Propositions submitted by the German minister., August, 1879

Propositions submitted by the German minister.

According to article 24 of the German-Chinese treaty of 1861, there can be no doubt that merchandise, on which the tariff duties have been paid in a Chinese port, can be conveyed into the interior without being subject to any other duties than the transit duty; this transit duty to be levied according to the rates in force in 1861, and not to be raised in future.

The same rule applies to produce carried from the interior to a port.

On produce carried from the interior to a port, or on imports carried inland from a port, the whole of the transit duties to which they are liable can be discharged by the payment of half the tariff import or export duty respectively.

From these stipulations it is evident that on imports, or native produce to be exported, no other duties or taxes can be levied but the transit duty, as it existed already in 1861, and that the imposition of other duties, may their names be lekin tax or anything else, is contrary to treaty, as far as the German treaty is concerned.

Such is the position taken up by the Imperial Government in the question of inland taxation. On the other hand, the Imperial Government is willing to give due consideration to the actual state of affairs as well as to the wishes and wants of the Chinese Government, and, jointly with the latter and the treaty powers, to search for an equitable solution satisfactory to all parties concerned.

According to the repeated declarations of the Chinese Government, the lekin tax, which would occupy the most prominent position if a practical solution of the question of inland taxation were attempted, is a temporary one, with the abolition of which the Chinese Government intends to proceed as soon as the financial state of the empire will permit.

Under these circumstances the Imperial Government would have no objection to consent for a certain time to the levying of a moderate and fixed lekin tax on imports forwarded inland, or produce purchased in the interior for exportation, provided the levy of such a tax were surrounded by the guarantees necessary for the security of commerce, and provided the goods in question were not protected by transit passes.

As such guarantees, the Imperial Government would consider, besides the issue of rules regulating the amount of the tax and the mode of levying it, as well as the responsibility of the officials intrusted with the levy, the creation of a port area, within which no other duties could be levied on foreign goods except the treaty import and export duty, and the uniform application of the transit pass system at all the open ports and throughout all the provinces of the empire.

The Imperial Government is, however, willing to go still farther, and, the above-mentioned guarantees once obtained, to consent even to an augmentation of the transit duty. This concession would, however, be subject to the condition that on the one hand it should be a temporary one and liable to be revoked, and that, on the other hand, it should be left to the choice of the foreign merchant to use either the old arrangement or the new one.

The Imperial Government is of the opinion that such an arrangement might, perhaps, be framed in adopting a proposal laid before Mr. Medhurst, Her Britannic Majesty’s consul, by the chamber of commerce at Shanghai, on February 1, 1869 (cf. 12, China correspondence with the chamber of commerce at Shanghai), and that an understanding might be arrived at on the basis that packages containing foreign goods to be forwarded from the open ports into the interior, and having paid the import duty and a raised transit duty, should have a stamp affixed to them by the Chinese customhouses at the open ports, and pass freely through the whole empire without being subject to the payment of any other tax.

In order to reserve to the foreign commerce the possibility of reverting to the former agreement, in case the Chinese Government should not sufficiently protect, against other duties, those goods forwarded under stamp, the now-existing transit pass system should be maintained, so as to leave it to the choice of the importer at the open port to forward the goods under stamp against the payment of the raised transit duty through the whole empire, or against the payment of the now-existing transit duty to certain places, named beforehand, in the interior.

With regard to Chinese produce purchased in the interior for export, a similar agreement might be arrived at, or an agreement like the one proposed by the non-ratified English convention of October, 1869, by which all duties would have to be paid in transitu, and the surplus over and above the treaty transit duty returned by the Chinese authorities if the produce be exported within a certain specified period.