REVENUE--CUSTOMS TARIFF
The revenues and expenditures of the Island of Cuba for the fiscal year
1898-99, according to the reports obtained by the author from the
Secretary of the Treasury, Marquis Rafael Montoro, may be thus
summarised:
BALANCE OF THE ESTIMATED RECEIPTS AND EXPENDITURES OF THE BUDGET OF THE
ISLAND OF CUBA FOR 1898-99
--------------------------------------+-----------------------------------
Expenditures. Amount. | Receipts. Amount.
--------------------------------------+-----------------------------------
Sovereignty | Taxes and Imposts $ 6,142,500
Expenditure $22,500,808.59 | Custom-Houses 14,705,000
_Local._ | Internal Revenue 1,640,650
General Expenditures 159,605.50 | Lotteries 1,900,500
State-Church, Justice, | State Property 435,000
and Government 1,612,859.44 | Miscellaneous Revenue 1,536,000
Treasury 708,978.51 | -----------
Public Instruction 247,033.02 | Estimates of Total
Public Works and | Revenue $26,359,650
Communications 1,036,582.10 |
Agriculture, Industry, |
and Commerce 108,178.52 |
-------------- |
$26,374,045.68 |
Deduct Amounts not |
Specified 17,314.27 |
-------------- |
Total $26,356,731.41 |
Receipts $ 26,359,650.00
Expenses 26,356,731.41
---------------
Surplus $2,918.59
--------------------------------------------------------------------------
While the revenues are all derived from the various species of taxation
exacted from the people of Cuba, the expenditures are divided into two
important classes: those under the head of "Sovereignty Expenses," or
expenses of the General Government, which, according to this estimate,
aggregate $22,500,808.59, and those which, under the head of "Local
Expenses" aggregating $3,873,237.09, constitute the expenditures for the
immediate necessities of the Island. In order to obtain a clear view of
the possibilities of revenue and the probable future expenses of the
Island of Cuba, these receipts and expenditures should be further
examined.
Taxes in Cuba, as will be seen from the above exhibit, are collected
under six general classifications, namely: (1) taxes and imposts,
including excise and liquor taxes, and taxes on railway freight and
passengers; (2) receipts from custom-houses, which include taxes on
imports and exports, loading and unloading merchandise, fines and
passports; (3) internal revenue, including stamped paper,[14] postage
stamps, warrants for payment issued by the State, diplomas and titles,
stamps on letters of exchange or deeds of transfer, on insurance
policies, on matches, and on almost every other conceivable sort of deed
and document; (4) lotteries, are put down in the above table as yielding
$1,900,500; (5) revenue from State property, including rents and sale of
lands and rent from docks; (6) revenue from miscellaneous sources, some
of which seem somewhat mythical. These comprise the general sources of
revenue which appear in this report, and from which the Secretary of the
Treasury, Marquis Montoro, informed the author he hoped to secure for
the fiscal year 1898-99 the following sums:
Estimated Amount
Sources of Revenue. Spanish Gold.
Taxes and Imposts $ 6,142,500
Custom-Houses 14,705,000
Internal Revenue 1,640,650
Lotteries 1,900,500
State Property 435,000
Miscellaneous Revenue 1,536,000
----------
Total Estimated Revenue $26,359,650
As to how much of this has been collected or how much can be collected,
it is impossible to say with any degree of certainty. Spanish official
reports are not very reliable documents at the best, and during the last
three years of internal dissensions, frequent changes in officials, and
war, they appear to be at their worst. The only possible light on the
subject which the author was able to obtain was a statement of the
actual taxes as levied between 1887 and 1897, inclusive, and the actual
amounts collected at the custom-houses and by the Spanish Bank of the
Island of Cuba, for under Spanish administration the latter institution
collected all taxes other than customs.
According to these figures, the custom-house receipts of Cuba fell from
$14,708,509.10 in 1895 to $9,648,369.94 in 1897-98. While the value of
the tax receipts handed to the Spanish Bank for collection for the
fiscal year 1896-97 exceeded $5,000,000, the actual money collected was
only $3,266,583.37, while for the next fiscal year, 1897-98, out of
receipts aggregating in the neighbourhood of $4,500,000, only
$2,377,742.21 was realised. The exhibits show that rural real estate,
which, under prosperous conditions, should yield in taxes from $880,000
to $1,000,000, is incapable of paying anything. Out of receipts
aggregating in 1897-98 over $800,000, the Spanish Bank only collected
$89,661.98 from these properties. Nor will it be possible in the
reconstruction of the Island to secure revenue from these sources, for
the burned and destroyed estates are yielding nothing to their owners.
