Taxation in the Philippines. I Author(s): Carl C. Plehn Reviewed work(s): Source: Political Science Quarterly, Vol. 16, No.

4 (Dec., 1901), pp. 680-711 Published by: The Academy of Political Science Stable URL: http://www.jstor.org/stable/2140422 . Accessed: 20/06/2012 04:16
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revenues enjoyedby the BRIEF accountof the principal in the Philippine Islandsduring the Spanishgovernment of centuries Spanishrulemaybe of special threeand a quarter an time. In thefollowing outline endeavor at interest thepresent onlyof that revenuesystem is made to select those features as from those which have a truehistorical significance, distinct has interest. The further effort havea mereantiquarian which an been madeto selectthesalientfeatures and notto write only due of vacillations policy, of account all thetiresome exhaustive as of to the ignorance the homegovernment to theconditions whichexistedin the islands. This account deals with the onlyand does revenuesof the centralor insulargovernment revenues. not includelocal or municipal to the It has becomesomewhat fashion speak ill of Spain's whichhave passed in government those of her dependencies underthe rule of the UnitedStates and to see as littlegood administration. in the Spanishlaws as in their But,in discusstheiradministration,faras so ing the Spanishlaws,apartfrom taxation the Philippines, wouldbe a sad misin it theyconcern fashion. Mistaken decrees take to fall in withthis prevailing to invariwere, be sure,frequently issued,but theywerealmost recalledas soon as the conditions whichmade themsuch ably and wereunderstood; the system taxation, of takenas a whole, as it stoodon thestatute books,was notill adaptedto the characterofthepeopleand of their life. economic of to But,whilenota fewof theprovisions thelawsrelating taxation can scarcely fail to meet withthe approvalof every the methods impartial student, and the spiritin whichthose lawswereadministered so utterly were voidof any recognition of some of those principles whichAmericans have come to
regard-

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official thatit is almost difficult us to understand as conduct for

68o

in theory, at least -

as the correct guides for all

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the Spanish methods of administrationas for us to see in them anythingbut abuse of power. We find that the governmentofficials connected with the revenue systemfrequently made collections and took fees which no law permitted, that they commuted the payment of taxes or reduced the amount of to be paid, in consideration paymentsto themselves, and that even those collectionsmade in accordance with the law did not always findtheirway into the public treasury.' Where a public is office regardedas a public trust,these are well-nigh worst the abuses that could be imagined,and the officials guiltyof them would be regardedas dishonest and unfaithful. But that view of official duty was not generallyrecognizedin the Philippines. Public moneywas, like holy water,somethingto which everybody helped himself." Moreover,as we study the historyof governmentin these islands, we find a certain extenuationnever, of course, amounting to an excuse -for the common view that a public officer was entitled to certain caidas, or "droppings," as the Spaniards called those emoluments of officenot permitted law but sanctioned by custom. Some by of these extenuating circumstancesarose fromthe generalattitowardthe people of the islands. The tude of the government nativeswere regardedas a conquered people and were required to pay tribute in order to enrich the royal exchequer and the officers who accomplished the conquest. Many feudal ideas which was originally pervaded the systemof government established, and some of them have continued even into the nineteenth century.2 The original basis of the revenue system of the cabezas de was the responsibility the native chieftains, Barangay, for the taxes levied against the people of their districts. Although Spain providedthe most elaborate means for how much she would compel the cabeza to pay into determining
1 All thisapplies withgreater forceto thelocal, thanto the central, government, althoughtrueof both. 2 The relationof the residentlaborers to the duefios on many of the large haciendas,even at the present time, preservessome feudal characteristics;no on wages are paid, compulsoryservices are performed certain of the owners' of fieldsand a certainproportion the crops of the tenants'fields is surrendered to the ownersin return the privilege tenancy. for of

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the treasury,yet, as a sort of tacit recognition his original of she never inquiredtoo closelyinto rightsand naturalauthority, how much more any cabeza might collect for himself. The earlier Spanish laws distinctlyrecognized certain revenues as belongingto him,by virtueof his positionand of the authority which he received from his clan, and simply requiredthat he persuade his people to render additional tributeto the Crown of Spain, whose vassals both he and they had become. Even in the more recent laws no adequate provisionis made for the remuneration his services, a course which can be justified of only on the suppositionthat he could still claim revenuesfrom the people by virtueof his positionas a naturalleader. That those next in authority over the cabeza should assert a claim to a personal share in these unlegalized but customary of emoluments his officeseemed so natural that the government in some instancesrecognized the practice and went so far as to fixthe rates,or percentages,of the taxes collected whichshould to go to the pettygovernors, the alcaldes and even to the adminof istrator the treasury(hacienda). sources of revenue were farmedout, and the Many important of profits conductingthese farmswere also levied upon without were ususcrupleby those high in office. Governmentofficials ally appointed by favor; their nominal salaries were often small, especiallyin the case of those connectedwiththe revenue system; numerousfees and percentageswere allowed; and, as the people were always ignorantof the law, the opportunities which the officials forextortion had were almostunlimited. The taxpayers could for the most part know nothingof theirrights underthe law. There was no compilationof the decrees,royal orders and the like relating to taxation until I867; and such laws as were published at all (usually by posting in public buildings) were in Spanish, a tongue but little understood among the people. The laws and regulations relating to taxation were scattered throughout other legislation; and it has proved a task of no small difficulty, even with the help of such excellent compilationsas those of San Pedro and the joint works of Tiscar and de la Rosa, and of the records of

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the and verify few facts the Treasuryin Manila,to ascertain lawswhich stated are of in regard theprovisions the revenue to sketch. in thefollowing brief of One sourceof muchconfusion ideas was the inextricable intermingling churchfundswith state and public funds. of Taxes proper were collectedin the same mannerand at the the same timeas the giftsof the pious to the church, latter sigby being distinguished nameswhichhad onlya historical nificance. It was in I50I that Pope Alexander VI1 granted the to to Ferdinand and Isabella,and to theirsuccessors, right dues in all their and otherchurch collectand retainthe tithes possessions beyondthe seas. This grantwas made in return -afterwards most liberally so fulfilled, far as for a promise were concerned-that the Crownshouldpay the Philippines in the the expensesof the church Christianizing conquered people. Whatever may have been the originof the abuses in the of and administration the tax laws of the Philippines however the obscure serious theseabuses undoubtedly were,theycannot in a fairand provided, the main, logical, factthatthe statutes be of in perhaps improved might equitable system taxes,which as if but adminsomeminor particulars which, a whole, honestly of wouldhave met all the requirements the situation. istered, of the For the future possibility such abuses of powerby revhas consideration been,in as enueofficials have just beenunder the which removed the excellent a greatmeasure, provisions by has Commission made forthe estabUnitedStates Philippine civil of lishment an honestand efficient servicein the islands. the of If the promise thatact is realized, Spanishlaws relating as to with to taxation, onlysuch modification maybe necessary themintoaccordwiththe changedconditions, safely may bring with be to and in be continued force willprobably found comply as laws of the requirements justiceas nearly couldanyrevenue be which might devised.
1 By Bull of December i6. This was a sequel to the grant of temporal over the lands to be discovered and conquered beyond the seas, sovereignty which was made by the same pope in 1493.

