabad which under agreement were paid by their employers in England were liable to taxation under act ii of 1886 (Part iv of the second schedule).
- In January, 1888, the chief commissioner of Assam asked whether commissions earned by managers and assistants of tea concerns in India, but; paid in England and not remitted to India, are liable to income tax.
- In September, 1889, the chief commissioner of Burmah transmitted for orders representations made on behalf of certain members of the American Baptist mission and the employés of the Irrawaddy Flotilla Company, praying to be exempted from the taxation of such portion of their income as was not paid in British India. In the case of the missionaries, it was contended that their income or salary was derived from donations in the United States, and that the portion of it paid in that country never reached India. In the case of the employés of the Irrawaddy Flotilla Company, it was urged that the portion of their salaries paid in Scotland should be exempted, v
- These cases have now been fully considered, and the governor-general in council is advised that in all of them the incomes are liable to the tax under the terms of section 3 (5) of the act, since they accrue and arise (though they may not be received) in British India. The definitions of “salary” and “income” given in the act no doubt overlap each other, but there is no reason why the one word should not be construed as supplementing rather than restricting the other, and, although salary includes commissions, perquisites, and profits of an employment only when received in British India, yet if profits accrue or arise in British India to any person resident in British India by reason of his employment, and such profits are not received in this country (as in the cases in question), they are taxable as “income” under part iv, though if received here they would be taxable as “salary” under part i of the second schedule of the act.
- The governor-general in council accordingly directs that the decision stated in the foregoing paragraph be acted upon in future by all local authorities.
Order.—Ordered, that the foregoing resolution be communicated to all local governments and administrations for information and guidance.