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Taxation in the Philippines. I Author(s): Carl C. Plehn Reviewed work(s): Source: Political Science Q

Taxation in the Philippines. I Author(s): Carl C. Plehn Reviewed work(s):

Source: Political Science Quarterly, Vol. 16, No. 4 (Dec., 1901), pp. 680-711 Published by: The Academy of Political Science

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TAXATION

IN THE PHILIPPINES.

I.

ABRIEF accountof theprincipalrevenuesenjoyedbythe SpanishgovernmentinthePhilippineIslandsduringthe threeanda quartercenturiesof Spanishrulemaybe of special interestat thepresenttime. In thefollowingoutlineanendeavor is made to selectthosefeaturesonlyof that revenuesystem whichhavea truehistoricalsignificance,as distinctfromthose whichhavea mereantiquarianinterest. The furtherefforthas beenmadeto selectthesalientfeaturesonlyandnottowritean exhaustiveaccountof all thetiresomevacillationsof policy,due to theignoranceof the homegovernmentas to theconditions whichexistedin the islands. This account deals withthe revenuesof the centralor insulargovernmentonlyand does not includelocal or municipalrevenues. It has becomesomewhatthe fashionto speakill of Spain's governmentin those of her dependencieswhichhave passed underthe ruleof the UnitedStates and to see as littlegood

intheSpanishlawsas

ingthe Spanishlaws,apartfromtheiradministration,so faras theyconcerntaxationinthePhilippines,itwouldbe a sad mis- take to fallin withthisprevailingfashion. Mistakendecrees were,to be sure,frequentlyissued,buttheywerealmostinvari- ablyrecalledas soonas the conditionswhichmadethemsuch wereunderstood;andthesystemoftaxation,takenas a whole, as it stoodon thestatutebooks,was notilladaptedto thechar- acterofthepeopleand oftheireconomiclife. But,whilenota fewof theprovisionsof thelawsrelatingto taxationcan scarcelyfailto meetwiththe approvalof every impartialstudent,the methodsand the spiritin whichthose lawswereadministeredwereso utterlyvoidof anyrecognition

of some of those principleswhichAmericanshave come to

in theiradministration.But,in discuss-

regard -

in theory,at least -

as the correct guides for all

officialconductthatit is almostas difficultforus to understand

68o

TAXA TION IN

THE

PHILIPPINES.

68i

the Spanish methods of administrationas for us to see in them anythingbut abuse of power. We find that the gov- ernmentofficialsconnectedwiththe revenue systemfrequently made collectionsand took fees which no law permitted,that they commutedthe paymentof taxes or reduced the amount to be paid, in considerationof paymentsto themselves,and that even those collectionsmade in accordance withthe law did not always findtheirway intothe public treasury.' Where a public officeis regardedas a publictrust,these are well-nighthe worst abuses that could be imagined,and the officialsguiltyof them would be regardedas dishonestand unfaithful. But thatview of officialdutywas not generallyrecognizedin the Philippines. Public moneywas, like holywater,something to which every- body helped himself." Moreover,as we study the historyof governmentin these islands, we finda certain extenuation- never, of course, amounting to an excuse-for the common view that a public officerwas entitled to certain caidas, or "droppings," as the Spaniards called those emoluments of officenot permittedby law but sanctionedby custom. Some of these extenuatingcircumstancesarose fromthe generalatti- tude of the governmenttowardthe people of the islands. The nativeswere regardedas a conquered people and were required to pay tributein order to enrich the royal exchequer and the officerswho accomplished the conquest. Many feudal ideas pervadedthe systemof governmentwhichwas originallyestab- lished, and some of them have continued even into the nine- teenth century.2 The original basis of the revenue system was the responsibilityof the native chieftains,the cabezas de

Barangay, forthe taxes levied against the

tricts. AlthoughSpain providedthe most elaboratemeans for determininghow much she would compel the cabeza to pay into

people of their dis-

1 All thisapplieswithgreaterforceto thelocal,thanto thecentral,government, althoughtrueof both. 2 The relationof the residentlaborers to the duefioson many of the large

haciendas,even at the present time,preservessome feudal characteristics;no

wages are paid, compulsoryservices are performedon certain of

fieldsand a certainproportionof the crops of the tenants'fieldsis surrendered

to the ownersin returnfortheprivilegeof tenancy.

the owners'

682 POLITICAL

SCIENCE

QUARTERL Y.

