File No. 639.003/48
The Military Governor of Santo Domingo ( Knapp) to the Secretary of the Navy ( Daniels) for the Secretary of State
No. 1580–18 K–F1
Santo Domingo,
November 6, 1918.
- 1.
- About the time of my leaving the Dominican Republic for Washington in the early part of July, considerable discussion had taken place concerning the advisability of gathering together in one law, which should be called the law of internal revenue, the different laws bearing on that subject. The matter was not ready for my action when I left, but Executive Order No. 197, establishing such a law, was issued in my absence by the Acting Military Governor on the 19th of August 1918.
- 2.
- During the examination of this matter I found, to my great surprise, that in the two laws called the ley sobre estampillos and the ley sobre la renta de alcoholes there were taxes laid on importations other than the taxes laid in the customs law of November 23, 1909, ley sobre aranceles ole importación y exportatión, which last was issued with the consent of the United States as is required by Article [Page 390] 3 of the convention between the United States and the Dominican Republic concluded February 8, 1907.
- 3.
- The laying of import taxes in any laws other than the customs law seemed to me so much open to suspicion, that I at once looked up the matter and found that it had been the subject of correspondence between the two governments; the ultimate issue having been that the United States consented to the taxes laid in these laws but adhered to the principle that no such tax could be laid in the future without reference to and approval by the United States Government, under the terms of the convention.
- 4.
- The correspondence referred to above also discussed the subject of municipal surtaxes that had been laid on imports, and with the same result; that, while the United States consented to such taxes as were then in existence, it still reserved the right to have submitted to it for approval any such proposed scheme of taxation. Many requests have come from municipalities to raise the revenue by surtaxes on imports and I have consistently declined to approve such proposals.
- 5.
- In preparing Executive Order No. 197, the terms of the law of stamps and the law of alcohol, in so far as they related to imports, were left out of the new law. I consider it contrary to every correct principle of taxation that an import tax should appear in an internal revenue law; and I now contemplate, if the Government of the United States approves, removing entirely from the internal revenues all taxes laid upon imports. In some instances I deem it wise to abolish the taxes altogether. In other instances, where the tax is not abolished, I purpose putting it as an amendment to the customs law, where, in my opinion, it properly belongs.
- 6.
- The change proposed will increase the customs revenues, which are those that come within the purview of the American-Dominican convention. On the other hand the change will decrease the revenues available for current use unless special provision is made to the contrary. The Dominican Government is in need of all its current revenue for the necessary expenses of administration, including the remedial measures that have been inaugurated by the Military Government, and that revenue should not be curtailed. The estimate of available revenue for 1919 is less than that which will have been available for 1918, and it is therefore very important that no source of revenue available for current use by the Dominican Government shall be decreased. For this reason I very earnestly request approval of the condition placed in the proposed Executive order (paragraph 4) amending the customs law to the effect that the total amount raised by the transfer from the law of stamps and the law of alcohol to the customs law shall remain available to the Dominican Government for its ordinary expenditures. On the basis of $4,000,000 customs revenue per annum, there will be available for current revenue, after all deductions now required are made, $1,600,000 per annum, so that the increase to the customs that the proposed change will bring about is not necessary to meet any stated obligations; it is, however, very necessary for current expenditures. Four millions is regarded as the minimum revenue ever to be anticipated in future with the present customs laws; with greater customs revenue there will be even less need for the proposed surtax as insurance to provide for stated obligations.
- 7.
- In the proposed amendment to the customs law, the items of importation placed therein, on which revenue is now collected under the internal revenue law, are of two general classes: first, articles which are manufactured in the Dominican Republic and which may reasonably be considered to be worthy to a certain measure of protection; second, articles that may generally be included in the class of luxuries, including alcohol and alcoholic drinks. The rates in the amendment to the customs law proposed are, generally speaking, lower than those now existing, but they are consolidated and made into one rate of a kind that can be readily collected, thus doing away with the intricacies and defects in administration that inhere in the present law. Appended, marked “C”, is an analysis of the change in the law upon the total tax as now collected.
- 8.
- I append suggested drafts of executive orders marked “A” and “B” to cover the changes proposed in this letter, with the earnest recommendation that they receive the approval of the Government of the United States. I do this, not only because I believe that I have no authority to issue the one of these orders marked “B” without such approval under the terms of the convention, but also because I desire to establish a very solid precedent that no modification in any direction, whether by way of increasing or decreasing rates of taxation upon imports into the Dominican Republic, is permissible without the previous consent of the United States Government, so long as the American-Dominican convention of 1907 shall remain in existence.
- 9.
- I request as prompt action upon this letter as may be possible, in order that the change may be made effective on January 1 next. Commander Hagner, Pay Corps, United States Navy, of my staff, who is now in Washington, is familiar with this matter, and will be instructed to make in person any explanations that may be desired in addition to those herein contained, if this correspondence finds him still there.
H. S. Knapp