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In the insular budgets the revenues were usually entered undersix generalheadings: (I) The directtaxes (con/ribuciones directas), including the personal taxes and the income tax. (2) The indirecttaxes (contribuciones or indirectas), the custom duties.' (3) The monopolies (rentas estancadas), including at various timesthe stamp taxes and the sale of quicksilver, salt, playingcards,corrosivesublimate, gunpowder, spirituous liquors, tobacco and opium, (4) Lotteries. (5) Public domain (bienes del estado). (6) Miscellaneous and indeterminaterevenues (ingresos eventuales). The same analysis is followed in this article, with the exception that the first is divided into two parts: (i) personal taxes and (2) the income tax, thus making seven, instead of six, parts.
I. PERSONAL TAXES.

i. Tributefrom Natives.-One of the laws of the Indies, and dating originallyfrom 1523, several times repromulgated nearly fifty years before the conquest of Manila, reads: thatthe Indians, Since it is a just and reasonablething, whomaybe pacified,and reduced to obedience and vassalage to Us, should rendertributein recognition Our sovereignty, should give of and such serviceas Our subjectsand vassals owe,and as, moreover, they have established the among themselves customof payingtribute to We commandthat theybe persuadedto aid Us with theirchiefs, in amountof thefruits the earth, may tribute, such moderate of as from timeto timebe required law.2 by The collection of this "tribute" was commencedin the Philippines immediately after their conquest by Legaspi and was continued until I884, a period of over three hundred years,with but little change in formor in the methods of administration and with no change in principle.
1 There never were any excises proper in the Philippines. The alcabalas of the Leyes de las Indias were never enforcedhere,and the place of such excises was taken by the monopolies. 2 Recopilaci6n de Leyes de los Reynos de las Indias, bk. vi, title v, law r. (Hereafterthistitleis quoted as Recopilaci6nde las Indias.)

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poll The tributewas a personal tax of the natureof a uniform tax and was the only direct tax universallyenforced. It was levied on natives, including mestizos.' Spaniards resident in the islands were exempt. The rate, known as "one tribute," but this was early 8 was originally silverrea/esforeach family, raised to iO reales fuertes, or their equivalent, 25 reales de vell/n,2equal to Y4 pesos,3and subsequently(I85I) to 12 reales fuertes,or i Y pesos. recent times the tributemight be paid Until comparatively in moneyor in kind,or partlyin one and partlyin the other. When paid in kind,those productswhichwere most easily disposed of were to be preferred. The products were accepted at values determinedin advance, according to a table of official values. Those whichmightbe tenderedvaried much fromtime to timeand from province to province,or fromdistrictto district. In most cases the tribute had to be rendered in the staple productof the province. The most commonstaple was rice or paddy, but later tobacco was required from certain
provinces.

The unit of assessmentwas the family. For this purposethe included a marriedman over twentyyears of familyordinarily age (after i 85 I, over sixteen) and his wife and minor children.4 male over twentyand everyunmarriedfemale Every unmarried livingwiththe (afterI 85 i, eighteenand twenty) overtwenty-five ceased a parentspaid one-half " tribute." The dutyto contribute when the taxpayer reached sixty years of age. Brieflystated, this was a uniformpoll tax, at the rate of half a "tribute,"
1 A similartax, known as the capitacidnpersonal de Chinos,was levied on the Chinese,as explainedbelow. 2 Recopilacion de las Indias, bk. vi, titlev, law 65. In I884, when the tribute the was abandoned, ratewas i peso and I7 cuartos,or $I.I0-5/8 (Mex.). 3 To avoid confusion between the dollar (gold) of the United States and the in dollar of Mexico, whichis current the islands,the latteris called a peso in this or article. In the Philippinesi duro,or pesofuerte,equalled 8 realesfuertes, i6o the or (or or cuartos, I00 centimos centavos), 5 pesetas. One real de velldon, ancient of equalled two-fifths a realfuerte; or Ipeso fuerteequalled 20 realesde velldon. unit, For a whilethe accounts were carriedin escudosdeplatt, equal to 3?peso each. 4 Originally subsequently femalesundertwenty-five, (i85i) males undertwenty, femalesundertwenty. males undereighteen,

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levied upon everyperson,male or female,over sixteen years of age and under sixty.' the besides the Spaniards were: (i) The Exempt from tribute, alcaldes, gobernadoresand the cabezas de Barangay,2who collected these taxes; as were also their wives and first-born sons or, if they had no sons, the persons adopted as such. This exemption lasted three years, or for the term of office. Soldiers and militia men, both active and retired or (2) invalided,togetherwith theirwives and those sons who resided under the parental roof; also their widows; and furtherthe membersof the provincialreserves.3 (3) Members of the various branches of the civil guard (exclusive of the municipal guard), including members of the resguardo volante (revenue the custom-house guards (caraandguardas volantes, inspectors) and the marine guards (resguardosmaritibinerosde hacienda), mos) withtheirwives and sons.4 (4) Inspectorsof tobacco and storekeepers,both male and female, under the administration withtheirwives or husbands and sons.5 of the tobacco monopoly,
1 The reason for the fiction that the tribute was at a certainrate per family, of whenas a matter factit was at half thatrateper poll,is foundin the customary of and set up an indeorganization the Filipinofamily. Until the childrenmarry pendenthousehold,the resultof theirlabor belongs to the parents. 2 The laws of the Indies (see Recopilacion de las Indias, bk. vi, titlev, laws I8 and 20; also, Ordenanza de Intendentesof 1786, art. 137) granted exemption " to the " Indian chiefs (caciques) and theirolder sons and to theirwives,also to the all " Indian " a/ca/des. In the Philippines traditional cacique was at the head or familieswhichconstituted naturalclan. Legaspi the of the groupof forty fifty these caciques,who came to be knownas cabezas de governedthe nativesthrough Barangay. It has been commonly was grantedas supposed that this exemption a partial compensationfor services rendered. It is, however, clear fromthe hisof toryof this exemptionthatit was rathera recognition the native chieftains' and powers. original governmental rights Jan.27, I8I9; 3 Royal Cedula, Oct. II, I786; decree of the Superintendencia, Bando, Sept. i6, I840, art. 20; decree of the Superintendencia, Oct. 5, I841; ibid.,Oct. 13, I841; ibid.,Aug. 7, I849; ibid., July26, I853; ibid.,Aug. I, 1853; and of the Su5perintendencia, 17, and decrees of the superior government Jan. Feb. I0, I846. 4 Ordenanzade Intendentes 1786,art.9I; decree of the Intendencia of general, June12, I835; decree of the Superintendencia, Jan. 27, I838; Bando, Sept. I6, Oct. 3, I850. I840, art. 20; decree of the Superintendencia, 5 Royal Ce'dula, May I5, 1784; decree of the superior government, April 2I, CircularNo. 45,Aug. 22,i840; Bando, Sept. i6, I840, art. 20. I8I9;

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a (5) Government employees receiving fixed salary.' (6) Paupers and cripplesreceiving public benevolence.2(7) Miscellaneous some exemptin recognition distinguished of services persons, or or to the government, to agriculture industry, others and
for "just cause." 3 In case the paymentof the tributeshould become excessivelyburdensome,on account of suffering among the people fromplague, failureof crops or severe tempest,such paymentmightbe whollyor partiallysuspended or remitted.4 The laws of the Indies required that the "Indians" should pay the tribute in their pueblos and that they must not be requiredto deliverit elsewhere.5 On the basis of thisprovision,

1 Ordenanza de Intendentes 1786, art. 9I; decree of the Superintendencia, Nov. I8, i833; ibid., Sept. 9, I835; Circular of the Administracio'n general de Tributos,June i, I863. 2 Bando, Sept. i6, I840, art. 20. 3 Among these were: "Two or more cantoresand one sacristdnfor every having one hundrednative inhabitantsor more." (See Recopilacionde pfueblo las Indias, bk. vi, title iii, law 3); after 1786 the porterosof churchesand from and of tenientes officials justice in the municithe same date the gobernadorcillos, of palities; afterI840, the numberof servitors each of the cathedralswho might of be exemptwas limited; fromI785, the studentsof the University Manila; from I840, the studentsof the colleges of Santo Tomas, San Jose and San Juan de of Letran; fromI853, the studentsof the University Santo Toma's and fromthe same date the students of the college of San Carlos de Cebu'; fromI835, the widowsof advocates and the wives of bachelors of arts; from1740, day laborers employedfour months each year at the arsenal at Cavite; and fromI826, day hospital; shops; fromI835, servantsof the military laborersat the royal artillery descendants fromI854, servantsof the hospitalof Cebu'; fromI822, the legitinmate to subjugated and who contributed the pacificaof those Cebuans who were first tion of that island; from I854, native women who were widows of Spaniards; and Chinese who, from I836, Spanish mestizos; from I828, the natives,mestizos cultivateplantationsof sugar each in groups of not more than twentyfamilies, capable of producing2000 picos (278,688 pounds) per annum,or plantationsof Ioo quintals(10,145 pounds) per annum; also the indigo,each capable of yielding notablythose of D. Pedro Mojica descendantsof certain prominentindividuals, kings; afterI838, wives, and of D. Carlos Lacondola recognizedby Spain as petty widowsand sons of the employeesof the marineservice; afterI857, meritorious employees of the telegraph system. Partial exemptionwas granted to many was vaccinators. AfterI878, the exemption persons,among them to the official extendedto nativeswho paid 4 pesos or more per annum for the " urbana" tax " was or the " industrial tax; and if these taxes exceeded 12 pesos,this exemption to include the sons livingunderthepatria potestas. 4 Recopilacion de las Indias, bk. vi, titlev, laws 22 and 45. 5 Ibid., bk. vi, title v, law 44; bk. viii, title vii, law Io; bk. viii, title viii, law 34.

