Page:Popular Science Monthly Volume 50.djvu/768

746 which there is a great difference of opinion, is, the form in which the duty on the imports of sugar shall be assessed—specific or ad valorem? To help to the formation of a correct opinion on this subject, attention is asked to the following exhibit of the nature and practical workings of these two forms of taxation. The ad valorem system, proportions duties to the worth of the goods at the place of shipment at so much per cent of their market value. Its chief merit is its justice and equity. It adjusts itself automatically to differences of valuation or of commercial qualities, so that the tax collected from the consumer varies in proportion to his ability to pay—at least so far as this may be determined by his ability to buy goods of greater or less cost.

The chief demerit commonly ascribed to it is the temptation which it is said to offer to fraudulent undervaluation. Since the duty to be paid depends upon the foreign value, if this can be made to appear less than it really is, some part of the tax is evaded, and the cost of the goods to the importer diminished. The difficulty of evading a customs revenue under a good and intelligent administration through undervaluation is illustrated by the circumstance that, in order to secure a saving of as much as six per cent on the landed cost of goods, the dishonest importer in the case of a forty-per-cent duty would have to swear an undervaluation of more than twenty per cent. On the other hand, the great advantage of a simple specific duty is the care and certainty with which it may be applied. If, for instance, the duty upon a class of textile fabrics should be fixed at forty cents a pound, including all accessories involved in packing, the weight of the contents of a case would show, by simple multiplication, the exact amount of duty to be paid. No expensive process of examination need be entered upon. Disputes can hardly arise, and false swearing is out of the question. Such duties have been found most useful when imposed upon simple articles not produced in widely varying grades of greatly differing commercial values.

The injustice and inexpediency of specific duties are, that they bear so much less heavily upon the high-priced than upon the low-priced qualities of goods, that the poorer classes of the community are taxed at a much higher rate than the richer. Neither do they adjust themselves to ups and downs of market values; and a rate of duty reasonable enough when enacted is often transformed by a fall of price into an onerous and prohibitory tax restricting imports and diminishing revenue. It is not, therefore, surprising that the attempt had been made to unite, if possible, the certainty and inevitableness of the specific system with the justice and equity of the ad-valorem principle. Two methods of combination of specific and ad-valorem rates have therefore heretofore been adopted.