The Chargé at Tangier ( Rand ) to the Secretary of State

No. 169

Sir: The arrangements recently made with the Spanish Authorities in Morocco, by means of conversations between the Department and the Spanish Ambassador in Washington, in regard to the payment by American citizens and protégés of consumption taxes imposed on certain commodities, having led me to an examination of the position of American ressortissants in regard to similar taxation [Page 592] in the Zone of the French Protectorate, I have the honor to report as follows:—

There is in the files of the Agency a communication from the French Resident-General, dated January 4th, 1923, a translation of which together with translations of the “Dahirs” mentioned therein, is annexed hereto.10 The French Resident-General requests this Agency to adopt the measures required to make applicable, to American ressortissants, the provisions of the “Dahirs” referred to (eventually promulgated on January 8th, 1923) increasing the rates of sumptuary taxes created by “Dahirs” of anterior date.

The Agency’s reply to the Resident-General, under date of January 12th, 1923, was to the effect that the legislation in question would be submitted to the United States Government for its consideration and instructions. Such action, however, appears by some inadvertence, not to have been taken.

Although, as shown by the annexes hereto, the Franco-Shereefian Authorities have duly solicited the authorization of the American Government to make applicable to American citizens and protégés, the legislation increasing the rate of existing consumption taxes, no such request appears to have been made in regard to the original “Dahir” creating the taxation.

In this connection, the Department is respectfully referred to a Despatch from the American Legation, Tangier, No. 518 of February 7th, 1916,10 under the signature of Maxwell Blake, as Chargé d’Affaires, transmitting the text of the Shereefian “Dahir” dated December 12th, 1915 establishing a consumption tax on sugar imported into the French Zone of Morocco. Mr. Blake commented fully on the “Dahir” and set forth the legal aspects of the legitimacy of such imposition, from the point of view of the treaties between the Powers and the Shereefian Empire.

No instruction appears to have been received from the Department in response to the aforementioned Despatch, but no difficulties have arisen in connection with the imposition of the taxes in question, so far as concerned American ressortissants in the French Zone of Morocco, as the latter, if they were interested in the importation of sugar, appear simply to have submitted to the taxation without question.

In the absence of any record of protest from persons under American jurisdiction in the French Zone, it is presumed that the latter also accepted without demur the subsequent legislation increasing and amplifying the effect and incidence of the sugar tax.

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However, the attitude assumed by Great Britain, Holland and the United States, in regard to the application of similar taxation in the Spanish Zone, clearly indicates that such measures in all parts of the Shereefian Empire are subject to the same conditions, namely, that the terms of the treaties require the previous assent of the Powers concerned, before their respective ressortissants can be subjected to the payment of such taxation.

From the communication of the Resident-General, annexed hereto, it is obvious that the Franco-Shereefian Authorities, contrary to the position they appear to have assumed according to the report of Mr. Blake, when the original taxation on sugar was created in 1915, now concur in the above interpretation of the treaties, since application is made for the assent of the United States Government to make American citizens and protégés liable to the payment of the taxes on the basis of their modified rates.

In requesting the Department’s instruction relative to the terms of the reply to be made to the Resident-General’s request herewith transmitted, the Agency desires to be informed whether any reference should be made to the absence of such request in regard to the original “Dahir,” or whether the reply should be limited to the formal consent of the United States Government to the application of these measures, as proposed, the present solicitation made by the French Resident-General being considered equivalent to a satisfactory compliance with the treaty principles involved.

In connection with the “Dahirs” enumerated in the Resident-General’s letter herewith, it is perhaps appropriate to signalize a point of special interest in relation to the “Dahir” of June 8th, 1922, extending the tax on sugar to manufactured products containing sugar.

The preamble to the provisions of the last mentioned “Dahir” states that the local trade has pointed out that the manufacture, in Morocco, of liqueurs and confectionery encounters undue competition, owing to the fact that similar articles imported from abroad are at present subjected to customs duty only, and do not pay the additional charges represented by the consumption tax on their sugar content. The object of the “Dahir”, it is stated, is to terminate such inequality, prejudicial both to the treasury and to local industry, by bringing imported manufactured products under the sugar tax.

This argument is perhaps not altogether ingenuous, since although imported articles had, until the promulgation of the “Dahir” in question, escaped the consumption tax on their sugar content, yet on the other hand they are and have been subject to the payment of import duty on their other constituent parts, on packing, [Page 594] on freight, on wages and other overhead charges included in their assessable value at the customs house, representing an amount in duty to which the locally manufactured goods are not subjected.

The raising of revenue is but a secondary objective of the “Dahir” in question, its main purpose admittedly being to “equalize” competition between the local and the foreign manufacturer, and the particular point of interest appears to be that, in these dispositions, there may perhaps be discerned, the initial steps towards the eventual introduction, into the Moroccan economic regime, of a protective tariff for home industries.

I have [etc.]

Elbridge D. Rand
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