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Friday, 25 January 2013

Part 2 - Duties, taxes and tolls: so nothing's changed

So, after reading Part One of our History of Customs & Tariff blog  Hyperlink 1, you now know where the first tariff “book” was found (Palmyra/ Syria AD136) and what the words customs, duty, excise and tariff means.  But what we’re talking about here isn’t something with no current relevance; what started centuries ago with the introduction of “customary dues” being collected, based on a menu of costs (taxes), was the systematic taxation of everyday people which continues today.

Customs Duties are taxes levied upon commodities imported into or exported from a country and, though no longer important instruments of commercial policy, transit duties or tolls which played a role in directing trade and controlling certain trade routes. Tolls were introduced in the Middle Ages and became very important during the mercantilist period of 16th–18th century, lasting into the middle of the 19th century in some countries.  

Duties have always formed one of the most important sources of the public revenue to be used at the rulers’ or governments’ discretion.  Actually the device of raising revenue from the quantity or value of exports and imports occurred naturally in all commercial states in need of money, at a very early stage of its history.  And a big momentum to the growth of these taxes was the need for money to wage war. 

It was much later that the charging of customs duty on imports developed from just being an income generator to also being a mechanism  to trying and slow down foreign competition to protect domestic industries.  Gottfried von Haberler in “The Theory of International Trade” (1937) suggested that the best way to distinguish between revenue duties and protective duties (disregarding the motives of the legislators) is to compare their effects on domestic versus foreign producers.

Ancient Duties

The Old Greeks in Athens imposed a duty of 2% on imports and exports over the Pierian Mountains from which they derived a considerable revenue from their customs.  They also levied an additional duty for the use and maintenance of the harbour (harbour fees). During the Peloponnesian war the Athenians, to replace the tribute paid by their subject states, they introduced a duty of 5% on all commodities exported or imported by such states.  By this means they hoped to raise more revenue than they could via direct taxation. A duty of 10% was established for a time by Alcibiades and other Athenian generals on merchandise passing into and from the Euxine Sea. Chrysopolis, near Chalcedon, was fortified and a “station for the collection of the duties” built.

The Romans also levied customs duties, under the name of portoria, these appear to have always existed as we have no record of their introduction and they are referred to in Ancient writings by guys such as Livy.  Portoria were levied on all goods imported by merchants for the purpose of re-sale, including slaves (trade has always struggled with morals), but things imported for the use of the state or for a person’s own use were exempted from it except “luxury” goods such as eunuchs and handsome youths. And along with the Roman duty system came the well know business of … smuggling.  At import or export a list of purchased items had to be lodged with the official responsible for collecting the tax, this official also had the right to search travellers and merchants.  If goods subject to a duty were concealed they were, on being discovered confiscated. (See nothing is new in the world of customs!)

So universal did these duties, local and national, become, that every continental nation was fairly covered with a network of customs lines. It is interesting to note though that, despite all these taxes being collected, international trade not only continued but grew. Once introduced, these duties seem to have been accepted without riots and, as they were profitable and difficult to abolish, many of them remain until the present time.

To end this blog here are the words of a customs officer (Veljko Velikić,) from Vršac, published in the magazine “Carinik” (Customs Officer) in November 1926. “Customs profession, one of the oldest trades (emerging immediately after the clerical, ruling and military professions), withstood many turbulences and assaults, but it persevered, survived and developed. The number of customs officers and customs houses reflects the greatness of a state. And there lies also the greatness of the customs profession.” 

Part 1:Customs duty where did it come from?

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