City property which, in times of prosperity, should yield upward of
$2,000,000, or even $3,000,000, in 1897-98 only yielded $1,140,230.12.
This tax, however, and the receipts from customs will be the first to
recover, as the immediate effects of permanent peace and honest
government will be felt in the cities and towns and seaports. Lotteries
will become a doubtful, if not impossible source of revenue. The
collections from internal revenue may keep up to the estimate, though
the income from State property and miscellaneous revenues seems upon
examination a rather doubtful resource for the new government to rely
upon. Judged from the actual revenue collected in 1897-98, had present
conditions prevailed, it is extremely doubtful if the real revenue
collected for 1898-99 would have reached more than half the rosy
estimates put forth by the Marquis Montoro. The fact is apparent to
those who know existing conditions in Cuba that the people of the Island
are just now in such an impoverished condition that the agricultural
interests are simply incapable of paying taxes.
The cities will soon be all right again, and under honest municipal
government, taxes on urban property will be paid. The influx of
commodities of all sorts, to make up for losses and destruction by war
and low stocks due to the blockade, will increase the custom-house
receipts. The reduction of duties on machinery and railway supplies may
increase the importations of these articles, and thus the lower rates of
duty will yield a revenue which the present high rates, by making
importations impossible, fail to do. By putting an end to smuggling, and
by honestly administering the custom-houses, the United States
Government may increase the revenue, but the proposed reduction of
duties of the amended tariff in a measure offsets this. Unless,
therefore, some new source of revenue is found practicable (and the
Spanish seem to have exhausted all known means of raising revenue),
reliance for the future will have to be on five of the six revenue
sources above enumerated. If for the first year or two they should yield
in all $15,000,000, it will probably be all the revenue that may safely
be estimated. Much will naturally depend upon the foreign imports. The
cable despatches from Havana, as this volume goes to press, indicate
that the customs revenue will be fully up to the author's estimates.
Aside from special imports, such as specie, leaf tobacco, etc., the
value of the imports of merchandise proper into Cuba the last normal
year (1895) was upward of $60,000,000. An average tariff rate of
twenty-five per cent. on this valuation of imported merchandise would
itself yield $15,000,000. As a matter of fact, the duties collected in
1895 were $14,587,920.57, on a total importation of merchandise other
than specie of $61,443,334.65, or about an average of twenty-five per
cent. To be sure, the nominal tariff rates were much higher in 1895 than
they will be in 1899, but there is a possibility of making up for the
loss by reason of lower duties by abolishing smuggling and honestly
administering the custom-houses. It is impossible, however, to estimate
on this, because, to do so with any degree of success, it would be
necessary to reduce to figures the losses of revenue by smuggling,
undervaluation, and misclassification. This is an impossibility.
The tariff which the Spanish Government enacted and put in force in the
Island of Cuba in September, 1897, and which, with modifications in the
shape of war taxes, was in force in ports of Cuba in possession of the
Spanish Government until the change of government, January 1, 1899, is
based upon the preceding tariffs. Both this tariff and its predecessors
seem to lack rational basis, so far as Cuba is concerned, the aim
apparently being to secure, by the means of exorbitant customs duties
revenue for the Spanish exchequer and profits for Spanish subjects,
without the slightest regard for the welfare of the people of Cuba.
While the duties seem to have been levied with this idea, the
classifications and methods of administration are so complicated and
obscure that they easily lend themselves to every known species of
revenue fraud, from false classifications and undervaluations to
smuggling of the most barefaced character. In fact, the author, after a
careful inquiry into the Cuban tariff and an examination of several
hundred witnesses in Havana and other cities of Cuba, reached the
conclusion that almost every form of revenue iniquity has been
perpetrated upon the people of this Island by the ruling powers.
Not only was the tariff constructed in a way that compelled the Cuban
producer to purchase the articles he needed and could not himself
manufacture, of Spain, instead of in the cheaper markets, but also it
levied almost prohibitive duties on such articles as Spain could not
under any circumstances send to Cuba. For example, the Spanish exporter
was able, by a discriminating duty of more than one hundred per cent.
against other countries, to import from Minnesota to Barcelona American
flour and reship it to Cuba at a price just below the price of the
American article shipped direct to Cuba, upon which a duty nearly three
times as great as that exacted from Spain had to be paid. On the other
hand, Spain took little interest in such articles as machinery and
railway supplies, including steel rails and locomotives, because she
neither produced them nor could she purchase elsewhere and reship as
Spanish production.