[VOL. XVI.

the treasury,yet, as a sort of tacit recognitionof his original rightsand naturalauthority,she never inquiredtoo closelyinto how much more any cabeza might collect for himself. The earlier Spanish laws distinctlyrecognized certain revenues as belongingto him,by virtueof his positionand of the authority which he received fromhis clan, and simplyrequiredthat he persuade his people to renderadditional tributeto the Crown of Spain, whose vassals both he and they had become. Even in the more recentlaws no adequate provisionis made forthe remunerationof his services, a course which can be justified onlyon the suppositionthat he could still claim revenuesfrom the people by virtueof his positionas a naturalleader. That those next in authorityover the cabeza shouldasserta claim to a personal share in these unlegalized but customary emolumentsof his officeseemed so naturalthatthe government in some instancesrecognizedthe practiceand went so faras to fixthe rates,or percentages,of the taxes collectedwhichshould go to the pettygovernors,to the alcaldes and evento the admin- istratorof the treasury(hacienda). Many importantsourcesof revenuewere farmedout,and the profitsof conductingthese farmswere also levied upon without scrupleby those highin office. Governmentofficialswere usu- ally appointed by favor; their nominal salaries were often small,especiallyin the case of those connectedwiththe revenue system; numerousfees and percentageswere allowed; and, as the people were always ignorantof the law, the opportunities whichthe officialshad forextortionwere almostunlimited. The taxpayerscould for the mostpartknow nothingof theirrights underthe law. There was no compilationof the decrees,royal orders and the like relatingto taxation until I867; and such laws as were published at all (usually by posting in public buildings) were in Spanish, a tongue but little understood among the people. The laws and regulations relating to taxation were scattered throughoutother legislation; and it has proved a task of no small difficulty,even with the help of such excellent compilationsas those of San Pedro and the joint works of Tiscar and de la Rosa, and of the records of

No. 4.]

TAXATION

IN

THE

PHILIPPINES.

683

the Treasuryin Manila,to ascertainand verifythe fewfacts in regardto theprovisionsof therevenuelawswhichare stated in thefollowingbriefsketch. One sourceof muchconfusionof ideaswas the inextricable interminglingof churchfundswith state and publicfunds. Taxes properwerecollectedin the same mannerand at the same timeas the giftsof the piousto the church,the latter beingdistinguishedby nameswhichhad onlya historicalsig- nificance.It was in I50I thatPope AlexanderVI1 granted to Ferdinandand Isabella,and to theirsuccessors,therightto collectand retainthe tithesandotherchurchdues in all their possessionsbeyondthe seas. This grantwas made in return fora promise-afterwards most liberallyfulfilled,so far as the Philippineswereconcerned-that the Crownshouldpay the expensesof the churchin Christianizingthe conquered people. Whatevermayhave been the originof the abuses in the administrationof thetax laws of the Philippinesand however serioustheseabuses undoubtedlywere,theycannotobscurethe factthatthe statutesprovided,in the main,a logical,fairand equitablesystemof taxes,whichmightperhapsbe improvedin someminorparticularsbutwhich,as a whole,ifhonestlyadmin- istered,wouldhave metall the requirementsof the situation. For the futurethe possibilityof suchabuses of powerbyrev- enueofficialsas havejust beenunderconsiderationhas been,in a greatmeasure,removedbytheexcellentprovisionswhichthe UnitedStatesPhilippineCommissionhas made forthe estab- lishmentof an honestand efficientcivilservicein the islands. If thepromiseofthatact is realized,the Spanishlawsrelating to taxation,withonlysuchmodificationas maybe necessaryto bringthemintoaccordwiththechangedconditions,maysafely be continuedinforceandwillprobablybe foundto complywith therequirementsof justiceas nearlyas couldanyrevenuelaws whichmightbe devised.

