No. 60.
Mr. Partridge to Mr. Fish.
Bio de Janeiro, November 19, 1874. (Received Dec. 24.)
Sir: I have thought that some account of the revenue system of Brazil would be interesting to the Department, and now have the honor to submit, in relation thereto, the following statement, founded on the estimates and facts set forth in the report (relatorio) of the minister of finance for the present year, and compiled also from other reliable sources.
The annual revenue of the empire for 1872–’73 was the largest ever received—about fifty-eight and three-fourths millions of dollars, (108,-831 contos,) and was derived from the following sources: [Page 95]
| Contos. | |
| From duties on imports | 60,280 |
| From duties on exports | 19,320 |
| From duties on maritime dispatch, (clearance fees) | 570 |
| From internal revenue | 25,200 |
| From contingent and extraordinary | 3,751 |
| 108,831 |
For the years 1873–’74 and 1874–’75, the estimate is made somewhat less—104,000 contos ($56,000,000)—on account of some expected diminution from the lowered tariff, (from imports,) and from the lessened price of coffee, cotton, and sugar, on which the “export duty” chiefly depends. The duties on imports are declared to be specific, by unit weight or measure, and leaving for ad-valorem imposition chiefly those cases where the invoice is thought to be undervalued, when the market value here is assumed as the basis, a proportionate sum added as penalty, and the duties are calculated on this increased basis. The tariff in force (since 1st July, 1874) also professes to give in a separate column what is supposed to be the rates ad valorem, to which the specific duty is equal; and these are stated to be 10, 20, and 30 per cent.
In fact, however, since the duties are chiefly stated on weights of the article, there are very many (such as cotton fabrics, woolen cloths and tissues, silks, &c.,) upon which the result of the duty by weight, as compared with value, gives an ad-valorem rate of 50, 60, 70, and even 95 per cent. The whole amount of the custom-house valuation of imports into Brazil having, been (1872–73) about $82,000,000, and the revenue therefrom about $32,500,000, it would appear that, after making some deduction for free goods, the general or average rate of duty was over 40 per cent.
This average duty, however, does not represent any particular rate; and, as a climate of extreme temperatures, from 95° down to 20° or less, is not accurately described by stating the mean annual temperature of 57½°, so it would give a very inadequate idea of the system on which duties on imports are levied in Brazil to say that the average rate of duty was some 40 or 50 per cent, ad valorem. On some, as on wheat-flour, on which the duty is only fifty-one cents per barrel, it is as low as 8 per cent, ad valorem; while on certain woolen fabrics it is as much as sixty-eight cents per pound, which, in case of some articles, is equal to nearly 100 per cent, ad valorem. On the cheaper wines the duty is only seven cents per liter, while on kerosene, now an article of prime necessity, it is 17½ cents per gallon. In the former case equal to 30 per cent, on a luxury; in the latter equal to 100 per cent. on what is necessary to all.
It is not easy to discover on what principle such a tariff system is based. It is not on the principle of protection, for there are no manufactures in Brazil to be protected, although a duty of five cents per pound is imposed on American lard for the alleged reason that the import competes with the native product of Minas. The true reason, however, is that those who can get any other will never submit to the native article; and as such belong to the richer class, it is found more productive to exact five cents than it would be to take only four, three, or two. Yet the tariff system does not appear to be founded on the principle of securing the largest possible revenue, though that undoubtedly was the object in view; for very many articles, and of general use elsewhere, are so heavily taxed as to become unattainable except to the rich alone; and thus a large return from an increased consumption is as effectually prohibited as the trade in and market of such articles. Every foreigner residing here feels the effect of this in the doubled and [Page 96] sometimes trebled cost of very many articles of prime necessity, and which, costing a shilling in England or a franc in France, are sold here for a milreis or more, being double and treble nearly, respectively.
The export tax (9 per cent, to the treasury and 4 per cent. to the province) of 13 per cent, ad valorem, and which yields nearly one-fifth of the whole revenue, is defended on two grounds: First, that inasmuch as there is no direct tax on or contribution by landed property, the only mode of reaching that is by taxing the produce as it leaves this province or the country; and second, without apparently heeding the contradiction involved, it is gravely asserted by the minister that this taxis paid wholly by the consumer. As in fact the planter is never called on for this tax, which is paid by the exporter on clearance at the customhouse, perhaps even a vast majority of the former never suspect that, but for its imposition, they would receive nearly two cents a pound more for their coffee. One result of thus taxing improved land and industry alone, and exempting the uncultivated and forest land, is that large proprietors are thus rewarded for withholding from cultivation and improvement and are aided in their refusal to divide their tracts into farms. These unimproved lands thus remain of no benefit to the revenue or to the nation, which, by this mistaken exemption, is deprived of the emigration it so much needs.