The amended tariff for the Island, which went into force January 1,
1899, was framed on the general plan of the "open door" for all nations;
that is, the merchandise of all nations will be admitted on an equal
footing, or at the same rate of duty. There is but one uniform rate of
duty, and that, as far as possible, a revenue, not a protective rate. In
a few cases, a protective rate has been allowed, for the purpose of
encouraging Cuban home industry, but as over half of all the imports
into Cuba are food products, not produced to advantage in the Island,
the rates of duty rarely exceed twenty-five per cent. ad valorem. In
this connection, it will be interesting to note the value of the
merchandise imported, divided by schedules or classes (page 217).
It will be seen from the following exhibit that Schedule 12, "Alimentary
Substances," covering all food products, is the most important of all
the schedules, representing more than half the total imports into Cuba
during 1895, and aggregating over $31,000,000. Next in importance to
this is Schedule 4, "Cotton and Manufactures thereof," aggregating
nearly $6,000,000, or ten per cent. of the total imports; Schedule 1,
"Ores, etc.," aggregating in the neighbourhood of $4,750,000, ranking
third, and so on through the list.
TABLE SHOWING VALUE OF IMPORTS INTO CUBA BY TARIFF CLASSES FOR THE LAST
NORMAL YEAR, 1895-96
----------+---------------------------------------------+---------------
Number of | | Value Imports,
Schedule. | Commodity. | 1895-96.
----------+---------------------------------------------+---------------
Class I. | Stones, earths, ores, etc. | $ 4,733,358.12
" II. | Metals, and manufactures of | 2,063,281.95
" III. | Pharmacy and chemicals | 2,166,414.92
" IV. | Cotton, and manufactures of | 5,908,202.23
" V. | Hemp, flax, jute, and other vegetable |
| fibres and manufactures of | 3,587,713.23
" VI. | Wool, bristles, etc., and manufactures of | 1,060,192.13
" VII. | Silk, and manufactures of | 315,010.00
" VIII. | Paper and its applications | 1,257,132.94
" IX. | Wood, etc., and manufactures of | 2,054,057.57
" X. | Animals and animal wastes | 3,880,209.64
" XI. | Instruments, machinery, etc. | 2,123,315.43
" XII. | Alimentary substances | 31,179,289.98
" XIII. | Miscellaneous | 1,115,156.51
| +---------------
| | $61,443,334.65
----------+---------------------------------------------+---------------
In conjunction with the above table, the following recapitulation of
values of exports and reshipments into Cuba during 1895-96 is given:
RECAPITULATION OF VALUES OF EXPORTS AND RESHIPMENTS IN CUBA DURING
1895-96
------------+---------------+---------------+
| First | Second |
Exports | Quarter | Quarter |
------------+---------------+---------------+
Classes of | | |
goods: | | |
Timber | $ 286,190.70 | $ 267,068.47 |
Cigars | 6,616,458.97 | 4,374,938.70 |
Sugar | 26,288,456.91 | 30,457,278.50 |
Molasses | 427,886.11 | 1,010,657.35 |
Rum and | | |
liquors | 352,393.44 | 292,808.18 |
Other | | |
articles | 1,332,714.86 | 2,538,509.69 |
+---------------+---------------+
Total | 35,304,100.99 | 38,941,260.89 |
+---------------+---------------+
Reshipment: | | |
Foreign | | |
goods | 15,462.65 | 8,477.91 |
Spanish | | |
goods | 61,343.08 | 27,477.62 |
+---------------+---------------+
Total | 76,805.73 | 35,955.53 |
+---------------+---------------+
Special | | |
exports | 207,477.55 | 166,881.15 |
+---------------+---------------+
Grand | | |
total |$35,588,384.27 |$39,144,097.57 |
------------+---------------+---------------+
------------+---------------+---------------+---------------
| Third | Fourth |
Exports | Quarter | Quarter | Total
------------+---------------+---------------+---------------
Classes of | | |
goods: | | |
Timber | $ 200,878.03 | $ 130,463.90 | $ 848,601.10
Cigars | 6,389,770.95 | 6,666,672.71 | 24,047,841.33
Sugar | 10,679,269.55 | 7,572,016.36 | 74,997,021.32
Molasses | 152,205.65 | 8,846.30 | 1,599,595.41
Rum and | | |
liquors | 267,277.53 | 121,991.00 | 1,034,470.15
Other | | |
articles | 2,738,024.01 | 1,112,242.44 | 7,721,491.00
+---------------+---------------+---------------
Total | 20,427,425.72 | 15,612,232.71 | 110,285,020.31
+---------------+---------------+---------------
Reshipment: | | |
Foreign | | |
goods | 17,567.05 | 27,524.08 | 69,031.69
Spanish | | |
goods | 28,718.17 | 29,276.53 | 146,815.40
+---------------+---------------+---------------
Total | 46,285.22 | 56,800.61 | 215,847.09
+---------------+---------------+---------------
Special | | |
exports | 2,092,960.13 | 153,326.30 | 2,620,645.13
+---------------+---------------+---------------
Grand | | |
total |$22,566,671.07 |$15,822,359.62 |$113,121,512.53
------------+---------------+---------------+---------------
The grand total of the trade of the Cuban ports for the last normal year
was nearly $175,000,000. Perhaps with allowance for smuggling and
undervaluations, this total may have reached $200,000,000; possibly it
may have exceeded those figures. However this may be, Cuba, under a
satisfactory government and normal conditions, may be easily said to
represent from $200,000,000 to $250,000,000 in the world's commerce.