1 By Bull of December i6.

This

was a sequel to the grant of temporal

sovereignty over the lands to be discovered and conquered beyond the seas, whichwas made by the same pope in 1493.

684 POLITICAL

SCIENCE

QUARTERLY.

[VOL. XVI.

In the insular budgets the revenues were usually entered undersix generalheadings: (I) The directtaxes (con/ribuciones directas), including the personal taxes and the income tax. (2) The indirecttaxes (contribucionesindirectas),or the custom duties.' (3) The monopolies (rentas estancadas), includingat various timesthe stamp taxes and the sale of quicksilver,salt, playingcards,corrosivesublimate,gunpowder,spirituousliquors, tobacco and opium, (4) Lotteries. (5) Public domain (bienes del estado). (6) Miscellaneous and indeterminaterevenues

(ingresos eventuales). The same analysis is followed in

article,with the exception that the firstis divided into two parts: (i) personal taxes and (2) the income tax, thus making

seven, insteadof six, parts.

this

I.

PERSONAL

i. Tributefrom Natives.-One

TAXES.

of the laws of the Indies,

several times repromulgatedand dating originallyfrom 1523,

nearly fiftyyears beforethe conquest of Manila, reads:

Sinceit is a just and reasonablething,thattheIndians,whomaybe pacified,and reducedto obedience and vassalage to Us, should rendertributein recognitionof Our sovereignty,and shouldgive suchserviceas Our subjectsand vassals owe,and as, moreover,they haveestablishedamongthemselvesthecustomof payingtributeto theirchiefs,We commandthattheybe persuadedto aid Us with tribute,in suchmoderateamountof thefruitsof the earth,as may fromtimeto timebe requiredbylaw.2

The collectionof this "tribute" was commencedin the Philip- pines immediatelyaftertheir conquest by Legaspi and was con- tinued until I884, a period of over three hundredyears,with but littlechange in formor in the methods of administration and with no change in principle.

1 There never were any excises properin the Philippines. The alcabalas of the Leyesde las Indias were never enforcedhere,and the place of such excises was taken by the monopolies. 2 Recopilaci6n de Leyes de los Reynos de las Indias, bk. vi, titlev, law r. (Hereafterthistitleis quoted as Recopilaci6nde las Indias.)

No. 4.]

TAXA TION ZN THE

PHILIPPINES.

685

The tributewas

a personaltax of the natureof a uniformpoll

tax and was the onlydirect tax universallyenforced. It was levied on natives, including mestizos.' Spaniards resident in the islands were exempt. The rate, known as "one tribute," was originally8 silverrea/esforeach family,but this was early raised to iO realesfuertes, or their equivalent, 25 reales de vell/n,2equal to Y4 pesos,3and subsequently(I85I) to 12 reales fuertes,or i Y pesos. Until comparativelyrecent times the tributemight be paid in moneyor in kind,or partlyin one and partlyin the other. When paid in kind,those productswhichwere most easily dis- posed of were to be preferred. The products were accepted at values determinedin advance, according to a table of official values. Those whichmightbe tenderedvariedmuchfromtime to timeand fromprovinceto province,or fromdistrictto dis- trict. In most cases the tribute had to be rendered in the staple productof the province. The most commonstaple was rice or paddy, but later tobacco was required from certain

provinces.

The unitof assessmentwas the family. For this purposethe familyordinarilyincluded a marriedman over twentyyears of age (afteri 85 I, over sixteen)and his wifeand minorchildren.4 Every unmarriedmale over twentyand everyunmarriedfemale overtwenty-five(afterI 85 i, eighteenand twenty)livingwiththe parentspaid one-halfa " tribute." The dutyto contributeceased when the taxpayerreached sixtyyears of age. Brieflystated, this was a uniformpoll tax, at the rate of half a "tribute,"

1 A similartax, known as the capitacidnpersonal de the Chinese,as explainedbelow.

2 Recopilacionde las Indias, bk. vi,titlev, law 65. In

Chinos,was levied on

I884, whenthe tribute

wasabandoned,theratewas i peso and I7 cuartos,or$I.I0-5/8 (Mex.).

