File No. 693.116/49.
The question is one now occupying the attention of the diplomatic body
and it is likely that a concerted effort will before long be made to
remove the abuses which do not appear to be confined to any one
locality. On November 18, 1910, the dean addressed a letter to the
senior consul at Mukden, the Japanese consul general, asking for further
information regarding the method of taxation and specific instances of
these illegal impositions. When the draft of the proposed
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letter was circulated among the
members of the diplomatic body, I suggested, in view of the fact that
all of our consuls in Manchuria had reported the prevalence of this form
of illegal taxation in their respective districts, that the inquiry be
extended to the whole of Manchuria, and not to Mukden and vicinity
alone. This suggestion was approved by my colleagues. The Japanese
consul general, in a letter of January 10, 1911, submitted a memorandum
on the subject to the dean of the diplomatic body, a copy of which is
inclosed for the Department’s information. I desire to call attention to
the statement in the letter that while the state of affairs now
prevailing in Fengtien Province may be considered fairly satisfactory,
it seems clear that the Kirin provincial authorities openly maintain a
right to tax certificated goods once such goods are in Chinese
hands.
Since the receipt of the letter from the senior consul at Mukden I have
heard nothing further of this matter from my colleagues here, nor have
any of our consuls in Manchuria addressed me recently on the subject. It
is believed that with the prevalence of plague in Manchuria and the
attending disorganization of trade there may be a momentary cessation in
these abuses. But the restoration of normal conditions throughout
Manchuria will doubtless see the recurrence of these illegal
practices.
I have to-day written the American consular officers at Mukden, Harbin,
and Antung, acquainting them with the Department’s views as contained in
the instruction under acknowledgment, and at the same time expressing
the hope that they may succeed in inducing their colleagues to cooperate
in attempting to effect a local settlement, Should their joint efforts
in this direction still prove unavailing they are requested to inform me
further regarding the method of taxation and to place before me as many
recent concrete instances of such illegal imposition on American
products as they are able to gather. Upon receipt of this additional
information I will be glad to take the matter up with the Wai Wu Pu in
case it is impossible to secure the collective action of the diplomatic
body. As this is such a difficult and complicated question and as the
nationals of all the leading representatives here are suffering
similarly, though perhaps to varying degrees, I hope to succeed in
inducing the diplomatic body to take prompt and energetic steps to
remedy the abuses complained of. Collective action in a matter of this
nature is, I find, almost without exception more satisfactory than
individual action.
Any other developments in this question will be immediately reported to
the Department.
[Subinclosure.]
memorandum on the taxation on foreign goods
and native goods under exemption certificate in the three
eastern provinces, such goods having passed into the hands of
chinese dealers.
In a question of this nature it is naturally very difficult to
procure specific instances of illegal taxation, or indeed to obtain
exact information. Chinese subjects for obvious reasons are
reluctant to supply material to a foreign consul which they know
will be used against their own authorities.
There are also but few Chinese merchants who confine their business
to dealing in foreign goods, and in many cases it is impossible not
to suspect that merchants of good standing have private arrangement
with the tax collectors the nature of which it is against their
interest to disclose.
Considerations such as these show that it is a matter of extreme
difficulty to obtain clear proof that illegal taxation is being
levied.
As far as Fengtien Province is concerned recent investigations seem
to show that the present condition of affairs is fairly
satisfactory. Neither the consulates at Mukden, nor those
established at other open marts in the Province have any outstanding
cases, although the Japanese consul at Liaoyang and the American
consul at Antung report that consumption taxes are being openly
levied within the areas of those marts from Chinese dealers.
On the other hand, at Mukden a Chinese storekeeper handling only
foreign articles states that no attempt is made to collect local
taxes from him, and there also seems to be a system in force that
foreign goods bought directly from a foreigner are exempted on
production of a bill of sale.
As far as can be ascertained, there is a general levy throughout the
Province of a consumption tax averaging about 2 per cent ad valorem.
This is collected sometimes on arrival of the goods at destination,
sometimes at the end of each month on an assessment of the gross
value of trade done by the particular merchant.
In the former case goods under exemption certificate would escape; in
the latter, more especially as the majority of Chinese importers do
not use exemption certificates, it would seem that foreign goods
would pay their quota.
Further, after import, when exemption cargo is broken up into small
parcels, it would be extremely difficult to protect it against a
levy of this nature.
