The Minister in Switzerland ( Harrison ) to the Secretary of State

No. 155

Sir: I have the honor to refer to the Department’s instruction No. 80 of November 11, 1937, and to report the action taken in compliance with the directions therein with regard to the four percent tax on customs receipts levied by the Swiss Government.

On receipt of the Department’s instruction under reference, and after careful review of the record and all available information regarding this matter, it appeared that no intimation with respect to the eventual application of the tax had been given to the Legation by the Swiss authorities other than the informal offer by Dr. Stucki to Mr. Wilson, during their conversation at Geneva in 1936, to confirm in writing his assurance that the tax would not be increased. Also, it appeared that provision for the continuance of the tax had been incorporated in the Budget of the Confederation for 1938, which was submitted to the Federal Assembly on October 29, 1937, and is due for consideration and passage by the Swiss Parliament during the current month.*

In the absence of Dr. Stucki, I called upon Dr. Hotz, Director of the Commercial Division of the Federal Department of Public Economy, and after referring to the correspondence on the subject, of which he took note, I explained the Department’s understanding that the tax was due to expire at the end of this year; also its desire to be assured that the tax would lapse at that time. In reply, Dr. Hotz referred to the fact that the new Budget provided for continuance of the tax in 1938. As to the duration of the tax, he could only suggest that possibly the hope might have been expressed that with a general vote of the people this year concerning the Government’s present emergency powers in the field of economic legislation the tax would have been discontinued. However, in all frankness he personally questioned the expediency or desirability of putting such an important [Page 578] question to a general vote, all the more so at this time when financial and economic questions were so complex and difficult. He could, however, assure me that the tax would not be increased. Furthermore, he said, except for the Netherlands, the import duties of Switzerland were the lowest in Europe; their average amounted to about six percent. With the tax included, this meant an average duty of 6.24 percent. Thus, in itself the tax could not, he claimed, be considered as constituting a barrier to trade; neither had there been any such desire or intimation when it had been enacted by Parliament.

Subsequently, when on December 17 he handed me his answer to my note of October 12 with regard to the treatment of American automobiles shipped on consignment, under bond, to dealers in Switzerland (please see my despatch No. 153 of December 21, 1937), Dr. Hotz referred to our previous conversation with respect to the four percent tax on customs receipts and recalled the particular circumstances under which the tax had been enacted. It had, he said, been included in the financial program for 1936 which should have been passed by Parliament during December 1935; that this was, and is, the regular procedure; that by reason of some delay at the last moment, which the newly elected Federal Councillor Meyer hesitated forcefully to overcome, the bill had been carried over into the January session of the Parliament and had been enacted in its original form subsequent to the signature of our commercial agreement; that this sequence of events had been most unfortunate and regrettable, and that he hoped that the Department would understand the very difficult situation in which they were placed. I had the impression that Dr. Hotz had probably discussed the matter with Dr. Stucki, who has recently returned to Bern, and that he was, in fact, begging us not to press the matter and thus spare the Government considerable embarrassment.

In view of all the circumstances of this case, as well as the fact that there appear to have been no protests recently against the tax in question by American importing interests, and particularly in view of the extremely receptive and cooperative attitude of Dr. Hotz and the Commercial Division of the Federal Department of Public Economy in general, I would respectfully recommend that the matter be not pressed and that for the time being we await developments.

Respectfully yours,

Leland Harrison
  1. Adopted by the Federal Assembly on December 21, 1937. The section concerning the “Customs Administration” contains an item of 8,500,000 francs as the estimated return for 1938 from the “stamp tax on customs receipts (droits de timbres sur les quittances de douanes)”. [Footnote in the original.]