Tariff

• The purpose of tariffs is to protect domestic industries from foreign competition, generate revenue for the government, and promote economic development by encouraging local production.
• Imports in the absence of special licenses or exemptions, which were often granted extensively for a price or as a reward to favorites or when a scarcity of domestic supplies threatened
• In the early development, import duties were levied not only by each petty state but by individual towns and provinces and by local feudal barons
• As the small states were absorbed in larger national units, the local tariffs were gradually abolished, until as a rule each national unit had only one tariff, applied at its external frontiers
• Duties first developed into taxes levied at the boundary in the eighteenth and nineteenth centuries
• Before that time the duties levied on trade took the form of tolls for the use of the streets, rivers, bridges and harbors or for protection or safe conduct of persons or goods
• These were levied not at the borders but at important trade centers and market towns within the country, with no discrimination between import, export and transit goods and without regard to whether or not a similar fee had already been paid in another part of the country
• Long before mankind envisioned income taxation and government begun to impose internal revenue taxes, Tariffs have been used by governments to raise revenue as early as before the coming as recorded in the Old Testament Bible, Eza Chapter 1-7 (Mark 2:14; Luke 5:27-29)
• In the Philippines, long before the discovery of the Philippine Islands in 1521 by Ferdinand Magellan and the Spanish colonization, Filipino tribes had already established strong trade relations with the Chinese and the people for other neighboring Asian countries
• Also, the payment of duties and taxes then were in the form of giving "royal tributes" to rajas or datus of the old barangay government
• One of the chief purposes behind the imposition of customs duties on articles of imported merchandise

  The equalization of the difference between the cost of producing in a foreign country the articles in question and laying them down for sale in the Philippines and the cost of producing and selling like or similar articles in the Philippines, so that the duties not only secure revenues, but at the same time enable domestic producers to compete on terms of equality with foreign products in the markets of the Philippines
• Purposes of Tariff


  • Revenue Tariff
  • Protective Tariff
  • Bargaining Tariff
• Revenue Tariff


  Whose rate of duty are relatively low so that goods may be readily imported and duties easily collected
• Protective Tariff


  Whose rate is relatively high to keep certain imports out of the domestic market or to raise domestic price on certain imports so that they may be manufactured profitability at home
• Bargaining Tariff


  Whose schedules includes rates designed primarily for bargaining purposes or which contain some general provision for the imposition of higher duties upon products of countries whose tariff policies are considered unsatisfactory or unfair
• Long before the history of the Philippines by Magellan, the ancient Filipinos were already trading with China, Japan, Siam (Thailand), Cambodia, India, Burma, Sumatra, Java and other neighboring islands
• An interesting Spanish documentary of 1586, narrated that they "are keen traders and have traded with China for many years, and before the advent of the Spaniards they sailed to Mulloco, Malacca, Hazian (probably Anchen, Sumatra), Parani, Burnie and other kingdoms"
• Barter


  Customary way of trading with other people in which the Filipinos offered their home products in exchange for the products of other countries
• Chao Ju-Kua (1209-1214) and Wang Tay-Uan (1349) observed that the ancient Filipinos were honest in the commercial dealings
• History records show that even before the arrival of Magellan in the Philippines, Chinese, Japanese and other foreign traders who brought silks, woolens, bells, porcelains, perfumes, iron tin, colored cotton cloth and other small wares to the country paid tariff duties on them
• As soon as the islands were acquired by Spain, the ancient almojarifazgo (a 3% ad valorem duty) imposed on both imports and exports was amplified to the Philippine customs house was established in Manila by Governor Guido R. de Lavizares in 1573
• COLLEGES, INC. CHAO JU-KUA (1209-1214) AND WANG TAY-UAN (1349) observed that the ancient Filipinos were honest in the commercial dealings
• Even before the arrival of Magellan in the Philippines, Chinese, Japanese and other foreign traders who brought silks, woolens, bells, porcelains, perfumes, iron tin, colored cotton cloth and other small wares to the country paid tariff duties on them
• However, according to the report of the Viceroy of Mexico to the Spanish King of 1573, the governor-general did not enforce the almojarifazgo at once. It took Gonzalo Ronquillo de Penalosa, the fourth Spanish governor-general to impose the almojarifazgo in 1582
• Duty on Chinese goods was increased to 6% in 1606
• It was not until more than two and a half centuries later that other ports of the archipelago were opened to foreign commerce. Zamboanga was opened in 1833; Cebu in 1842; Iloilo and Sulu in 1855; Legaspi and Tacloban in 1874
• Philippine exports consisted mainly of

  • rice, coconuts, palm oil, sugar, fibers, straws, cane, dyewoods and lumber
  • luxuries such as sea snails, beches-de-mer, edible bird's nests, tortoise shell, pearls and mother-of-pearls shells
• These goods were brought to China by Chinese junks which in turn carried to the Philippines cotton, grass linen, silk, iron and iron implements, household utensils and manufactured wares
• These Chinese wares were later on shipped to Mexico to be sold, the proceeds of which were made to cover the regular contribution of Mexican US$ 250,000.00 for support of the insular treasury
• Luxury items sent to Mexico included silks fine woven fabrics of Persia and India, gold, silver and spices
• The galleons brought back to Manila, Mexican dollars, Spanish wines and manufactures which gave a profit of from 100 to 400%
• All foreign commerce was required to be carried in government vessels except those with China, Japan and other Oriental countries
• Not until 1834, Philippine trade was opened to the world, and ships other than those of Spain permitted to share in Philippine commerce
• The customs house became a distinct department in 1779, and was made an independent branch of the Treasury in 1805
• Prior to 1734, these values were assessed by a board composed of a royal officer and two merchants with a royal fiscal as intervenor
• In 1734, a permanent board of valuation called as "Junta de Valoraciones" was created. This was abolished in 1782, followed by tariff board in 1828 called as "Junta de Arancelus"
• Trade during the interim was in the hands of Compania Real de Filipinas
• Prior to the adoption of the new tariff drafted by the Tariff Board, which went into effect on January 1, 1832, the rates were enforced as follows:


  • 15% on all goods from Spain and Mexico; 5% upon departure of the vessel, 10% upon arrival in Manila except wines upon 5% additional was collected before commencement of voyage
  • 3% on all goods from other countries, except those from China which has 6%
  • 10% on all Asiatic merchandise to Mexico, and duties based on official values
  • 3% on all exports other than Asiatic. Duty was based on official values
• The tariff board created in 1828 was instructed to prepare a new tariff bases on the following purposes:


  • To increase revenue
  • To protect the agriculture and arts of the islands
  • To expand foreign commerce
• On IMPORTATIONS, 4 rates were established according to origin:

  • Spanish goods in Spanish ships
  • Spanish goods in foreign ships
  • Foreign goods in Spanish ships
  • Foreign goods in foreign ships