159. Income. The income of the Central Government is derived from three main sources: First, customs dues; second, internal revenue taxes; and third, earnings of governmental enterprises and activities and interest from special funds.

160. Philippine Tariff. The United States may from time to time enact tariff measures which place the Philippines on a different footing from that of a State of the Union. For instance, the Payne Act of 1909 provided for free trade between the United States and the Philippines, subject to restrictions on some products, like sugar and tobacco. By the Underwood Act of October 3, 1913, however, complete free trade between the United States and the Philippines was declared. The Jones Law authorizes the Philippine Legislature to enact tariff laws with reference to countries other than the United States, but tariff relations between the United States and the Philippines must be under the sole control of Congress.

The Philippine Legislature has not yet materially changed the tariff law known as the Underwood Tariff Law, which is still in effect. The duties imposed by the existing law on goods imported from foreign countries are relatively low. The average duty imposed is about twenty-five per cent ad valorem. For instance, the ad valorem rate on porcelain and earthen ware is from ten to fifty per cent; on cutlery from twenty to thirty per cent; and on paints, dyes, and varnishes from ten to twenty per cent.

ESTIMATED INCOME OF 1921, AND SOURCES THEREOF

PROPOSED EXPENDITURES FOR 1921 SHOWN BY DEPART-
MENTS HAVING JURISDICTION THEREON

TOTAL P83,549,778

(a) Offices under the Governor-General...2.3% P1,932,820

(b) Legislature..

(c) University of the Philippines.
(d) Militia Commission...
(e) Supreme Court....

2.0% P1,702,578

.

.1.1% P1,450,000

.4% P322,035

·3% P 283,810

Revenue from taxation (66.6) = P 56, 136

Import duties 17.6% P14,857,000

Business tax 21.8% 8,391,000

Because of these low duties, we may say that our tariff is, with the possible exception of the tariff on rice, a tariff for revenue only as distinguished from a tariff for protection. A tariff for protection is generally higher and has in view

not only the raising of revenues for the government but also the protection of home industries. Because the Philippines is not a manufacturing country no necessity exists for raising the tariff for the protection of home industries.

In the year 1918, the import duties of the Philippines

amounted to

13,479,736.56. The collection of tariff duties is in charge of the Bureau of Customs. The principal ports of entry in the Philippines are Manila, Iloilo, Cebu, Zamboanga, and Jolo.

161. Internal Revenue. as follows:

The internal revenue taxes are

1. The cedula tax. This is paid by all male inhabitants of the Philippines over the age of eighteen and under sixty, excepting officers, soldiers, and employees of the Federal Government of the United States, the diplomatic and consular representatives or officials of foreign powers, paupers, insane persons, imbeciles, persons serving a sentence of more than one year in prison, and the non-Christians, under certain conditions. The cedula tax is one peso, although in the provinces it is generally raised, upon resolution of the respective provincial boards, to two pesos. In Manila it has also been raised to two pesos by resolution of the Municipal Board.

Cedulas serve as certificate of identification; those who vote for public officers must have cedulas; those who appear in court must present them; and they must be shown whenever one transacts business with a public officer, pays taxes. receives money from public funds, assumes public office, or receives any license or permit from any public authority,

2. The documentary stamp taxes. As the name implies, these taxes are collected and paid by the purchase and affixture of documentary stamps upon documents, instruments, and other valuable papers by the person making, signing, issuing, accepting, or transferring the said documents and

papers.

3. The privilege taxes. These apply to businesses and occupations, such as merchants, manufacturers, distillers, brewers, liquor denters, lawyers, doctors, engineers, etc. The tax on occupations and on some businesses is fixed, while other business taxes are both fixed and percentage.

4. Specific taxes. These are sometimes called excise taxes, and apply to things manufactured or produced in the Philippine Islands for domestic sale or consumption and to things imported from the United States or from foreign countries.

Articles subject to these taxes are distilled spirits, wines, fermented liquors, cigars, cigarettes, etc.

5. Taxes on resources of banks, receipts of insurance companies, and receipts of corporations paying a franchise tax. The banks are taxed upon the amount of capital employed, the average amount of deposits, and the average amount of circulation issued. Insurance companies are taxed on the total premiums collected. Corporations paying a franchise tax are taxed on the gross earnings and receipts.

6. Charges for forest products. These are collected from timber, firewood, and other minor forest products cut and gathered from public forests.

7. Fees for testing and sealing weights and measures. Before any weight or measure can be used for any commercial purpose, it must be first tested and sealed.

8. Internal revenue, including the income tax. From March 1, 1913, to December 31, 1918, the income tax law enforced in the Philippine Islands was the income tax of the United States. Since January 1, 1919, the income tax law passed by the Philippine Legislature has been in operation.

9. Ad valorem tax on the output of mines. This tax is on the gross output of each mine determined by its actual market value.

10. The tax on inheritances, legacies, and other acquisitions by death. This tax is on the transfer of property located in the Philippine Islands whether real or personal, tangible or intangible.

The collection of all internal revenue taxes is in charge of the Bureau of Internal Revenue.

162. Expenditures of the Philippine Government. — The expenditures of the Philippine Government have been classified in the budget into the following items:

1. Expense of revenue collection.