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-that is, the cabezas the native chiefsor heads of the hundreds de Barangay -were made the actual collectors of the tribute forthe fortyor fifty families under theircharge; and the local officials -the alcaldes, for the province; the mayors (correcommonly gidores) or the petty governors (gobernadorcillos), -were held responknownas "' captains," for the municipality throughtheirhands to sible for its collection,'it being remitted the treasuryin Manila. It was at one time prescribedthat no nor cabeceri'ashould contain less than forty-five, more than fifty, but this provision was often difficult comply to contributors, with and fell into abeyance. Every second year a padr6n de tasas, or tax list, was made up for each cabecer'a and served as a basis of assessment for two years. This list was practically a census of the tributepaying natives,as it gave the names, ages and occupations of the heads of familiessubject to the tribute. It had to be visJd by the parish priest,who was supposed to compare it with the parish recordsand vouch for its correctness. The cabezas de Barangay were charged with all the tribute whose names were entered in the due from those contributors padron de tasas; and if the whole amount were not turnedin at and the end of three months,they were liable to imprisonment theirgoods were subject to confiscation.2 This drasticmeasure was oftenenforcedwiththe utmostseverity. Besides the tribute the native " Indians " paid, in the same manner,three othertaxes, amountingin all to fivesilver reales; one real forthe tithe (diezmospredia/es),one real for the comfund(cala de comunidad) and three reales forthe church, munity under the name of the sanctoruzm.3 The tithe4was-theoretically, at least-paid by all residents
1 For accounts of the local government the Philippines, of see Reportof the Philippine Commissionof 1899, vol. i, pp. 44 ff.; also Foreman,The Philippine Islands, ch. xiii. These accounts relate mainly to the simpler and more uniestablished by the modernreforms;the ancient system formlocal governments and as the Maura law was not universallyintroduced, was much less uniform, than would appear fromthese descriptions. thereis still much more complexity 2 DecreeoftheSuperintendencia, Sept. 25, I8I9. 8 Collected by the government, but paid over to the church. 4 Recopilacion de las Indias, bk. i, titlexvi,laws I-23, 29; bk. vi,titlev, law 65.

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of the islands,even by those who,forreasons of state or religion, or by favor,were exempt from the tribute.' Except as commuted, the tithe never became of any importanceas a source of revenue to the government. It was originally one-tenthof the fruitsof the soil or of any profitsor income and pertained to the crown.2 But those who paid the tributewere declared exempt,so far as their estates were concerned; and for them the tithewas commuted and added to the tribute, the uniat form rate of one real.3 From I635 to the middle of the nineteenthcenturythere was a furtheraddition to the tribute,at the rate of one-half real for each contributor, ostensibly for the conquest of Jolo. This was knownas the donativode Zamboanga.4 The tribute demanded from the mestizos(that is, ordinarily the sons by native women of the Sangleyes,or Chinese traders, in the islands) was double in amountthat levied on the natives, and they paid two reales for the tithe, one real for the communityfundand three reales forthe sanctorum. Spanish mestizoswere exemptfromthe tribute. This exemption included the sons of Spaniards by native women and of natives by Spanish women.5 In 178I the provinceof Bulacan voted a special tax, to equip two boats of the varietyknown as vintas6 forthe protectionof the coasts of the archipelago from the inroads of the Moros. to This tax, called the vintas,amountedat first one-half real for
1 Recopilacion de las Indias, bk. i, title xvi,law I4 (Spaniards to pay); ibid., law i6 (estates [haciendas] of the king to pay); ibid.,law I7 (knightsof the miliSept. 25, 1768, Oct. 14, 1785 (las religiones tary orders to pay); royal CedUulas, of to pay on the fruits theirestates). 2 Ordenanzas de Intendentesde la Hacienda, 1786,arts. I55, i68. 3 Royal Cedula, July I2, I778, approving the royal decree (real auto) of Dec. II, '775; also the royal Cidula, May 23, i8o0. 4 The fortified port of Zamboanga, Island of Mindanao, was the outpostfrom whichthe wars withthe Moslems werewaged. Dec. io, I836, and the decision of the Decree of the Superintendencia, June30, i8S6. Jutnta SuperiorDirectiva de Apelaciones, 6 The origin of this term is somewhatuncertain. But it was applied by the somewhat Spaniards to a long narrowdugout,usuallywith one heavy outrigger, like a catamaran and built forspeed. Such boats are common in the southern islands of the archipelagoand in the Caroline Islands.

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raisedto one and was afterwards whopaid tribute each person I of paddy. The province Pampanga laterjoinedBulaof ganta was of can in thepayment the vintas. This tribute suppressed trade in I829 and its place was takenby a tax on the coasting in it suppressed i 85I 2 againlater, was finally revived (cabotage); thosenativesonlywhowere be of nature things, exactedfrom communities underthe in and subjugated living organized fully the But that did not prevent Spanish local administration. " to effort collectrevenuesfromthose" infidels whowere not intoregular municipalities subduedto be organized sufficiently sovereignty. to Spanish whocouldyetbe compelled recognize but the of the Long before conquest the Philippines, laws of the " thatall the " Indians whomightbe conIndieshad provided in tribute recognito be queredshould persuaded paya moderate This,as we have seen,was the tionof Spanish sovereignty.3 and originof the tribute, it was also the grounduponwhich, " the possible, wild,"infidel tribesof the mountains whenever to which islandswere required pay a tribute, and uncivilized of laterbecame knownas the "recognition vassalage." and whatsoever, withno regularity was This tribute collected to legal exceptions its enforcement, many were,moreover, there was to bringthe nativesintothe the general purposeofwhich that it fold of the church. Thus, for example, was provided " " the " Indians who were " in rebellion shouldbe conciliated of evenby the remission all taxes,to come by all good means, was rewarded by intoobedience.4 The acceptanceof baptism to and exemption,5 in any case conversion the sacredfaithof from tribute. of it with tenyears exemption carried theSpaniards
1 A ganta equals one-halfcavan, or three litres. Prior to i8iS a ganta was equal to 3.064I litres. in therewas a heavylocal tax rendered the formof 2 In additionto the tribute, labor on roads,publicworksand churches. This could be commuted compulsory sources of abuse of power. into a moneypayment. It was one of the most fertile 3 Recopilacionde las Indias, bk. vi, titlev, law I. 4 Abid., iii, titleiv, law 8. bk. 5 Znstruccio'n, 28, 1569, arts. 5, 7; royal CIdula, Feb. I, 1756. The same Aug. in wereincorporated all later legislation. provisions

2. Recognition of Vassalage. -

The tribute could, in the

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In i8461 the rate of the recognitionof vassalage for the negritos and "infidels" was fixed at one real per capita. In some places 2 the rate was made as high as onepeso per annum. But in later years the total amount collected fromthis source was only about I2,000 pesos per annum. 3. Tze Cddulas Personales.-In I884 the time-honored tribute, the originalmainstayof the entire system of government and the originalbasis of and of the revenue in the Philippines, Spain's commerce with her dependencies, was repealed; and with it passed away the tithe,the caja de comnunidad and the which had been sanctorum.3 The place of the ancient tribute, renderedfor so many years with so littlemurmuring, taken was by a graduated poll tax, modelled upon that of the peninsula, and needless to say the innovationwas not popular. The tax was collectedby means of a certificate identificaof 5 tion,known as a cidula personal,4 which every resident of the as islands- Spaniards and foreigners, well as natives,"'without distinctionof race, nationalityor sex, over eighteen years of age" was requiredto obtain. The only exceptionswere the Chinese, who paid another poll tax, the remontadosd infieles, not subject to the local administration, and the natives and colonistsof the archipelagoof Jolo and of the islands of Balabac and Palawan. There were eventuallysixteendifferent classes of cdulas 6:
I.

