CUSTOMS DUTIES are taxes on the import and export of commodities, and rank among the most ancient, as they continue to prevail as one of the most common modes, in all countries, of levying revenue for public purposes. In an insular country like the United Kingdom customs duties came in process of time to be levied only or chiefly in the seaports, and thus applied only to the foreign commerce, where they may be brought under the control of fair and reasonable principles of taxation. But this simplification of customs duties was only reached by degrees; and during a long period special customs were levied on goods passing between England and Scotland; and the trade of Ireland with Great Britain and with foreign countries was subjected to fiscal regulations which could not now stand in the light of public reason. The taxes levied, on warrant of some ancient grant or privilege, upon cattle or goods at a bridge or a ferry or other point of passage from one county or province to another, of which there are some lingering remains even in the United Kingdom, and those levied at the gates of cities on the produce of the immediate country —a not uncommon form of municipal taxation on the European continent—are all of the nature of customs dues. It is from the universality of this practice that our English term of “customs” appears to have been derived. In countries of extensive land frontiers the system of taxation by duties on foreign commodities becomes still more complicated. Custom-houses have to be established along the land borders and at particular points on the rivers or the railways; and the foreign and domestic tax-collectors are brought into immediate contact. Some European Governments distinguish in their rates of duty between “dry” or land ports and ...“wet” or sea ports; and others vary their dues on foreign commodities according to the zones of the globe from which the commodities come. Nothing has consequently been more perplexing to the merchant than customs duties. They are a labyrinth through which he has had to steer with caution and circumspection; while, atthe same time, it has offered to the more unscrupulous traders temptations to fraud. The smuggling which proceeds under customs duties is only to be checked by the most careful administration, by a system proceeding as far as possible on the simplicity of generally recognized principles, and by duties so moderate in amount as to reduce to a minimum the temptation of fraud.
A customs duty on the import of commodities has to be paid by the domestic consumers of the commodities. The foreign producer will not sell them at less than they cost, and the importing merchant will not bring them in unless he obtain this cost, his own fair profit, and the import duty over and above these essential constituents of the transaction. An import duty is thus in some cases a tax which consumers may pay lightly or heavily as they choose, and has accordingly a flexibility that is not unimportant in taxation. But if the commodity be one of domestic as well as foreign supply, the effect of the customs duty is to raise the price of the domestic supply in some proportion to the duty; and the consumer, in so far as the commodity is one of necessity to him, has no choice. He has to pay the tax, with the further dissatisfaction of knowing that it goes to no public purpose, but only into the pockets of some of his own private neighbours. A customs duty on the export of commodities, on the other hand, has to be paid by the foreign consumers, one of the most agreeable forms of taxation to be conceived. But this desire of taxing foreigners for domestic revenue is met by the competition of general commerce, and nations have to be chary of levying duties on the export of the products of their own industry. It is only where they have some special monopoly of the product that they can enter upon such a course without the gravest disadvantage to themselves.
Wherever the principle of free trade is recognized, these distinctions have to be strictly observed; and in the past thirty years’ regime of free trade in the United Kingdom, the whole system of customs duties, in its principles, its rates of duty, and its administration, has undergone a complete revolution. Of many hundreds of articles on which customs duty was levied in the seaports, only five or six, of exclusively foreign origin, now remain to yield the customs revenue of the kingdom. Yet this revenue has never declined. It is much larger than when the whole elaborate system of customs duties was in force. The best literature of this interesting subject, apart from the standard works of British, French, and German economists, is to be found in the Budgets of the British Parliament since 1842; in the Acts consolidating and reforming the custom-house administration, particularly the Act of 1853 drawn by Mr Wilson, editor of The Economist, and then secretary of the treasury; in the reports of the Hon. David Wells, late commissioner of revenue in the United States; and in the annual reports of the British custom-house commissioners, in which alone there is a magazine of the most valuable facts. Of recent years the only controversy of the British public with the custom-house relates to what has been deemed the too careless admission of adulterated or worthless commodities, in respect to which there may have to be a further reform in the future. In the case of commodities on which a duty is levied, aud must be paid before they pass into consumption, there would seem to be a responsibility on the part of the duty-levying power to ascertain that the commodity is what it is professed to be.
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