REVENUE OF CUBA--INTERNAL TAXES
In the two preceding chapters the attention of the reader has been
called to the revenue of Cuba derived from custom-house receipts, which
aggregates about $15,000,000 of the $26,000,000 required by the Spanish
to pay the governmental expenses of the Island. Before ascertaining the
way in which this money has been expended, and before making any
suggestion as to possible division of revenue for the future, it may be
well to pass briefly in review the other sources of revenue; and in this
process the land, professional, and internal taxes come in for
consideration. The Spanish Government estimated that the revenue from
these combined sources for 1898-99 would be $7,783,150. This
amount--when added to the customs, $14,705,000; the lotteries,
$1,900,500; income from State property, $435,000; and miscellaneous
revenue, $1,536,000,--practically completed the budget, as given in the
opening of Chapter XV. Dismissing lotteries, the most important source
of Cuban revenue has been from land and professional taxes, which should
yield under normal conditions the following amount:
TAXES AND IMPOSTS
Sources. Dollars.
Sovereignty taxes 650,000
Impost on mining property 10,000
Taxes on city property at 12 per cent. 1,600,000
Taxes on rural property, irrespective of cultivation,
at 2 per cent. 150,000
Taxes on industry, commerce, and the professions,
including 1/2 per cent. from contractors 1,400,000
Tax on personal drafts (cedulas) 150,000
Liquor consumption tax 1,300,000
Sale of liquor licences 120,000
Additional tax of 10 per cent. on transportation of
passengers and 3 per cent. on that of merchandise 300,000
Discount on payments 70,000
Tax of 1 per cent. on payments 400,000
---------
6,150,000
Deduct 5 per cent. commission for the collection of
personal drafts (cedulas) 7,500
---------
Total 6,142,500
The following important statement in regard to the taxes of Cuba other
than customs duties was prepared by José Anton Alcala, chief of the tax
bureau of the Banco Español of Cuba, for Hon. Charles W. Gould, of the
Department of Justice, and through the courtesy of Mr. Gould has been
made part of this chapter:
"We have selected for our explanations the collection of taxes
during the year 1894 to 1895 because it is the latest year in which
taxes were collected with regularity and the accounts of the yearly
production to the State duly verified. In our statements appear
only the sums belonging to the public Treasury and by no means the
total amount of receipts collected. A reason for this is that with
the exception of the capital of the Island all receipts of taxes in
Cuba include, as an additional tax, the sums which belong to the
municipalities. Both taxes and the agreed expenses for collection
are perceived jointly. We hope thus to render clearer which are the
real taxes, in behalf of the Treasury. Otherwise it would be
necessary, in order to form a judgment, to make in each case a
deduction of the sums belonging to the municipalities, which are of
18 per cent. over the Treasury taxes on the city real estates, of
100 per cent. for the country estates, and of 25 per cent. for the
industrial taxes. As expenses for collection, 5 per cent. on the
total amount belonging to the Treasury is charged.
"Here is the rule followed to impose taxes for real-estate, city,
and real-estate, country:
"On city estate, 25 per cent. on the amount of the rent which the
proprietor declares to perceive is discounted, and over the
remaining 75, 12 per cent. is imposed.
"On country estates, 2 per cent, is charged on the rent which the
proprietor declares to perceive, without any previous discount.
"The Industrial Subsidy affects every citizen who should exercise
any industry, profession, trade, art, or employ. A relation of them
is made, being arranged by tariffs, classes, and numbers, with
expression of the portion anyone ought to satisfy according to the
last Regulation and Tariffs approved by the Government on 12th of
May, 1893. These relations, named _matriculas_, are made every
year.
"There are also the _patentes_ or receipts of taxes on certain
industries which satisfy their duties per annum and in advance. If
the industrial stops business before the year is over, he has no
right to claim the balance. To this class belong certain shops,
hawkers (_vendedores ambulantes_), veterinary surgeons, etc. The
amount to be paid in each case is unchangeable and it is fixed in a
special tariff for the _patentes_.
"There are also receipts called of 'occasional amounts.' They
include the receipts from the taxpayers who begin or stop business.