Speaking generally, from the absence of complaints it seems a not
unwarrantable conclusion that the consumption tax is not heavy, on
the whole collected reasonably, and that there is a desire on the
part of the tax officials to avoid direct levies on exemption
cargo.
In Kirin Province not only is the scale of taxation heavier, but
there has been a constant effort on the part of the authorities to
levy taxes on certificated goods.
At Ch’angch’un, and apparently all over the Kirin Province, the
following taxes are in force:
- (a)
- Kuan chuan, — of 0.07 per cent.
- (b)
- Chu chuan, — of 0.04 per cent.
- These are known as the 7 and 4 “li” tax, and are generally
levied from the importer.
- (c)
- Mai ch’ien chuan, — of 0.09 per cent, levied from the
seller.
- (d)
- The ying yeh shui, — of 1 per cent, levied from the
importer.
- (e)
- Hill and sea tax, —. This is a species of octroi, levied
mainly on native goods. But marine products, kerosene,
foreign vermicelli, and other articles are included in the
tariff, which averages about 3 per cent ad valorem.
- (f)
- Special excise taxes are levied on tobacco, wines, and
spirits. In the case of tobacco the tax is 10 per cent ad
valorem.
That these taxes have been and are still being levied on goods
brought in under exemption certificates seems to need no specific
proof. The Kirin authorities openly assume the attitude that they
may tax such goods as of right once such goods are in the hands of
Chinese merchants.
In a report from the Kirin customhouse sent to the American consul on
the 28th of March, 1909, are the following statements:
In goods turned over to native merchants exemption
certificates are of no avail and foreign merchants can not
request the nonpayment on behalf of merchants who are acting
as their agents.
The collectorate at Ch’angch’un levies duty on kerosene in addition
to the 7, 4, 9 business tax, but in every case from Chinese
merchants, and in no case from foreign merchants.
Mr. F. D. Cloud, then in charge of the American consulate general,
submitted this document for the consideration of his colleagues, and
it formed the basis of the identical note which the Mukden consular
body sent in to the viceroy in June, 1909, and which was later
transmitted to the various legations.
It would appear from the reply of the Wai-Wu Pu to the dean of the
diplomatic body, dated February 22, 1910, that the governor of Kirin
maintains the same attitude as his customs board. It is stated
therein with reference to the 7 4 9 li taxes, “the above-mentioned
taxes are all levied on the capital of Chinese merchants. With
reference to the collection of 1 mace 5 candareens per case on
kerosene oil this is levied on the business capital of Chinese
merchants.”
More recently in reply to protest against the levy of the kerosene
tax brought forward by the American consul at Harbin, the
commissioner of the foreign bureau at Kirin in a letter dated August
25, 1909, states “as to the tax of 7 4 9 li it is collected on the
capital invested and the proceeds of goods sold, and not on the
goods.”
Again, on the 22d October in a further dispatch to Mr. Green on the
same subject, the commissioner takes the stand “after foreign goods
are sold to Chinese subjects and when the latter sell to each other
they must, of course, pay the inland taxes according to the
regulations.”
On the 1st of December the Ch’angch’un Taot’ai wrote to H. B. M.’s
consul general with reference to a claim to tax sugar imported by a
British firm, “the regulation laid down by the tax office are to the
effect that all goods, no matter what the nationality of the
importer, must pay the 7 4 li tax on sale to Chinese merchants.”
The exemption certificate only frees foreign merchants from payment
of import duty and can not free native merchants from payment of tax
on goods purchased. As Chien, the deputy points out, these taxes are
levied from Chinese merchants and are no concern of foreigners. In
this case the British firm in question complains that their goods,
which are all imported under exemption certificates, are, on leaving
their godowns, followed by the police and tax officials to the
buyers’ shops and that the police prevent cargo leaving the city
until the buyers produce a certificate showing that the tax has been
paid.
In a proclamation issued by the Ch’angch’un tax office in the ninth
moon of the present year, clause 9 lays down specifically that
purchasers of goods from foreign merchants must pay a buying tax of
1 per cent. Presumably this is the “Ying Yen” tax.
The Japanese consul at Ch’angch’un has, however, recently obtained a
verbal promise from the Taot’ai that this claim will be
withdrawn.
As regards tobacco an attempt was recently made to levy a tax of 10
per cent on goods imported by a British firm under certificate
within the limits of the open mart of Ninguta. This question is
still in the hands of the British consul at Harbin.
At present the consular body at Mukden have little or no information
as to the treatment of goods in Hei Lung Chiang Province.
