Part 21 (1/2)

CHAPTER XXII

FINANCES

Financial system.--National revenues.--Customs tariff.--National budget.--Legal tender.--Munic.i.p.al income.--Munic.i.p.al budgets.

The financial system of Santo Domingo is characterized by an inequitable mode of obtaining public revenue, whereby the burden of supporting the state is thrown upon the poorest cla.s.ses in the form of indirect taxes upon articles of necessary consumption, and wherein taxation of property or contribution according to economic capacity plays little part. This is especially true with regard to munic.i.p.al taxation.

NATIONAL FINANCIAL SYSTEM

The revenues of the general government are derived chiefly from customs duties and secondarily from miscellaneous minor sources. There is no direct tax on land. Prior to 1904 the revenues fluctuated according to the state of tranquillity of the country, being usually something less than $2,000,000 per annum, but immediately upon the establishment of the American receivers.h.i.+p in April, 1905, they went up rapidly. The increase has continued steadily and the government's annual income now amounts to over $4,500,000.

The proportion of revenue calculated from the various sources has fluctuated but little in the different budgets. The proportions appearing from the budget of 1916 are here shown, as well as those of the budget of 1910, at which period the interior revenues were administered with less leakage.

Per cent of total 1910 1916 Customs duties........................ 77.2 81.7 Impost on alcohol..................... 6.8 4.4 State railroad........................ 6.4 ...

Revenue stamps........................ 3. 3.6 State wharves......................... 2.1 4.4 Port dues............................. 1.5 1.8 Stamped paper......................... 1.4 2.

Post offices.......................... .7 .8 Consular fees......................... .4 .9 National telegraph and telephones..... .3 .2 Miscellaneous......................... .2 .2 ----------- Total........................... 100. 100.

Almost 95 per cent of the customs receipts are obtained from import duties. The present customs tariff, which took effect on January 1, 1910, made a radical change in the Dominican tariff system and was a step in the country's financial regeneration. Theretofore the Dominican tariff system was about as unscientific as could be imagined. It had been a tariff for revenue only, in the sense that the object was to obtain all the revenue possible and more; accordingly the common necessities of life were most heavily taxed.

Originally, it appears, the tariff provided for the payment of an ad valorem duty on goods imported; later the discretionary power involved in the apprais.e.m.e.nt was taken away and a fixed, arbitrary value was a.s.signed by law to each article, and on this value, known as the ”aforo,” a specified percentage was payable as customs duty.

Successive governments, in their efforts to raise money, gradually increased this percentage until it reached 73.8 per cent. As the ”aforo” valuation was as a general rule higher than the real value the imposition of so elevated a tax made all imported articles inordinately expensive. With respect to many items the lawmakers overreached themselves, for the duties were raised far beyond the point of maximum return.

For years a desire prevailed to adjust the tariff on a rational and equitable basis, but as there were no statistics and the government feared its income might be reduced, nothing was accomplished. After the establishment of the receivers.h.i.+p, full statistics of imports and exports became available. The general receiver's office and the Dominican government accordingly drafted a new tariff, to which the American government agreed under the terms of the fiscal convention.

The new tariff is based almost entirely on specific schedules; only in exceptional instances, such as in the case of drugs, are ad valorem duties imposed. There were many reductions from the former tariff, especially on articles of prime necessity, but in some cases the rate remained substantially the same, while in a few it was slightly increased, a tendency being observed to protect home industries. On the whole the revision made an average reduction of about 15 per cent as compared with the former tariff, but the new duties are scientifically distributed and after a year of commercial readjustment the revenue reached higher figures than ever before.

Less than 6 per cent of the customs receipts are derived from export duties. Such duties are imposed on cacao and a number of other articles, but not on sugar or tobacco. The tax is not a large one, but the imposition of any export tax is deplored.

Wars and crop conditions have had their influence on the customs receipts, but the figures continue satisfactory, as appears from the following table of collections since the establishment of the receivers.h.i.+p:

GROSS CUSTOMS COLLECTIONS

First Modus Vivendi year, April 1, 1905, to March 31, 1906 .................................................... $2,502,154.31 Second Modus Vivendi year, April 1,1906, to March 31, 1907 .................................................... $3,181,763.48 Four months' period, April 1, 1907, to July 31, 1907 (termination of Modus Vivendi)...................... $1,161,426.61 First convention year, Aug. 1, 1907 to July 31, 1908 .................................................... $3,469,110.69 Second convention year, Aug. 1, 1908 to July 1909 .................................................... $3,359,389.71 Third convention year, Aug. 1, 1909 to July 1910 .................................................... $2,876,976.17 Fourth convention year, Aug. 1, 1910 to July 1911 .................................................... $3,433,738.92 Fifth convention year, Aug. 1, 1911 to July 1912 .................................................... $3,645,974.79 Sixth convention year, Aug. 1, 1912 to July 1913 .................................................... $4,109,294.12 Seventh convention year, Aug. 1, 1913 to July 1914 .................................................... $3,462,163.66 Five months' period, Aug. 1, 1914 to Dec. 31, 1914 .................................................... $1,209,555.54 Ninth fiscal period, Jan. 1, 1915 to Dec. 31, 1915 .................................................... $3,882,048.40 Tenth fiscal period, Jan. 1, 1916 to Dec. 31, 1916 ................................................... $4,035,355.43 Eleventh fiscal period, Jan. 1, 1917 to Dec. 31, 1917 ................................................... $5,329,574.20

With regard to port dues, the Dominican government was long bound by a concession made to the Clyde line in 1878. Upon the redemption of this concession the port dues were in 1908 reduced to their present figure.

An impost on alcohols was established in 1905, and ought to become an important source of revenue. The law is crude in that it taxes the distillation rather than the sale of alcohol and does not sufficiently guard against fraud. The receipts, which in the beginning were quite promising, fell off strangely in late years.

The most recent sources of revenue are the Central Dominican Railway, from Puerto Plata to Santiago, acquired from the San Domingo Improvement Company under the debt settlement in 1908; the Moca extension of the railroad, finished by the government in 1910; and the wharves acquired by the redemption of the various port concessions.

These properties at first gave the government a handsome revenue, which later diminished in a suspicious manner.

The budget of the Republic kept pace with the growth of income, but the appropriations were practically all for personnel, while public works continued to be neglected and no provision was made for future contingencies or the establishment of a reserve fund. The annual budget enacted to become effective July 1, 1916, may be summarized as follows;