As taxes as a rule are collected quarterly, these receipts are for
the amount of time during the three months in which the taxpayer is
a debtor to the Treasury.
"'Occasional taxes' and _patentes_ amounted, for the whole Island,
during the year 1894 to 1895, to the sum of $133,283.31 for the
public Treasury. We do not include that total in our statements
because it is collected only occasionally.
"It is to be borne in mind that the total of taxes is never
collected in Cuba, and that there is always a deficit, which has
been less since the Spanish Bank is the collector.
"Here is the total collection of taxes during the year 1894 to
1895:
Havana Province 90.84 per cent.
Matanzas " 89.72 "
Santa Clara " 87.73 "
Pinar del Rio " 78.34 "
Santiago de Cuba " 66.59 "
Puerto Principe " 93.65 "
"The last-mentioned province gives such a good result
(notwithstanding the very great difficulties in collecting, over
only five municipal districts which are on a very large area of
land), because the capital of the province and the city of
Nuevitas afforded a splendid revenue. In the province of Santiago
de Cuba the collection is harder than in any other, on account of
the scarce and bad roads and means of communication.
"In the lists of collection of 'Industrial Subsidy' in the province
of Havana, there appears a great number of taxpayers who have not
existed for many years and whom, nevertheless, the administration
continues to keep on its records, because every new administrator
is reluctant to confess that the taxpayers have decreased during
his time of office.
"There are reasons to suspect that there are concealments of
taxpayers in the city estates list. A new record (_catastro_), made
by an intelligent and honest administration, would surely give a
rise in the collection of taxes.
"The collection of taxes is in charge of the Banco Español de la
Isla de Cuba, which has branches at Matanzas, Cardenas, Cienfuegos,
Sagua, and Santiago de Cuba, and auxiliary offices at Puerto
Principe and Pinar del Rio.
"The Island has been divided into groups of towns near those
cities. The representatives of the Bank collect the taxes
themselves in the cities where they live, and by delegates in the
other towns.
"The actual contract signed by the Government and the Bank began in
1892-93, and holds good for ten years. The Bank receives as a
commission 5 per cent. upon the total amount of the taxes to
collect, presented by the public Treasury. As the Bank has no
interference whatever, when the lists of taxes are made, it
confines itself to collecting what the public Treasury declares in
its own lists. The Bank, therefore, is merely an agent.
"City and country taxes are collected quarterly, semi-annually, and
annually. Industrial Subsidy is only collected by quarterly
receipts. Annual receipts are applied to the estates whose taxes do
not exceed the sum of eight dollars a year; the semi-annual are for
those that do not exceed the sum of ten dollars a year.
"The annual receipts and the receipts for the first six months of
the year are collected jointly with the receipts for the first
three months. The second six months' receipts are collected with
the second three months'. This explains why there is an increase in
the collection of taxes in some places, during the first and second
three months of each year. Some sudden increases happen also in
some places in the 'Industrial Subsidy' during certain quarterly
collections. This is due to the collection of receipts from some
corporations which pay 12-1/2 per cent. of their profits according
to their balances. Railway companies pay 6-1/4 per cent. of their
profits. State contractors pay 1/2 per cent.
"Taxpayers who do not pay their taxes at the time fixed for it are
subject to the procedure called _apremios_, according to the rules
of May 15, 1885, approved by the Government. When _apremios_ are to
begin, taxpayers are duly warned by mail, giving them time enough
to pay their taxes before incurring trouble.
"_Apremios_ are of three _degrees_: The first consists in an
increase on the tax of 5 per cent.; the second consists in the
seizure and afterwards the sale at public auction of chattel and
live stock, besides a further increase of 7 per cent.; the third
consists in the seizure and sale at public auction of real estate,
besides a further increase of 9 per cent.
"These rules embody many details. They are obscure and complicated.
According to them, long proceedings are made against morose
taxpayers, a characteristic of Spanish bureaucracy."
