Fundamentals of Tariff System

Definition & Origin of Tariff

  • Term comes from the Spanish coastal town Tarifa (named after Arab "Tariff Iban Malik").
  • Early system: Moors/"racketeers" levied fixed charges on passing merchant ships.
  • Word spread into Spanish, Portuguese, French, Italian — always meaning a price list or schedule of duties.

Philippine Foreign Trade before Spain

  • Filipinos traded with China, Japan, Siam, Cambodia, India, Burma, Sumatra, Java.
  • Trade mainly by barter; prices sometimes paid in gold or metal gongs.
  • Chinese chroniclers noted Filipino honesty.
  • Foreign traders already paid tariff duties before Magellan’s arrival.

Spanish Period (Key Points)

  • Almojarifazgo imposed: (3\,\%) ad-valorem on all imports/exports; Chinese goods raised to (6\,\%) in 1606.
  • Manila customs house founded 1573; tariff administration evolved (Junta de Valoraciones 1734 → Junta de Aranceles 1828).
  • Other ports opened: Zamboanga 1833, Cebu 1842, Iloilo & Sulu 1855, Legazpi & Tacloban 1874.
  • Pre-1832 rates: 15\,\% on Spanish/Mexican goods (split 5\,\% departure + 10\,\% arrival); 3\,\% on other countries, 6\,\% on Chinese goods; 10\,\% on Asiatic exports to Mexico.
  • Tariff Board (Junta de Aranceles) created 1828 to: increase revenue, protect local agriculture/arts, expand commerce.
  • New tariff effective Jan\,1,\,1832: 100 classified articles with fixed values; all exports dutiable except gold, silver, tobacco to Spain.
    • Four import (and export) rates by origin/flag:
    – Spanish goods in Spanish ships (lowest)
    – Spanish goods in foreign ships
    – Foreign goods in Spanish ships
    – Foreign goods in foreign ships (highest)
  • Amendments 1855, 1857, 1870 maintained protection for Spanish goods; Suez Canal opening prompted shift toward specific duties.
  • Law of 1882: exempted most Philippine products except tobacco, rum, sugar, cacao, chocolate, coffee; after 1892 only sugar paid duty in Spain.
  • New tariff Apr\,1,\,1891: duties made specific, free list reduced, Spanish merchandise still exempt.

American Occupation

  • McKinley Executive Order Jul\,12,\,1898 set provisional U.S. military tariff for occupied ports.
  • Manila customs reopened Aug\,21,\,1898; Spanish tariff retained minus Spanish preferences until Nov\,10,\,1898.
  • Spanish/modified tariffs remained until Act No. 230 (passed Sept\,17,\,1901; effective Nov\,15,\,1901) began full revision.
  • U.S. Dingley Tariff applied to Philippine exports to the U.S.; Philippine imports from U.S. paid full local duties — no mutual preferences initially.