Costing37.50 pesos; for all personswho paid in one or more

of Circularof the superiorgovernment June 12. on Sibuyan,for example, by conventionapproved by the Su erintendencia Feb. I5, I8538 Decree of the Gobierno general,May 7, I884, and royal decree of March 6, was allowed the church I884. An amount equal to the proceedsof the sanctorum fromthe proceeds of the cidulas. 4 The cidulas were first of issued by authority the royal decree of March 6, This regulation, I884, under a provisional regulation dated July I5, I884. somewhat amended, was approved by royal Decreto of July 22, I885. It was of amended further the decree of the general government April 25, i888, and by the royal decrees of Dec. 12, I890, May I9, I893, and July 15, I894. Less importantamendmentswill be found in the royal decrees accompanyingthe budget each year. 6 Residence,one year. 6 Originally therewere nine classes taxed,the rates rangingfromI.50opesos to 25 pesos,and a tenth, gratis,forpriests,soldiersand privileged classes.
2

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quotas of the direct taxes' more than 400 pesos, exclusive of surtaxes; or those who enjoyed, from one or more sources, salaries or receipts in excess of 8ooo pesos per annum, whetherpaid fromstate or local funds,or paid from the earnings of corporations,industries or individuals.2 2. Costing 30 pesos; for those with direct taxes of 300 to 400 pesos, or incomes of 6ooo pesos to 8ooo pesos. 3. Costing 22.50 pesos; for those with direct taxes of 200 pesos to 300 pesos, or incomes of 4000 to 6ooo pesos. 4. Costing I2.00 pesos; for those with direct taxes of 100 tO 200 pesos, or incomes of 2000 to 4ooo pesos. 5. Costing 7.50 pesos; fordirecttaxes of 50 to i oopesos, or incomes of I000 to 2000 pesos. 6. Costing 5.25 pesos; fordirecttaxes of 12 to 50 pesos,or incomes of 6oo to I ooo pesos. Also for the wives and children,of both sexes, over eighteen years of age, of all persons who paid taxes amounting to over I00 pesos or enjoyed incomes amountingto 2000 pesos; always provided that such wives or children were not, on account of independent propertyor income, required to obtain cddulas of a higher class. 7. Costing 3.50 pesos; for direct taxes of 8 to 12 pesos inclusive, or incomes of 200 to 6oo pesos. Or the wives and childrenof persons who paid direct taxes of I2 pesos to I00 pesos, or had incomes of
6oo to
2000

pesos.

8. Costing 3.00 pesos; for the wives and children,of both sexes, more than eighteen years of age, of all persons who paid annually on account of direct taxes of 8 to I2 pesos inclusive, or enjoyed salaries or incomes of 200 to 6oo pesos inclusive. 9. Costing 2.25 pesos; for direct taxes of less than 8 pesos, or incomes of less than 200 peSOS. In I890 this class was declared to include all persons not belonging to the higherclasses who enjoyed fixed incomes, and all domestic servants.3
1 The cedula was not considereda direct tax. The taxes included were the tax industrial and the urbana tax. See, below,"the incometax." 2 The directtaxes were supposed to be at the rate of half a tithe, or five percentum; hence taxes at 400 pesos per annum would, theoretically, representan holds good in the subsequentclasses, incomeof 8ooo pesos. The same proportion excepting 6, 7, .8 and 9, which included persons who enjoyed partial exemption from the direct taxes on account of the comparativesmallness of their incomes, and hence in those classes the tax is less than five per cent of the income. 3 Royal decree of December i2.

No. 4.]

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in not Costing2.00 pesos; forall persons included the precedI0. classes. In I890 thisclass was declared ing classesor in subsequent or to include wage workerswhose earningswere irregular of a character. fortuitous in officers activeservice. i i. Costing 2.00 pesos; formilitary officers. wivesand sons of military 12. Costingo.so pesos; for colonists. CostingI.50 pesos; foragricultural I3. "pastors Issued gratis; for monks,nuns, sistersof charity, I4. of the asylumsof benevolence,"paupers who receivedpublic aid, civil) and and navyand in thecivilguard(tercio in privates thearmy the during periodof theirimprisonment. forconvicts Issued gratisand knownas "privileged" (clase privilegiada); IS. or "captains," and (gobernadorcillos) municipal for pettygovernors their wives; for cabezas de Barangay and theirwives, and their 1 (first" assistants, knownat thattimeby the nameofprimogenitos" of born sons), "in recognition theirservicesin the administration and collectionof the tax."2 in gratis; for European agriculturists ParaI6. A special citdula, gua 8 (Island of Palawan). Any person was permittedto purchase a ddula of a higher class than that which he was legally required to have. To enforcethe collection of these taxes the proper c/dula had to occasions: be exhibitedon the following or upon any pub(i) Upon takingup any commission entering under the royal or insular authority; (2) upon lic employment enteringupon any provincialor municipaloffice; (3) upon making any contract,public or private; (4) upon presenting any business or appearingforany purposebeforethe claim,soliciting of pettygovernorsor ministers justice in the pueblos; (5) upon or bringingany action before any court of any authority before in any institutionof learnany officer;(6) upon matriculation ing; (7) upon entering any employmentin industryor comart merce,any profession, or trade; (8) upon paymentof direct
1 Underthe tribute, explained sons de as above,thefirst-born of the cabezas the or as were exempt. It seemsthat cabezas adopted such," Barangay, " persons " assistants. "adopted their 2 This was not the original See footnote above, reasonforthisexemption. in with de of the concerning exemption cabezas Barangay connection thetribute. 8 See royal settlement. of order Aug.20, i888. Thiswas a convict

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[VOL. XVI.

taxes; (9) upon presenting any claim or exercising any civil and mentioned, upon acquiringany rightsor right not previously contractingany obligations; (I o) upon establishing identity; making or withdrawing (I i) upon realizingany kind of credits, makingbills of exchange, deposits,collectingon lettersof credit, pledges withthe depositingmoneyin savings banks, confirming montesde piedad, or pawn shops, and upon bidding at public administrator, member, auction; (12) upon becominga director, or voter, shareholder employeeofanyclass of associationor indusbeyond the boundaries trial undertaking; (I 3) upon travelling1 of thepueblo of residence; and (14) upon enteringinto domestic of were authorizedto call service. The officers the government forand examine the cldulas upon any and all occasions, and any was subject to person found withouta c6ddla (indocumentado) verysevere penalties. The c6dulas were issued on the basis of a padrdn preparedby the same the cabezas de Barangay and drawn up in practically manneras the padr6n for the tribute, the required information out ") "1 being collectedon schedules (hojas, literally, leaflets filled by the heads of households, giving the name and income of everyperson over eighteenyears of age in the household. The padrdn was made in triplicate: one copy for the cabeza, one for the gobernadorcilloand one for the treasury department de (administraci6n hacienda publica). The heads of all institutions- monasteries,convents,prisons,etc.- who had persons entitledto c6dulas gratis under their charge prepared a special padr6n; but any person not entered in the padrdn might purchase a cldula, ifhe so desired. The captains,or thepatrones,of all boats were required to submit a similar padr6n for the persons living on the boats. The cabtza de Barangay was held responsiblefor the collection of the taxes on all persons entered in the padrdn forhis cabeceria,and the captains,or the responsible. patrones,of all boats were held similarly The c/dulaswerepreparedwithstubs and bore serialnumbers, so thateveryone issued to the tax collectorscould be traced and
1 The cidsda thus served as a passport to all persons travelling withinthe islands.