3 To avoid confusionbetweenthe dollar (gold) of the United States and the dollar of Mexico, whichis currentin the islands,the latteris called a peso in this article. In the Philippinesi duro,or pesofuerte,equalled 8 realesfuertes,or i6o cuartos,or I00 centimos(orcentavos),or 5 pesetas. One real de velldon,theancient

unit,equalled

For a

two-fifthsofa realfuerte; or Ipeso fuerteequalled 20 realesde velldon.

whilethe accounts werecarriedin escudosdeplatt, equal to 3?peso each.

4 Originallymalesundertwenty,femalesundertwenty-five,subsequently(i85i)

males undereighteen,femalesundertwenty.

686 POLITICAL

SCIENCE

QUARTERLY.

[VOL. XVI.

levied upon everyperson,male or female,over sixteen years of age and undersixty.' Exempt fromthetribute,besidesthe Spaniards were: (i) The alcaldes, gobernadoresand the cabezas de Barangay,2who col- lected these taxes; as were also their wives and first-born or, if they had no sons, the persons adopted as such.

This

(2) Soldiers and militia men, both active and retired or invalided,togetherwiththeirwivesand those sons who resided under the parental roof; also their widows; and furtherthe membersof the provincialreserves.3 (3) Members of the vari- ous branches of the civil guard (exclusive of the municipal guard), includingmembers of the resguardo volante (revenue inspectors)andguardas volantes,the custom-houseguards (cara- binerosde hacienda), and the marineguards (resguardosmariti- mos) withtheirwives and sons.4 (4) Inspectorsof tobacco and storekeepers,both male and female, under the administration of the tobaccomonopoly,withtheirwivesorhusbandsand sons.5

sons

exemptionlasted three years, or for the term of office.

1 The reason for the fictionthat the tributewas at a certainrate per family, whenas a matteroffactitwas at halfthatrateper poll,is foundin thecustomary organizationof the Filipinofamily. Untilthechildrenmarryand set up an inde- pendenthousehold,the resultof theirlaborbelongsto the parents.

2 The laws of the Indies (see Recopilacionde las Indias, bk. vi, titlev, laws I8 20; also, Ordenanza de Intendentesof 1786, art. 137) grantedexemption

and

to the " Indian chiefs" (caciques) and theirolder sons and to theirwives,also to all " Indian " a/ca/des. In the Philippinesthe traditional cacique was at the head of the groupoffortyor fiftyfamilieswhichconstitutedthe naturalclan. Legaspi governedthe nativesthroughthesecaciques,who came to be knownas cabezas de

Barangay. It has been commonlysupposed that this exemptionwas grantedas

a partial compensationfor servicesrendered. It is, however,clearfromthe his-

toryof this exemptionthatit was rathera recognitionof the native chieftains' originalgovernmentalrightsand powers.

3 Royal Cedula,Oct. II, I786; decree of the Superintendencia,Jan.27, I8I9;

Bando, Sept. i6, I840, art. 20;

ibid.,Oct. 13, I841; ibid.,Aug. 7, I849; ibid., July26, I853; ibid.,Aug. I,

decrees of the superiorgovernmentand of the Su5perintendencia, Jan. 17, and

Feb. I0, I846.

decree of the Superintendencia,Oct. 5, I841;

1853;

4 Ordenanzade Intendentesof 1786,art.9I; decreeof theIntendenciageneral,

June12, I835; decree of the Superintendencia, Jan. 27, I838; Bando, Sept. I6, I840, art. 20; decreeof theSuperintendencia,Oct. 3, I850.

5

Royal Ce'dula,May I5, 1784; decree of the superiorgovernment,April2I,

I8I9;

CircularNo. 45,Aug. 22,i840; Bando, Sept. i6, I840, art.20.

No. 4.]

TAXATION

IN

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PHILIPPINES.

