The above figures are determined according to the Customs returns of the 2nd, 3rd, and 4th years of the Republic.  By deducting Tls. 2,200,000 of transit duty, the net increase will be Tls. 33,600,000 taels, which is equal to $48,500,000.  For the sake of prudence, allowance of five per cent, of the total amount is made against any incidental shortage.  The net revenue thus increased would amount to $46,100,000.  Against the loss of $58,000,000, there will be a shortage of some $11,900,000.  This, however, will not be difficult to make good by new sources of revenue as the result of a tariff revision:—­

(a) Tax on goods at the time of manufacture $800,000.

(b) Tax on goods at the time of sale $8,000,000.

(c) Tax on cattle and slaughtering houses $2,000,000.

(d) Tax on foodstuffs $4,000,000.

“Under (a) and (b) are the taxes to be collected on native made foreign imitation goods and various kinds of luxurious articles.  Under (c) and (d) are taxes which are already enforced in the provinces but which can be increased to that much by reorganizing the method of collection.  The total sum of the proceeds set forth under above items will amount to $14,800,000.  These will be quite sufficient to cover the loss caused by the abolition of likin.

A VITAL INTEREST

“As the abolition of likin concerns the vital interest of the merchants and manufacturers, it should be carried out without delay.  The commercial and industrial enterprises of the country can only thrive after likin is abolished and only then can new sources of revenue be obtained.  This measure will form the fundamental factor of our industrial and economical development.  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 connexion should be the increase of the present Customs tariff to the actual five per cent, ad valorem rate.  When this is done, proposal should be made to the Powers having treaty relations with us concerning the abolition of likin and revision of Customs tariff.  The transit destination duties on imported goods should at the same time be done away with.  This would not entail any disadvantage to the importers of foreign goods and any diplomatic question would not be difficult of solution.  Meantime preparatory measures should be devised for reorganizing the method of collecting duties set forth above so that the abolition of likin can take place as soon as the Government obtains the consent of the foreign Powers respecting the increase of Customs tariff.”

MEMORANDUM

THE LEADING OUTSTANDING CASES BETWEEN CHINA AND THE FOREIGN POWERS