No. 4.J

TAXATION

ZNr THE

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695

accountedfor. The cidula stated the year forwhichit was valid, the number of the class, the rate at which it was issued, the province and pueblo in which it was issued, the name of the person to whom it was sold, givingthe name of the provinceof which he was a native,his age, conjugal condition,profession and address, with properreferencesto the padron in which he was enrolled. To cover the costs of collection there was an allowance of five six per cent (formerly per cent), of which three went to the cabeza de Barangay, one to the governorof the province,one of to the administrator the hacienda p'blica and one to the gobernadorcillo. of To completethe transformation all the ancient taxes which the conqueredpeoples, had grownout of the tributeexacted from the royal decree of July I5, I894, authorized the governorgeneral to provide the cddula of the tenthclass (2.00 pesos) for such pueblos and plantations1 of "sinfidels" as he thought and in everycase to exact as the rate forthe recognition proper, of vassalage an annual paymentof at least o.50 pesos. After the American occupation the ddulas personales were abolished; but, as the procedureof Spanish law was retained,it was soon found that the possession of such a documentforthe the miliwas purpose of identification necessary. Consequently, at decided to issue such certificates the nominal tarygovernment rate of one peseta (0.20 pesos) each, an amountwhich and uniform to it was assumed would be sufficient cover the cost of sale. Just previous to the American occupation the cddulas had yielded a revenue of about 7,000,000 pesos per annum,which was the largest item on the list of revenues at that time. 4. Chinese Poll Tax.- The Sangleyes, or Chinese traders, residentin the islands,were the constant subjects of restrictive taxation. As early as I6I4 the legislationand of discriminating governorwas enjoined to collect license taxes from them for
1 The termrancherfas, here translatedas " plantation,"is used in the mounnot organized tainous provinces of Luzon to designate a village or settlement under the as a puebZo. They were usually governedby a native gobernadorcillo, are guidanceofa missionary. In the Visayas similarsettlements called sementeras, -literally, "plantations."

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[VOL. XVI.

acquiring residence (radicacion), and the royal officialswere empowered to fix the rate of these licenses.' A bando issued by the governorin I66o prescribesthe manner in whichthese licenses shall be issued and the listing of the Chinese in a Chinese were padron. Down to I755, when the non-Christian expelled from the Philippines,their presence was regarded as of prosperity the islands. essential to trade and to the industrial of historical significant the many interesting It is not the least facts built into the citywall of Manila that the largestand finest 2 gateway should be that " del Parian," or leading fromthe districtwithinthe walled citywhere the Chinese were once allowed .to settle. In I 790 the rate forthe Chinese poll tax was fixedat six duros per capita, equivalentto six pesos of eight reales each.8 But in "recognizing,"in the words of a I 828 the superiorgovernment, at submitted the time," thegreatadvantageswhichthe memorial Chinese, or Sangleyes, enjoyed in the commerce which they had in the Philippines,to the prejudice of the Spaniards and and consideringthat the tributeof six dutros annum per mestizos, which they were paying was very little compared with their gains and withthat which existed in Java, Singapore and other colonies in Asia, where they were permittedto trade," decided that there should be a new padron, or tax list, made of the Chinese resident in the islands; that they should be divided as into cabecerz'as, were the natives; that the Chinese cabezas de Barangay should give bond forthe tributeof theirrespective and gather the same and turn it in to the provincial cabeceri'as, alcaldes, who were to receive three per cent of the collections; that the Chinese were to be divided into three classes: the greater merchants,among whom were to be classed (i) such as shipped goods or effectsto foreignlands or sent them to the provinces of the Indian archipelago,or importedgoods
law also bk. vi, title ix, Mexican for marketplace. 8 Royal Cedula, May 14. Foreman (p. 120) states that " taxes were first levied as on the Mongul tradersin i828." This is an error, the special capitationtax after began in 1790, and license taxes were levied almost withoutinterruption
1 Recopilacion de las Indias, bk. viii, title xxix, law i i;
13. 2

I614.

No. 4.]

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697

whether from forsale on theirown accountor on commission, or otherprovinces;(2) lessermerchants shopabroador from of from warehouses the capital the keepers, whowere supplied of or of the provinces;and (3) artisans everyclass; thatthe the per first class shouldpay ten pesosfuer/es month, second for whofailed three two; thatany Chinaman four and the third to overto theowner of months pay his tax shouldbe delivered at to somehacienda workas a day laborer a wage not less than of realesand a ration rice perday,and the master of twosilver of the haciendashouldpay the wagesto thealcalde mayor the untilthetax was discharged. province of This schemeforthe taxation the Chinesehad been preof sufficient knowledge the local conpared in Spain without would have metwithmanygrave and ditions, its enforcement some of whichwere,however, obviatedbeforeit difficulties, went into effect. In the firstplace, therewere among the earnthemeagre to living which Chinese manywhocouldbarely and wereaccustomed whocouldnotpayeventhetwopesos they which lawrequired. Consequently,fourth the a class permonth month to be established.The third had classwas at onepesoper masters superintendents or of of thenmadeto consist overseers, whilethe fourth included or and factories shops, operators day laborers. In the secondplace,it wouldhavetendedto impede of they the entrance the Chineseintocommercial forwhich life, and occupation, were well fitted whichhad been theirfavorite and withthe them compete to more more andwouldhavedriven whichthe Chinesehad notentered in heretofore. natives fields In the thirdplace,the dailywage of two realesfordelinquent had was Chinesewhichthe government placedas theminimum as too high, being morethanthe nativesemployed agricultural thatthe this it was provided could earn. To remedy laborers on Chinesewere to be employed the publicworks delinquent for and and fortifications that,if theywere delinquent a second were to be expelledfromthe islands. Another quarter, they for in difficulty the program this tax was that no Chinamen on to wouldconsent act as cabezasde Barangay, accountof the for the taxes on the padron for the cabeceri'a. responsibility

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[VOL. XVI.

The duty of making thepadron was, therefore, laid upon the corregidores, mayors, of the towns or districtswhere the or Chinese resided, and collections were made by the a/caldes mayoresof the province. The firstpadron, satisfactorily completed in I83I, showed 5708 Chinese, of whom 7 were in the firstclass, i66 in the while I96 were second, 4509 in the thirdand 830 in the fourth, over sixtyyears of age and exempt. But the attemptto collect which the tax on this basis was beset with new difficulties to had not been anticipated. Eight hundredChinese preferred return home rather than pay the tax. One thousand and fled to the mountains, and four hundred and fiftyeighty-three three,who did not possess the means to returnhome, to flee or to pay the tax, were compelled to work out their taxes on the saw itself compublic works. Hence in I834 the government pelled to authorize the intendenciato reduce the rates to such a level that the taxes could be paid by the Chinese. The result was that the increase was levied in the formof a special tax on Chinese industryand commerce, which is discussed in another connection,and the poll tax proper was restored to its old level. In i850,1 in connection with one of the many almost vain effortsto encourage the entrance of the Chinese into agricultural pursuits, two new classes were created forthe poll tax, consisting of (i) Chinese engaged on estates raising sugar, indigo and hemp in Luzon and the Visayas, and (2) Chinese engaged in agriculturein certain sparsely settled districts. The rates for these two classes were twelve and five reales, respectively. Those Chinese who chose to raise tobacco for the monopoly were to be exemptforfiveyears. The benefitsof this act were afterwardsextended2 to Chinese engaged in fisheries,woodand in any employment cutting,mining,shipbuilding otherthan that of commerce. In I862 these rates became threeand two pesos, respectively.3 Nevertheless, as most of the Chinese
I 2 3

Decreto,August 5 and Bando of the same date. Decreto,Dec. 22, I850. Royal order,March 27, i86i.

