File No. 893.811/39.
[Inclosure.]
Consul Williams
to Chargé MacMurray.
No. 6.]
American Consulate,
Nanking,
August 11, 1914.
Sir: I have the honor to enclose a copy of
a communication from the Anhui provincial authorities giving notice
of a proposed tax on alcoholic beverages and tobacco. It appears
that this tax is to be levied and collected on the sale of the
commodities concerned, and is additional to the collection of a
licensing fee from the dealers. Indeed no attempt has been made to
disguise this tax under the name of a licensing fee, as has been
done in some other ports of China, and it should be noted that the
avowed objects of the tax are not only to raise revenue but to
penalize a trade the legitimacy of which has never before been
questioned, and which has received the formal sanction of the
Government by inclusion in the conventional tariff.
While it is not believed that any American interests are directly
involved, the measure appears to be such a flagrant violation of
treaty, in so far as it authorizes the collection of a tax in a
treaty port on foreign imported goods, that I propose to protest
vigorously against it, unless otherwise instructed by the
Legation.
If the tax is uniformly enforced against native as well as foreign
goods, it is difficult to find any effective grounds for protest in
the case of shipments into the interior without the protection of a
transit pass. But it should be remembered that the authorities do
not admit that a transit pass frees goods from the collection of
“loti shui,” a species of which they appear to consider this new tax
to be; on the other hand it is commonly reported that goods which
pay likin are frequently freed from the payment of “loti shui.” It
is therefore morally certain that an attempt will be made to collect
the proposed tax on goods shipped into the interior under transit
pass.
To show the extent to which the violation, under the guise of “loti
shui,” of the treaty exemption from inland taxation of goods covered
by transit pass has been carried by the Anhui authorities, I submit
copies of correspondence46 between the Wuhu agency of the Standard Oil
Company and this office, reporting an attempt to collect this tax on
goods destined for points without the province; in other words, the
fiction that “loti shui” is a local tax collected at the point of
destination was permitted to give way for a space to the truth, that
it is simply likin, or a duty on internal trade, under another name
and collected in a slightly different way in order to avoid an open
breach of the
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treaty
obligation to respect transit passes. As will be seen from the
correspondence, the goods held at the border have been released,
thanks to the intervention of the British Consul at Wuhu.
This matter is cited here, as it is believed that the proposed tax on
liquor and tobacco is but a part of a general scheme to tax foreign
trade in Anhui. Its enforcement in Wuhu would be, I believe, the
first time an attempt has been made to collect a consumption,
destination or similar tax in a treaty port.
It is hoped that sufficient pressure may be brought to bear in Peking
to secure the issuance of such a reprimand or such instructions as
may cause the Anhui authorities to respect China’s treaty
obligations. I have [etc.]