This fact gives some idea of the vast trade possibilities of Cuba after
a complete rehabilitation and industrial reconstruction of the Island.
In the following table the author has carefully compiled from the
several available sources of information the average receipts from 1886
to 1897, inclusive, of the several custom-houses of Cuba:
TOTAL CUSTOM-HOUSE RECEIPTS IN ISLAND OF CUBA FROM 1886 TO 1897,
INCLUSIVE
------------------------+-----------------+----------------+---------
| Total for | Average per | Ratio of
Custom-Houses. | Twelve Years. | Year. | Total.
------------------------+-----------------+----------------+---------
Havana | $106,132,753.38 | $ 8,844,396.11 | 69.9
Cienfuegos | 13,691,144.65 | 1,140,928.72 | 9.0
Matanzas | 9,381,754.10 | 781,812.84 | 6.2
Santiago de Cuba | 7,668,501.66 | 639,041.81 | 5.1
Cardenas | 4,363,935.76 | 363,661.32 | 2.9
Sagua la Grande | 2,994,082.56 | 249,506.88 | 2.0
Caibarien | 1,705,523.71 | 142,126.97 | 1.1
Nuevitas | 1,564,595.30 | 130,382.94 | 1.0
Guantanamo | 1,380,693.44 | 115,057.79 | 0.9
Gibara | 1,186,480.34 | 98,873.37 | 0.8
Manzanillo | 913,896.91 | 76,158.07 | 0.6
Baracoa | 373,498.11 | 31,124.85 | 0.2
Trinidad | 194,656.85 | 16,221.40 | 0.1
Santa Cruz | 107,935.59 | 8,994.63 | 0.1
Zaza | 91,276.51 | 7,606.38 | 0.1
------------------------+-----------------+----------------+---------
Total | $151,750,728.87 | $12,645,894.08 | 100.00
------------------------+-----------------+----------------+---------
During the twelve years, it should be stated the largest amount of
revenue was collected in 1886, when it was $15,330,778.96, and the
smallest amount last year, namely, $9,648,369.94. The receipts show the
working of the Reciprocity Treaty with the United States, which, while
it greatly added to the prosperity of the Island, decreased the revenues
which Spain sought to secure for herself.
From the above table it will be seen that the total amount of revenue
collected during these twelve years averaged $12,645,894.08 per year;
that the custom-house of Havana collected 69.9 per cent, and
Cienfuegos--which is an important city, and, in the opinion of the
author, the city which, under the new conditions, will show the most
rapid development--9 per cent., ranking second. In the custom-house
district of Santiago, the average revenue receipts per year have been
5.1 per cent. The inclusion in this district of Guantanamo, Gibara,
Manzanillo, and Baracoa will probably increase the collections for the
province to nearly ten per cent. of the total revenue of the Island.
The following is a similar table to that given above, but gives at a
glance the customs receipts from imports and exports at each port:
RECEIPTS FROM IMPORTS AND EXPORTS--1886-1897
----------------+---------------------------+-------------------------
| IMPORTS. | EXPORTS.
+---------------+-----------+--------------+----------
| | | |
| Average | Per Cent. | Average | Per Cent.