No. 4.]

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clung stubbornly theirold commercialpursuits,therewas, in to spite of all this legislation,littlepracticalchange fromthe general tax of six pesos per annum imposed in I790. An extensive revision of the law relating to the Chinese poll tax was made in I890, by virtue of the royal decree of February I3. Every Chinese, irrespectiveof age or sex, was required to be provided with a cJduZa de capitacionpersonal or document of identification. This document, or schedule, was precisely similar in character and in effectto that which the natives were required to have and whichwas knownas the c/dula personal. It was valid forone year only, and its cost thus constitutedan annual tax. The c/dulas were of eight different classes, as follows:
I. Costing30 pesos; 1 for all male Chinese over fourteen years of age whoseannualcontribution the form directtaxes2 excluin of sive of surtaxes amounted 400 pesos or more. to 2. Costing25 pesos; forthosewhose directtaxes wereover 300

20 3. Costing pesos; forthose whosedirect taxeswereover200 pesos but not over300 pesos.

pesos but not over 400 pesos.3

4. Costing pesos; forthose whosedirect taxeswere 15 overioo pesos but not over 200 pesos. 5. Costingio pesos; for those whose directtaxes were over 50 pesos but not over ioo pesos. 6. Costing6 pesos; for all male Chinese over fourteen years of age notincludedin thefivepreceding classes.4 7. Costing 3 pesos; for Chinese women over fourteenyears of age. 8. Issued gratis;forall underfourteen yearsof age and forthose physically incapacitated work. for Another class of cidula, called privilegiada, was issued gratis to the Chinese gobernadorcilloand to his wife; also to his lieutenantsand to the tax collectorsduringtheirtermof office.
8 The ambiguity to whichcidula a Chinese payingexactly400 pesos should as purchase existedin the Spanish law. 4 It should be observed that this is the old rate of the Chinese poll tax of I790; see above.
1 Withoutthe surtaxes; see below. 2 The cedula was not regardedas a directtax.

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As was so universallythe practice with all Spanish taxes, these rates Were increased by several surtaxes. First, there was five per cent of the price as a "tconsumption tax." Second, there were a number of surtaxes, ostensibly for the supportof the provincialand municipalgovernments. Latterly, and down to the time of American occupation,these amounted to fifty per cent and were designated as for the "benefit of the treasury." Third, there was a surtax of eight per cent, to be distributed as follows: one per cent for the general treasury,two, for the cost of collection and five, to form a fundto meet the expenses of sendinghome insolventChinese. The total cost of the ccdu/as was, therefore:class I, 48.90 pesos; class 2, 40.75 pesos; class 3, 32.60 pesos; class 4, 24.45 pesos; class 5, I6.30 pesos; class 6, 9.78 pesos; class 7, 4.89 pesos. It was expressly provided that any Chinaman might purchase a cdue/abelonging to a higher class than that in which he was listed,withoutbeing required to give any explanation. To enforce the purchase of these documents, the Chinese were required to produce them on every occasion when they came in any way in contact with the governmentor when it mightbe necessaryto establishtheiridentity, certainofficials and were authorizedto call forand inspect the cdulas at any time. The cdiea had to be presented in court whenever a Chinaman had business there; to notaries, whenever their services were required; to the captain of the port and to every ship captain, when the Chinaman desired to travel, etc., etc. Any Chinaman found withouta c/dula (indocunentado) was subject to severe penalties, and in case of actual inabilityto purchase one might be deported. The officers collectionwere held of accountableforthe price of thecdie/as for everyperson entered in thepadron and could only be relieved fromthe responsibility forpaymentby provingsickness on the part of a contributor, sufficient incapacitate him for work for four months,his to death or departurefrom the islands.

No. 4.)

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II. THE INCOME TAX.

was of out the Philippines rounded by theaddition a tax on all it agriculture, being the established exceptthosefrom incomes to of that occupation. policy the Spanishgovernment nurture as administratively This was theonlytax in the Islands known a direct tax. It was leviedunderthe guise of twotaxes: one, calledtheconon theannualrentalvalue of urbanreal estate, directasobre la propriedadurbana,but commonly tribucidn dividends on as known the " urbana" tax; and another salaries, directasobrela industria, called the contribucio'n and profits, abbrelas a y el comercio, profesiones las artes, namecommonly tax tax."2 The rateof theincome viatedinto the " industrial income. Very was half a tithe,or fiveper cent of the net was and exempt, a partialexemption low incomeswereentirely to granted thosejust abovethe lowest. leviedat therate 2. The "Urbana" Tax.-This wasoriginally of fiveper cent upon the net rentalvalue of all houses and inhabwhether of and of of buildings brick, masonry, iron ofwood, be might theuses to ited by theirownersor notand whatever and nipa,3 theywereput; and also uponthoseof bamboo which or industrial or purposes. whenrented used forcommercial owned and was granted buildings for Absolute exemption those whichservedas resicommunities, occupiedby religious housesof thoseused as hospitals, dencesforthe parishpriests, or or benevolence schools, when not privateproperty when housesinhabited for by granted the owner such use freeof rent, which whenownedby thegovernments they consuls, by foreign granteda similar and represented, when those governments of to franchise the representatives Spain,and public buildings and used by the state. owned
1 Royaldecree, June14. 2 Thiscommon nrse and unfortunate has given to a complete is name peculiarly

-In i. In General.

of 18781 the system taxes in forcein

of character thetax. ofthe misunderstanding true for nipa thatch roof with 3 The common househas a bambooframe, native andwalls.

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[VOL. XVI.

was to Temporary exemption granted houses of bamboo and nipa, whenoccupied their and of by owners, to edifices whatever ruinedby earthquakes, materials floodor fireand typhoons, those whichwere in process of construction of complete or and reconstruction forone year thereafter. value upon whichthe tax was to be assessed The netrental a for was determined deducting fixed by allowance, the expenses the of repairsand maintenance, from gross rentalsreceived or whichmighthave been receivedhad the edifice been rented. This allowancewas forty per cent in the case of structures of brick,masonry iron and fifty cent in the case of or per of structures wood or of bambooand nxipa. The tax was assesseduponall proprietors, without distinction of class or nationality, the sole exception thatnatives with who paidtribute wereto be exemptif theirurbanatax wouldnot exceed four pesos per annum; if it reachedor exceededthat sum, such nativeswere to be exemptfromthe tribute;if it exceededtwelvepesos, this exemption from the tribute to was extend to their legitimatechildrenliving under the patria potestas; and whenit reachedtwenty-fivepesos, and their they sons werealso to be exempted from personal services.' In thecourseofthenexttenyearsa number modifications of wereintroduced, in I889 2 thelaw finally and assumed thatform which hadat thetime theAmerican it of occupation inwhich and it is still enforced the United States military by government. The principal changes were: First,theabandonment thedisof tinction between housesof bamboo and nxipa thoseof brick, and or masonry iron,together with the exemption the former of whenoccupiedby the owners. In place of this,all buildings of whatever materials whichthe annual tax wouldbe less on thanonepesowereexempted. Second, allowance repairs the for and maintenance reduced twenty-five cent and made was to per uniform all structures.The ratewas increased a surtax for by offive cent of the tax,forthe expensesof assessment per and collection.
2

1 A local tax.

Royal decree,publishedin Manila Gazeae, Dec.

29.

No. 4.]