The two tables which follow show the face value of the tax receipts
placed in the hands of the Spanish Bank for a series of years and the
actual amounts collected. They have been carefully compiled by the
author from official sources and are believed to be reliable:
TABLE I.----FACE VALUE OF TAX RECEIPTS HANDED TO SPANISH BANK FOR
COLLECTION
-------+---------------+-------------+--------------+-------------+--------------
YEARS. | City | Rural Real| Taxes on | Minor | Total.
| Property. | Estate. | Professions,| Taxes. |
| | | Trades, etc.| |
-------+---------------+-------------+--------------+-------------+--------------
1886-87|$ 2,520,061.51 |$ 507,739.70|$ 1,963,778.53|$ 249,071.76|$ 5,240,651.50
1887-88| 2,565,834.77 | 472,909.25| 2,090,306.46| 257,577.35| 5,386,627.83
1888-89| 2,633,491.17 | 510,456.81| 2,030,542.86| 141,876.76| 5,316,367.60
1889-90| 2,451,866.27 | 393,938.19| 1,895,638.08| 136,604.67| 4,878,047.21
1890-91| 2,498,060.52 | 693,323.04| 2,027,435.32| 117,792.37| 5,336,611.25
1891-92| 2,093,492.10 | 386,578.79| 1,654,306.58| 108,604.87| 4,242,982.34
1892-93| 1,989,290.65 | 784,943.09| 2,452,044.86| 131,650.37| 5,357,928.97
1893-94| 1,889,814.97 | 804,838.90| 2,183,355.47| 214,191.07| 5,092,200.41
1894-95| 1,884,766.87 | 814,006.33| 2,297,452.23| 167,096.27| 5,163,321.70
1895-96| 1,905,731.44 | 823,609.47| 2,073,581.75| 104,731.51| 4,907,654.17
1896-97| 2,060,263.25 | 880,946.21| 1,995,542.42| 105,453.12| 5,042,205.00
1897-98| 1,924,866.65 | 811,470.78| 1,609,094.32| 85,163.40 | 4,430,595.15
-------+---------------+-------------+--------------+-------------+--------------
|$26,417,540.17 |$7,884,766.50|$24,273,078.88|$1,819,813.52|$60,395,193.13
-------+---------------+-------------+--------------+-------------+--------------
[Illustration: ROAD IN A PINE GROVE OF VUELTA ABAJO.]
TABLE II.---- ACTUAL AMOUNT OF TAXES COLLECTED BY THE SPANISH BANK
-------+--------------+-------------+--------------+-------------+--------------
| City | Rural Real | Taxes on | Minor |
YEARS.| Property. | Estate. | Professions, | Taxes. | Total.
| | | Trades, etc. | |
-------+--------------+-------------+--------------+-------------+--------------
1886-87| $2,275,853.10| $468,245.88|$1,662,664.91 | $249,071.76| $4,655,835.65
1887-88| 2,347,957.42| 436,222.17| 1,716,689.28 | 257,577.35| 4,758,446.22
1888-89| 2,380,545.54| 466,897.68| 1,705,509.13 | 141,876.91| 4,694,829.26
1889-90| 2,227,503.12| 363,222.63| 1,576,865.82 | 136,615.59| 4,304,207.16
1890-91| 2,227,217.01| 619,271.48| 1,695,196.40 | 117,792.36| 4,659,477.25
1891-92| 1,851,515.43| 345,743.88| 1,391,013.56 | 108,604.87| 3,696,877.74
1892-93| 1,789,106.74| 717,760.37| 1,996,761.13 | 131,650.37| 4,635,278.61
1893-94| 1,728,234.60| 722,572.96| 1,842,921.66 | 214,191.07| 4,507,920.29
1894-95| 1,703,327.71| 684,296.62| 1,870,617.89 | 167,096.27| 4,425,338.49
1895-96| 1,594,158.79| 371,845.50| 1,468,294.18 | 104,731.51| 3,539,029.98
1896-97| 1,523,368.43| 224,870.98| 1,412,890.84 | 105,453.12| 3,226,583.37
1897-98| 1,140,230.12| 89,661.98| 1,062,686.71 | 85,163.40| 2,377,742.21
-------+--------------+-------------+--------------+-------------+--------------
|$22,789,018.01|$5,510,612.13|$19,402,111.51|$1,819,824.58|$49,521,566.23
-------+--------------+-------------+--------------+-------------+--------------
The following table is compiled from the totals of the detailed tables
above, and shows the amount of the taxes collected by the Bank of Spain
and the amount and percentage of delinquent taxes in each year for
twelve years. It is probable that the amount for the half of the present
fiscal year is relatively greater:
TAX RECEIPTS HANDED TO SPANISH BANK FOR COLLECTION
--------+---------------+---------------+---------------+---------------
| | Actual Amount | Total | Percentage of
YEARS. | Face Value. | Collected. | Delinquent |Delinquent Tax
| | | Taxes. | Each Year.