The internal revenue from all sources, for 1872–’73, was about $13,500,000 (25,210 contos,) and nearly as much during the following year. This sum is, however, not made up from revenue proper, for some 3,500,000 of it are the gross receipts (from traffic and passengers, &c.) on the Dom Pedro II Railway, belonging to and worked by the government, the expense of which (over 2,000,000) is estimated for and paid out among the government expenditures.
There are also included the receipts of the post-office, telegraphs, iron founderies, mint, and all public institutions, the expense of which is borne by the government, which receipts in all amount to about $5,000,000, so that the receipts from internal taxation amount to only about $8,500,000.
This amount is collected through taxation, and is derived from the following sources:
| From house-tax (10 per cent, on-rent) in Federal district, in the city of Rio alone | $1,216,000 |
| Ground-rents, leases of government lands, (water privileges of Rio,) and water-fronts on reclaimed land | 19,00 |
| Stamps; (on receipts, contracts, checks, &c., as with us) | 2,000,000 |
| Tax on salaries, (government employés,) no income tax | 216,000 |
| Tax on sales and transmission of landed property, 6 per cent. ad valorem | 2,185,000 |
| Licences for trades, professions, and all business throughout the empire | 1,800,000 |
| Lotteries, (20 per cent. on all receipts—15 per cent. on prizes, and 1 per cent. additional not included) | 560,000 |
| Tax on consumption (of Rio) cattle, brandy, &c | 225,000 |
| Tax on mineral sale of public lands | 25,000 |
| Water-tax in Rio (imperial government supplies) | 55,000 |
| Outstanding debts, dues from taxation outstanding | 275,000 |
| 8,576,000 |
To this sum (from internal revenue) must be added the amount received under the heads of contingencies and extraordinary, composed of fines, and penalties, $500,000; indemnities from river Plate republics, (chiefly in payment of debts due for moneys advanced during the Paraguayan war,) $250,000; and from sundry sources, $170,000; in all, $920,000.
There is also raised from the tax on slaves, and on the sale, gift, transmission, or inheritance of that species of property, (heavily taxed,) a [Page 97] fund, which is kept apart,* and is destined to assist and ultimately to compensate the final abolition of slavery. This amounts to about $600,000 a year.
Of the receipts above named, from internal taxation, ($8,576,000,) a .large portion ($2,500,000,) is derived from local taxation, (in the city and district of Rio alone,) and is spent in the improvement of the capital; so that only about six millions are derived from general taxation, and of this one-third ($2,000,000) comes from stamps; another third and more (or $2,185,000) from an enormous tax, six per cent, on the value, on the sale or transmission of landed property; and the remaining third merely from licenses, or the tax on professions, trades, business and industrial establishments.
From this, necessarily within these limits, general statement it will appear, I think, that the revenue system of this empire is first unequal in its operation and effect, pressing hard and unduly on its main source of reliance, agricultural labor. This is and must be the consequence of the heavy export-tax, added to the effect of the entire exemption of the large landed proprietors, whose uncultivated tracts yield nothing to the stated Next, the system does not tend to promote the industries on which it must rely, and their increase, from which additional revenues could be easier had. It encourages the withholding of lands from improvement—lands whose only value is the opportunity they afford to labor. And this effect is increased by the enormous tax imposed on the mutation and interchange of values, on the sale and transmission of landed property, which tax delays and renders difficult and costly, if it does not in many cases prevent, instead of fostering as much as possible, the sale of land and development of the country’s resources. And, finally, the system is one in which the contributions levied, which ought to bear lightly on articles of prime necessity, heavily on luxuries, and equally on all contributors in proportion to their means, are so distributed as to have, in many respects, the opposite result, and yet leave many rightful sources of revenue quite untouched. Its supporters claim in its behalf that, if it is not the best that can be imagined for Brazil, it is the best system at present attainable and practicable; that no direct tax on the vast unimproved lands could be collected without disturbance, especially in the remoter districts, nor without greater dissatisfaction than results at present from any supposed inequality in its effects. And they add, that the new necessities of the country, and the development of its resources by the railways they are constructing, will, before long, require and make practicable improvements in this respect. As new regions are brought into activity, or are afforded the opportunity to become productive, they will have to bear a share of the burden and debt by which this benefit has been secured.
I am, &c.,
- That is to say, the account is separate; the moneys being turned into the treasury, and supposed to be invested in the national debt, are not quite so distinct.↩