CHAPTER XXXV INDIRECT TAXES CONFUCIUS does not like indirect taxes. According to his view, there should not be any such taxes at all. This opinion appears to be justified not only by reason but by reference to the history of taxation in China. During the first part of the Han dynasty (346-422 A. K. or 206-130 B. C.), the Sui dynasty (1134-1168 A. K. or 583-617 A. D.), and the first part of the Tang dynasty (1169-1306 A. K. or 618-755 A. D.), there were practically no indirect taxes. Yet the government was very rich, and the people were very prosperous at this period, except during the revolution at the end of the Sui dynasty (1162-1173 A. K. or 611-622 A. D.). In later times, however, the government has never been able to get along without indirect taxes. This will appear from the account of the historical development of the indirect taxes from the Chou dynasty to the present day, to which we will now proceed. I. CUSTOMS DUTIES Confucius is an extreme free-trader, in regard to both internal and foreign trade.1 But, according to the Official System of Chou, there were three places where commodities were taxed-the external custom-house (kuan), the internal custom-house (mên), and the market-places (shih). Commodities might be taxed at only one of these three places, but it was necessary to show receipts for the taxes paid be 1 Cf. supra, pp. 453-4. fore they could pass any one of them. When a commodity was imported, a receipt was issued by the external customhouse when the import duty was paid, and this was examined on passing into the internal custom-house and market. When a commodity was exported, a receipt for the export duty was first issued by the controller of the market, and then examined as it passed through the internal and external custom-houses. The three authorities coöperated in order to prevent smuggling. Therefore, the Chou dynasty did not allow free trade in any commodity.1 I. Customs Duties on Internal Trade After the Ch'in dynasty had consolidated the feudal states into a single nation, the internal trade of China was far more important than the foreign trade. Therefore, we shall first consider the inland customs of different dynasties. According to history, from the Ch'in dynasty to the first part of the Tsin dynasty, customs duties did not exist. Therefore there was free trade, internal as well as external. Customs duties were first revived by the Eastern Tsin dynasty. From the Eastern Tsin to the Southern Chen (868-1140 A. K. or 317-589 A. D.) custom-houses were established along the waterways. Such commodities as fuel, charcoal, fish, etc., were taxed at ten per cent. Under the Sung dynasty, the general rate of commodity tax when the commodity passed through inland customs was two per cent ad valorem.2 In later history, there was only one period during which the Confucian doctrine of absolutely free trade was realized. In 1713 A. K. (1162 A. D.) Kin Shih Tsung abolished all customs duties, and the custom-houses were ordered to in 1 Chs. xiv, xv. General Research, ch. xiv. spect passengers only. This reform was proposed by Chang Chung-yen. 1 The present dynasty has twenty-six principal customhouses of the old type. They are both inland and maritime custom-houses. All the sub-stations established by each of them for the collection of duties and for inspection and search are confined to certain places. The general rate of duties is three per cent ad valorem. Many custom-houses require a customs fee, one-tenth of the duty itself, for administrative expenses. If there is no fee required, the expenses are defrayed by "the additional amount." The amount of collection of each custom-house is fixed, and it is divided into two parts, "the regular amount" and "the additional amount." When the duties collected fall below these fixed amounts, the director is responsible for the deficit; when they are above these limits, he should send to the government the actual amount collected." (a) Tax on Ships Han Wu Ti began to tax the ships of merchants (423) A. K. or 129 B. C.). A ship over fifty feet long paid one hundred and twenty coins annually. It was simply a tax upon the instrument of trade. During the Five Dynasties (1458-1510 A. K. or 907-959 A. D.) there was a tax on ferry-boats. It was abolished by Sung T'ai Tsu (1511), but revived in later times (at least in 1622). In 1630 A. K. (1079 A. D.) the government established public warehouses and transported merchants' goods with government ships, in order to charge a tax for the ships. Yet private ships were freed from tax. It was only during the Southern Sung dynasty that ships were illegally taxed 1 Continuation of the General Research, ch. xviii. The Institutes of the Ts'ing Dynasty (Ta Ts'ing Hui Tien), chs. xxiii, lviii, lx. General Research of the Present Dynasty, ch. v. by local officials. The regular tax tax upon ships, as a tonnage duty collected by special officers, really began at the end of the Yüan dynasty, but was repealed after three years (1888-1891 A. K. or 1337-1340 A. D.). The Ming dynasty established seven inland custom-houses for the collection of tonnage duties in paper money in 1980 A. K. (1429 A. D.). In 2076 A. K. (1525 A. D.) their number was twelve. All of them collected only tonnage duties from the ships, with the exception that two collected the commodity tax also. From 2031 to 2080 A. K. (14801529 A. D.) all the "paper-money custom-houses gradually substituted for the collection of paper money the collection of silver. In the present dynasty, tonnage duties still exist. (b) Tax on Passengers The most objectionable form of taxation in Chinese history was the tax upon passengers. In 451 A. K. (101 B. C.) Han Wu Ti taxed the passengers in Wukuan, an important pass, for the expenses of its keepers. In the Northern Wei dynasty (1077 A. K. or 526 A. D.) and the Northern Chou dynasty (1131 A. K. or 580 A. D.), people coming to the market-places were taxed, one coin for one person; but such tax was abolished in 1132. Fortunately. these were the only cases. (c) Likin Besides the customs duty, there is the likin, or contribution of one-thousandth. It is a tax on commodities when they pass through any likin barrier. In 2404 A. K. (1853 A. D.), when the T'ai-p'ing rebels captured Nanking, the sources of revenue for military expenditures were cut off. Therefore, Lei Yi-hsien, a military officer, created the likin At the beginning, it was a voluntary contribution from the merchants, and the government promised that it tax. should be abolished as soon as the rebellion should be put down. This tax was an important factor in preserving the present dynasty. But the government has not kept its promise, and the tax has now become an intolerable burden. Its legal rates vary in different provinces-some are one or two per cent, and some are five or nine per cent. According to the budget of this year (2462 A. K.), the total sum of likin is 43,187,907 taels.1 It will be abolished in the near future. 2. Customs Duties on Imports and Exports Before the Sung dynasty, the import duty levied on foreign goods was unknown. In 1522 A. K. (971 A. D.) the first maritime custom-house was established in Canton. Its purpose at first appears to have been regulation rather than revenue. The rate of customs duty was first made twenty per cent in 1542 A. K. (991 A. D.). During the reign of Sung Jên Tsung (1574-1614 A. K. or 1023-1063 A. D.), three maritime custom-houses were established in different places-Hangchow, Ningpo and Canton. Ten per cent of commodities was taken as import duties, and the government bought thirty per cent at reduced prices. In 1698 A. K. (1147 A. D.) the annual revenue, raised from both the duties and the purchases, amounted to two million strings. In 1715 A. K. (1164 A. D.) the system of government purchase was abolished, and the rate of duty was fixed at ten per cent.2 The tariff of the Yüan dynasty was changed several times. In 1828 A. K. (1277 A. D.) general commodities were taxed at the rate of one-tenth, and coarse commodities onefifteenth. A distinction was drawn between native goods This sum is mixed up with other minor taxes. 'General Research, ch. xx. |