Custom-Houses. | Twelve Years. | of Total | Twelve Years.| of Total
| | imports. | | Exports.
| | | |
----------------+---------------+-----------+--------------+----------
Havana |$ 7,882,855.48 | | $ 961,540.63 |
Cienfuegos | 1,094,962.53 | | 45,966.19 |
Matanzas | 723,978.04 | | 57,834.80 |
Santiago de Cuba| 625,517.97 | | 13,523.84 |
Cardenas | 297,738.05 | | 65,923.27 |
Sagua la Grande | 207,422.23 | | 42,084.65 |
Caibarien | 127,011.98 | | 15,114.99 |
Nuevitas | 122,282.25 | | 8,100.69 |
Guantanamo | 103,198.88 | | 11,858.91 |
Gibara | 63,371.21 | | 35,502.16 |
Manzanillo | 60,664.85 | | 15,493.22 |
Baracoa | 31,122.49 | | 2.36 |
Trinidad | 11,963.02 | | 4,258.38 |
Santa Cruz | 4,679.98 | | 4,314.65 |
Zaza | 4,520.12 | | 3,086.26 |
----------------+---------------+-----------+--------------+----------
Aggregate |$11,361,289.08 | 8.33 |$1,284,605.00 | 8.33
----------------+---------------+-----------+--------------+----------
During the war, as already explained, the customs receipts have
naturally declined, therefore the year preceding that has been selected
as indicating the average revenue from custom-houses, when not disturbed
by commercial treaty, such as that made in connection with the McKinley
Tariff law of the United States, nor the other disturbances, such as
civil war and subsequently the blockade of Cuban ports by the United
States navy. The value of the following table is in the fact that it
shows customs receipts from the several sources other than those which
may be considered strictly import duties.
CUSTOM-HOUSE RECEIPTS DURING 1895-96, SPECIFYING TAXES
--------------+-------------+-------------+
| First | Second |
Tariff | Quarter | Quarter |
--------------+-------------+-------------+
Import Duties |$2,464,392.70|$2,387,357.28|
Ten per cent. | | |
on Imports | 272,162.34| 237,673.86|
Provisional | | |
fifteen per | | |
cent. on | | |
Imports | 84,126.55| 312,346.57|
Export Duties | 344,850.62| 227,858.34|
Navigation Tax| 2,539.75| 4,635.50|
Loading Tax | 254,316.53| 346,953.59|
Unloading Tax | 140,562.35| 128,938.58|
Passenger Tax | 8,925.75| 7,808.00|
Merchants' | | |
Bonds | 332.05| 143.50|
Fines | 18,308.40| 22,496.45|
Interest on | | |
Promissory | | |
Notes | 695.03| ..........|
Excise Tax | 333,003.78| 252,265.95|
+-------------+-------------+
Totals $3,924,215.85|$3,928,477.62|
----------------------------+-------------+
--------------+-------------+-------------+--------------
| Third | Fourth |
Tariff | Quarter | Quarter | Total
--------------+-------------+-------------+--------------
Import Duties |$1,947,152.48|$1,977,028.01|$ 8,775,930.47
Ten per cent. | | |
on Imports | 521,216.92| 209,483.87| 970,536.99
Provisional | | |
fifteen per | | |
cent. on | | |
Imports | 302,821.71| 267,337.93| 966,632.76
Export Duties | 359,135.46| 369,237.95| 1,301,082.37
Navigation Tax| 6,232.50| 5,305.00| 18,712.75
Loading Tax | 124,242.98| 91,509.85| 817,022.95
Unloading Tax | 129,965.77| 112,984.47| 512,451.17
Passenger Tax | 6,190.25| 6,229.75| 29,153.75
Merchants' | | |
Bonds | 208.56| 228.84| 912.95
Fines | 13,346.50| 16,663.15| 70,814.50
Interest on | | |
Promissory | | |
Notes | ..........| ..........| 695.03
Excise Tax | 333,525.56| 205,179.59| 1,123,974.88
+-------------+-------------+--------------
Totals $3,474,038.69|$3,261,188.41|$14,587,920.57
Having treated as fully as possible on the revenue of Cuba in the past
from customs and made such forecasts as to the probable revenue as would
seem warranted by the official figures, the next chapter will be devoted
to a summary of the schedules of the amended tariff now in force, which
will probably remain during United States occupancy the customs revenue
law of the Island.
[Illustration: PALM-TREE BRIDGE.]