--------+---------------+---------------+---------------+---------------
1886-87 | $5,240,651.50 | $4,655,835.65 | $584,815.85 | 11.16
1887-88 | 5,386,627.83 | 4,758,446.22 | 628,181.61 | 11.66
1888-89 | 5,316,367.60 | 4,694,829.26 | 621,538.34 | 11.69
1889-90 | 4,878,047.21 | 4,304,207.16 | 573,840.05 | 11.76
1890-91 | 5,336,611.25 | 4,659,477.25 | 677,134.00 | 12.69
1891-92 | 4,242,982.34 | 3,696,877.74 | 546,104.60 | 12.87
1892-93 | 5,357,928.97 | 4,635,278.61 | 722,650.36 | 13.49
1893-94 | 5,092,200.41 | 4,507,920.29 | 584,280.12 | 11.47
1894-95 | 5,163,321.70 | 4,425,338.49 | 737,983.21 | 14.29
1895-96 | 4,907,654.17 | 3,539,029.98 | 1,368,624.19 | 27.88
1896-97 | 5,042,205.00 | 3,266,583.37 | 1,775,621.63 | 35.21
1897-98 | 4,430,595.15 | 2,377,742.21 | 2,052,852.94 | 46.33
--------+---------------+---------------+---------------+---------------
Total |$60,395,193.13 | 49,521,566.23 |$10,873,626.90 | 18.04
--------+---------------+---------------+---------------+---------------
Of course this difference does not absolutely represent the uncollected
taxes, because the Government officials may have subsequently been able
to secure collections from some of the delinquents. The delinquent
column is also very greatly enlarged by reason of the fact that the
Government authorities place in the hands of the Spanish Bank a large
number of worthless receipts--that is, receipts in which the taxpayer is
dead or the properties destroyed. This explanation, of course,
exonerates the Spanish Bank, and shows that it collects the taxes in a
businesslike way; but it does not change matters from a revenue point of
view. That remains the same. It is probable, however, that under the new
conditions it will be easy so to levy these taxes that they will yield
annually from $4,000,000 to $5,000,000 in revenue. In thus proceeding
the United States authorities will unquestionably abolish some of the
most onerous.
The receipts from internal taxes are estimated as follows:
INTERNAL REVENUE
Stamped paper $350,000
Postage stamps 300,000
Stamped paper for payment to the State 250,000
Stamps for the same 50,000
Telegraph stamps 40,000
Bills of Health 3,000
Stamps for diplomas and matriculation 90,000
Stamped paper for municipal fines 1,000
Postal cards 2,000
Papal Bulls 1,000
Revenue stamps for drafts, etc. 60,000
" " " receipts, etc. 300,000
Stamps on policies 20,000
Revenue stamp on consumption of matches 260,000
----------
$1,727,000
Deduct commission for sale of the above 86,350
----------
Total $1,640,650
This source of revenue will be greatly increased under American control,
though it will come from improved postal and telegraph facilities,
increase in banking business, and other legitimate sources of internal
revenue. The internal taxes of Cuba must be fully revised. If this work
is intelligently performed, the same revenue can be obtained in a manner
far less odious to the taxpayer.
This table practically completes the sources of Cuban revenue, for the
miscellaneous sources are of an intermittent character, and the
lotteries revenue is not likely to cut any figure in the future finances
of the Island. In the next chapter the author will briefly consider how
the money has been expended and give some suggestions as to the future
division of the funds collected.