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are The details of administration verysimilarto those of the of tax, as it exists in the commonwealths the general property and the penalty United States. The tax is payable quarterly, for delinquency is ten per cent. In case of enforced collecthe tion,which is by distraintof personal or real property, cost of collection is added. In order to ascertain the rental value, are authorized to examine receipts, leases the revenue officers and other documents. The selling value of the propertymay be taken into considerationto determine the rent when the building is occupied by the owner, and the rent is then estimated accordingto the average percentageon the value earned leased and similarly located. If the rent canby otherproperty in this way, it is estimatedat ten per cent of not be ascertained the sellingvalue. The tax list,or padre5n,is compiledby local assessmentboards, knownas " local census boards," service upon which is compulof soryand unpaid. Every proprietor real estate is compelled knownas a c6rdula,or schedule,whichgives to make a declaration, but the assessment is the property, all the particularsregarding revenue made by theboard. The tax is collectedby the internal in each province,and special collectorsmay be appointed .office for this branch of the service,all being under the central tax office the general treasurydepartment. of by That part of the income tax represented the " urbana" tax covered all income derivedfromreal estate other than agriculturalreal estate. Buildinglots unoccupiedwere exempt. -The and Commerce. second, and 3. ThzeTax on Indzustry part of the incometax is the so-called by farthe most important, " industrial of tax." The prototypes this tax are to be foundin the Spanish excise1 (Alcabala), never collected in these islands, in the ancient tax on pulper'as, or grocerystores, and in the industrialand commerciallicense tax on the Chinese.2
is The similarity one of formmerely. liquors,whichwas and sale of spirituous The license tax for the manufacture imposedafterI864, whenthe monopolyof spirituousliquors was abandoned (see May I4, I864), mighthave been included here. decree of the Superintendencia, for which, But the tax on the Chinese shops was a truetax apportionedto profits, took a formanalogous to thatof a license tax, convenienceof collectionmerely,
1
2

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[VOL. XVI.

The tax on the pulper/'as, which had no significancein the Philippines except as an isolated instance of a tax similar to was levied on all grocerystores the one now under discussion, in excess of the numberdeclared by an ordinancepassed by the to local authorities be absolutely necessaryfor the supportof the community.' The industrialand commercial license tax on Chinese was, however,of no little importance. This tax originated,as has already been stated, in an attemptto increase the burden upon these industriouspeople in I828. As it proved to be impolitic to raise the rate of the capitationtax, those Chinese who could to afford pay higherrates were reachedby an additionaltax levied in the formof a license tax on theirshops and industries. For the assessment of this tax all shops kept by the Chinese were divided into fourclasses, accordingto the size of the shop and the characterof the goods made and sold.2 The firstclass included those shops which,in addition to the main room,had interior rooms,where,as in the mainroom,were displayed" manufacturesof cotton,linen or silk, fancygoods, books, paper and otherthingsused by the richand the well to do." In the second class were all those shops of one room onlywhich sold any or all the followinggoods: European or Chinese wares, silks, hardware, porcelain, mirrorsand the like, or goods and effectsof the country. This class also included Chinese pharmacies, wax bake shops,blacksmithshops and lumbershops. The chandlers, third class included shops selling comestibles,raw or cooked, silversmith shops, shoemakershops, carpenter shops, dye shops and soap-makershops. The fourthclass included all those not enumeratedin the preceding classes, among which the most importantwere: umbrella makers, shops for sandals and slippers (chinelas),junk shops, barber shops, stands for old clothes and hats, shops forthe sale of leather,flour, furniture, Chinese
whilethe tax on dealers in liquors was a true license tax, and its resemblanceto the older Chinese " industrial and commercial " was merely tax superficial. ' Recopilacion de las Indias, bk. iv, titleviii,law 12. 2 We followhere the general outlineof the decree of the superior government of Sept. 13, I852, as given in circular No. 82 of the Administracidn general de Tributos.

No. 4.]

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705

delicacies, charcoal and for cleaning rice. Those of the first class paid IOO pesos per annum,of the second 6o pesos, of the third30 pesos, and of the fourth12 pesos. to It was the object of the classification apportionthe tax to used forthis and the characteristics the abilityof the taxpayer, purpose were such as indicated in a general way the profitsof in the various enterprises whichthe Chinese engaged. Precisely was followedin the incometax of I878, so far the same principle and commerce; and as that tax affectedthe profitsof industry shops grew the elabof out of this simple classification Chinese by for oratetariff all industries, whomsoeverconducted,which is now in force. tax By the decree of June I4, I 878,1 the industrial as levied on the Chinese was extended to all industriesof the same sort,by whomsoeverconducted,and two new classes, one at 300 pesos per annum and one at 200 pesos, were created. The firstof these new classes was composed of stock companies and corporations engaged in making loans and discounts,large commercial houses and factories,insurance companies other than mutual,banks which issued bills payable to bearer on demand, also commercialcapitalistsengaged in bankingor in the export and importtrade, having warehouses and selling at wholesale, when doing business in Manila. The second class included commercialcapitalists,as above, doing business elsewhere than whether dealing in Manila; wholesale stores, not importing, in foreign wares or those of the country; money lenders; dealers in the products of the country and their collecting agents; 2 and finallyall those manufactoriesand mercantile houses which "by reason of their business, ought to pay a higher rate than those assigned to the third class." The law of I878 was by its own termstentativeand to a cerproveda success tain extentincomplete. But as the experiment and the tax yielded a handsome revenue,the law was gradually
The same decree whichestablishedthe urbana tax. induagents whose business it is to travel throughthe interior Acopiadores, to cing the natives to plant and harvest and then buyingand transporting the coast hemp,copra,sugar,etc.
1 2

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expanded and amended until it reached its full growthin the elaborate reglarnento approved by royal decree, June 19, I890, which enumeratedover four hundreddifferent classes of industries and occupations. This regulationpreserves all the old featuresof the tax and extends it to cover wages, salaries and professional earnings. of The most striking characteristic this part of the income tax is that it is almost entirelyobjective,a declarationor estimate of the amount of the income in money being required in but veryfew cases, and the amount of the contribution required in of any one person being determined, most cases, by the external or superficial featuresof the business in whichhe is engaged such, forexample,as the kind of goods handled,the size and froma commercial of arrangement his shop, and the importance point of view of the town in whichit is located. The cases in whicha statementof,or reference the amount to, of the income is prescribedare as follows: (i) officials banks, of stock companies and the like, administrators real estate, or of of the vested incomes of individualsor corporations, agents or attorneysof persons receiving pensions or interest from the state; (2) employees of banks, corporations,insurance companies and other organizations,firmsor individualswhen the remunerationexceeds 609 pesos per annum; (3) dividends declared by banks, by corporationsor branches and agencies thereof(excepting mutual insurance companies),the tax being in this case stopped at the source; (4) government contractors, in which case the rate is one-halfof one per cent of the sum named in the contract.' In other cases there are generally four specific rates for each industry, shop or occupation: the firstfor Manila and its adjacent suburbs; the second for most of the other important portsofentry2 a fewimportant and towns of over thirty thousand inhabitants; the thirdforcertainprovincialtownsof over fifteen thousand but not over thirtythousand inhabitants; and the
1 It was evidentlyassumed that the profit such contracts on would be at least fromthe regularrate on incomes. ten per cent,so that this is no departure 2 Zamboanga is excepted.

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PHILIPPINES.

