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Updated: May 12, 2025
The reverse of the propositions would be nearer to the truth, because a much larger amount of revenue would be collected by merely converting the ad valorem duties of a tariff into equivalent specific duties. To this extent the revenue would be increased, and in the same proportion the specific duty might be diminished.
And should any spirits be brought, without the governor's permission, from the eastward of the Cape of Good Hope, the following additional duties are to be paid; viz. If permitted to be landed, for every 100 gallons, 5L.; not to be charged more than 6s. per gallon, including duty of 2s. per gallon; 5L. per cent. ad valorem, and 5s. wharfage for each cask or case of 100 gallons.
That on all goods, wares, and merchandise, produce, &c., contained or sold on board any flatboat, or other water craft, there shall be assessed, levied, and collected upon the ad valorem worth a general tax of fifty cents on every one hundred dollars' value thereof.
But one thing to which we should like to call the special attention of the Government is the procedure to be adopted to negotiate with the Foreign countries respecting the adoption of this measure. The first step in this connection should be the increase of the present Customs tariff to the actual five per cent ad valorem rate.
The papers accompanying the report of the Secretary of the Treasury will disclose frauds attempted upon the revenue, in variety and amount so great as to justify the conclusion that it is impossible under any system of ad valorem duties levied upon the foreign cost or value of the article to secure an honest observance and an effectual administration of the laws.
These discriminations could be overcome by assessing a duty in ad valorem terms, but this method is open to the objection, first, that it increases administrative difficulties and tends to decrease revenue through undervaluation; and, second, that as prices advance, the ad valorem rate increases the duty per pound at the time when the consumer most needs relief and the producer can best stand competition; while if prices decline the duty is decreased at the time when the consumer is least burdened by the price and the producer most needs protection.
The numerous frauds which continue to be practiced upon the revenue by false invoices and undervaluations constitute an unanswerable reason for adopting specific instead of ad valorem duties in all cases where the nature of the commodity does not forbid it.
By the ad valorem principle all articles are taxed according to their cost or value, and those which are of inferior quality or of small cost bear only the just proportion of the tax with those which are of superior quality or greater cost. The articles consumed by all are taxed at the same rate.
Conversely, a rate only adequate to equalize this difference on cheaper goods would remove protection from the fine-goods manufacture, the increase in which has been one of the striking features of the trade's development in recent years. I therefore recommend that in any revision the importance of a graduated scale of ad valorem duties on cloths be carefully considered and applied.
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.
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