707

fourth all othertowns. These ratesstand in the relations for of I00, 68, 5i and 36, or nearlyso.' In the case of certain progoods fromraw materials industries whichmanufacture like ducedin the islandsand of occupations, thoseofpeddlers, thereis onlyone rate is in whichlocation of littleimportance, of foreach,irrespective location. in with the To illustrate manner whichthe elaboratetariff, is fourtimesfourhundred different classes of contributors, we constructed, maycite a fewtypicalexamples. Thus, number nine in groupone reads: "Brokersdealingin the wares but goods and not of the country not importing exporting or office place of business"; these are rated or havinga regular at (I) 30, (2) 20, (3) 15 and (4) i i pesos. Under number in twenty-one the same groupare: "Bankers,whose regular on or businessis to buy,sell or discount theirown account, bills as agents, and other securities rated "; drafts, of exchange at (I) I000, (2) 68o, (3) 5iO and (4) 357 pesos. Under group number dealswith bazaarsand stores, three contains: two, which " Storesand bazaarsengagedexclusively thesale of Chinese, in Indiangoods,"which thesewares; and British import Japanese rated at (I) 400, (2) 272, (3) 204 and (4) I43 pesos; and the not at same kindof establishments importing, (I) 200, (2) 136, besides characteristics, (3) I02, (4) 7' pesos. Otherdistinctive and or thekindofwares whether imported not,used in the same on the groupare: whether goods are manufactured the premwhether businessis done at retailor at the ises or elsewhere, maintains "godown" a whether establishment the wholesale, is and whether or warehouse machinery used or not. Under which treatsof dealersand vendors, find we numgroupthree, of "dealers in lumber all kinds builders, and ber eightincludes who exporttheirwares,"rated at or cabinet-makers coopers, if 150, 102, 77 and 54 pesos; and undernumber-nine, they they are rated at 75, 5', 38 and foregothe rightto export, which treatsofvarious industries, four, 27 pesos. Undergroup 2 includes number twenty-six
1 Thus the fourratesforacopiador1s are 250, I70, I28 and 89 esos. 2 Added by the decree of the Intendencia general,Feb. 5, 1892.

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[VOL. XVI.

on smallshopssituatedin a roomopeningdirectly the streetor in whereare sold,at wholesale arcades,witha back roomor workshop, toolsand instrunails,cutlery, hardware, locksand keys, and at retail, faucets and cookingutensils, mentsof steel,iron and othermetals, from thelike,and withtherightto sell,at retailonly,otherarticles jewelry, porcelain, suchas smallhardware, Europe,China and Japan, toys, opticalinstruments, files, earthenware, mirrors, and common fine musical instruarticlesof iron,brass or bronze,zinc, perfumery, piece lace, portmanments,furs,hats, brushes,combs, umbrellas, clocks,all kinds of paper, sewing-machines, paints, teaus,foot-wear, trinkets mouldings, chromos, frames, engravings, stationery, prints, and similar articles, of metal, blankbooks,saddlery with but one door and without a "'godown" or warehouse; rated at I00, 68, 5i and 36 pesos. If such a shop has a "godown," the rates are 120, 8o, 6o and 42 pesos; and if two doors with a "godown," 150, 102, 77 and 54 pesos. Among the professions,surveyors,for example, pay 12, 8, 6 or 4 pesos; dentists, 30, 20, 15 or ii pesos; architects, ioo, 68, 5I and 36 pesos, according to location; lawyers, I50, I00 or 50 pesos, according to the category of the courts in which they practice. Among the arts and trades we find tailors importinggoods rated at 0oo pesos for Manila and at they pay the usual reduction in other places; not importing, 50 pesos, etc.; and if they work in doorways or anywhere in sight of the public, but have no shops, I2 pesos. The various classes in the tariffcorrespond very closely to varieties of shops which have grown up in the the different islands. Thus, number twenty-sixof group four,used as an above, is an accurate descriptionof several hundred illustration Chinese shops in Manila; and the number of doors and the possession or non-possessionof a storehouse,or "godown," are simple and common marks distinguishingdifferencesin size and profits. An examinationof the business conducted under shows that each of the various classes or numbersof the tariff five per cent of the usual or average the tax is approximately commencing business in a profits. A dealer or manufacturer rate is small way will be placed in a class for which the tariff low; as his business grows, he passes into a higher class, and

No. 4.]

TAXATION

IN

THE

PHILIPPINES.

709

pan passu withthe increaseof his profits. his taxes increase thatthe same tax maybe paid however, There is a possibility, as by a large establishment by a small one, when both are has proved along the same lines. But experience organized that this is veryrarelythe case, as a largerestablishment characteracquiresome of the manydifferent wouldnaturally class. isticswhichwouldplace it in another different classesof occupations indusor There are sixty-two in are trieswhichare exempt. These exemptions drawn such a wayas to relievefromtaxation: (I) all personsotherthan below 6oo pesos Chinesewhose incomesare in all probability as domestic serper annum such,forexample, seamstresses, weaversof mats and of walls of nipa or nipa thatch, vants, barbersand day laborers; (2) all public itinerant boatmen, school teachers; (3) publicand benevolent including officials, taxed or burdened, as institutions;(4) industriesotherwise of and forestry; all branches agricultural industry (5) mining (in accordancewiththe settled policy of the government); or authorsand editorsof scientific (6) fishing;(7) writers, branchesof educaworksand teachersin the higher literary industry tion; (8) for two years only, "any manufacturing in conducted the islands." whichhas not been previously Like all Spanishtaxes,the rates of this tax were increased now abolished,some of which accrued to the by surtaxes, and governments.Assessbenefit the provincial municipal of the basis ofa tax list,orpadr6tn, drawn by up mentis madeon in and the internal revenueoffice each province, declarations all from personssubjectto the tax. The tax is are required and are by payablequarterly, delinquencies punished a penalty cents (Mexican) per of twenty-five cent,plus twenty-five per day for expenses of collection. Collectionmay be enforced and, by closureof the shop or establishment if that fails,by seizureand sale of the delinquent's property. of incidence is obviouslymost important;for, if the tax or is shiftedfromthe rent, wages, interests profitsupon which it is levied, it must result in raising the price
4. Operationof the Income Tax as a Whole. The question

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[VOL. XVI.

and of commodities mustact as an annoying restraint trade. on is Such,however, not foundto be the case. The consumer does not pay the tax,and thereis no perceptible restraint on and kindof economic trade. The tax is universal affects every as been stated, activity exceptagriculture, which, has already it wastheexpressed policy the Spanishgovernment foster of to and encourage. It is distinctlytaxon profits.The only a place wherelaborand capitalcan go to escape thistaxation thereis, all fore, intoagriculture, branches industrial commercial of and activity being alike subject to the tax and at practically the the pricesof manufactured comsame rates; consequently or mercialwares can be affected the tax onlyto the extent by thatcapitaland labor are driveninto agriculture the cost and ofagricultural products correspondingly reduced. The reasons forthusfavoring which had all the more agriculture, weight by virtue the factthatthe " friars," werelargelandholders, of who had a decisivevoicein the government, to be found: first, are in the great naturaladvantages whichthe islandspossessfor the production such cropsas hemp, of cocoanut tobacco, copra, - crops whichpromise such oil, sugar,indigoand chocolate for wealthand welfare the returns the general of magnificent in whentheyare developed; and,second, theinertness country to of the nativesand theirreluctance laboraftertheirimmewhich are diatenecessities supplied, placesso severea handicap on all agricultural endeavor. The policyof Spain in favoring evenat theexpense manufacturing in of agriculture theseislands, was industries, notwithout justification. the In considering formof the incometax,the moststrikis ing characteristic the skillful wayin whichit avoidsalmost of or the entirely difficulties a personaldeclaration, estimate, of the annual incomeand the dangersof falsestatements and In to misrepresentation. this it bears a markedresemblance and the Britishproperty incometax. Except in the case of or on suchgrossnegligence corruption the partof the public as officials was commonunder Spanish rule,it is impossible to forthe taxpayer evadea just assessment;and it is the only tax withany success of an income whichcan be enforced form

No. 4.]

TAXA TION IN

THE

PHILIPPINES.

711

whatever among a people trained,as the Filipinos have been for centuries,in every formof duplicitywhere the interestsof governmentare concerned. It is, moreover,a tax which, if can be made as just and equitable under honestlyadministered, existing circumstancesas any other tax which could possibly be developed. Practicallyall of the objections that have been urged against the Philippine income tax, in the various statements and petitions presented to the representativesof the methods are United States government, based upon the corrupt of administrationunder Spanish rule; and not one which is worthyof a moment's consideration has been urged against the principle of this tax. CARL C. PLEHN.
UNIVERSITY OF CALIFORNIA.

(To be continued.)