687

(5) Governmentemployeesreceivinga fixedsalary.' (6) Paupers and cripplesreceivingpublicbenevolence.2(7) Miscellaneous persons,some exemptin recognitionof distinguishedservices to the government,or to agricultureor industry,and others

for "just cause." 3 In case the paymentof the tributeshould become excessivelyburdensome,on account of sufferingamong the people fromplague, failureof crops or severe tempest,such paymentmightbe whollyor partiallysuspendedor remitted.4

Indies required that the "Indians" should

pay the tributein theirpueblos and that they must not be requiredto deliverit elsewhere.5 On the basis of thisprovision,

The laws of the

1 Ordenanza de Intendentes 1786, art. 9I;

decree of the Superintendencia,

Nov. I8, i833; ibid., Sept. 9, I835; Circularof the Administracio'ngeneral de Tributos,June i, I863.

2 Bando, Sept. i6, I840, art. 20.

3 Among these were: "Two or more cantoresand one sacristdnfor every pfueblo having one hundrednative inhabitantsor more." (See Recopilacionde las Indias, bk. vi,titleiii,law 3); after 1786 the porterosof churchesand from the same date the gobernadorcillos,tenientesand officialsof justice in the munici- palities; afterI840, the numberof servitorsof each of the cathedralswho might be exemptwas limited; fromI785, the studentsof the Universityof Manila; from I840, the studentsof the colleges of Santo Tomas, San Jose and San Juan de Letran; fromI853, the studentsof the Universityof Santo Toma's and fromthe same date the studentsof the college of San Carlos de Cebu'; fromI835, the widowsof advocates and the wives of bachelors of arts; from1740, day laborers employedfour monthseach yearat the arsenal at Cavite; and fromI826, day laborersat the royalartilleryshops; fromI835, servantsof the militaryhospital; fromI854, servantsof thehospitalof Cebu'; fromI822, thelegitinmatedescendants

of those Cebuans who werefirstsubjugatedand who contributedto the pacifica- tion of that island; from I854, native women who were widows of Spaniards; from I836, Spanish mestizos; fromI828, the natives,mestizosand Chinesewho,

in groups of not more than twentyfamilies,cultivateplantationsof sugar each capable of producing2000 picos (278,688 pounds) per annum,or plantationsof indigo,each capable of yieldingIoo quintals(10,145 pounds)per annum; also the descendantsof certainprominentindividuals,notablythoseof D. Pedro Mojica and of D. Carlos Lacondola recognizedby Spain as pettykings; afterI838, wives, widowsand sons of the employeesof the marineservice; afterI857, meritorious employeesof the telegraphsystem. Partial exemptionwas grantedto many persons,amongthem to the officialvaccinators. AfterI878, the exemptionwas extendedto nativeswho paid 4 pesos or more per annum for the " urbana" tax

or the " industrial "

to includethe sons livingunderthepatriapotestas.

tax; and ifthesetaxes exceeded 12 pesos,thisexemptionwas

4 Recopilacionde las Indias, bk. vi,titlev, laws 22

5 Ibid., bk. vi, title v, law 44; bk. viii, title vii, law Io; bk. viii, title viii,

and 45.

law 34.

688 POLITICAL

SCIENCE

QUARTERLY.

[VOL.

XVI.

the native chiefsor heads of the hundreds-that is, the cabezas

de Barangay -were made the actual collectorsof the tribute forthe fortyor fiftyfamiliesunder theircharge; and the local officials-the alcaldes, for the province; the mayors (corre- gidores) or the petty governors (gobernadorcillos),commonly knownas "' captains," forthe municipality-were held respon- sible for its collection,'it being remittedthroughtheirhands to the treasuryin Manila. It was at one timeprescribedthat no cabeceri'ashouldcontainless than forty-five,nor morethan fifty, contributors,but this provision was often difficultto comply with and fell into abeyance. Every second year a padr6n de tasas, or tax list,was made up for each cabecer'a and served as a basis of assessment for two years. This list was practicallya census of the tribute- paying natives,as it gave the names,ages and occupations of the heads of familiessubject to the tribute. It had to be visJd by the parishpriest,who was supposed to compare it with the parishrecordsand vouch forits correctness. The cabezas de Barangay were charged with all the tribute due fromthose contributorswhose names were entered in the

padron de tasas;

the end of three months,theywere liable to imprisonmentand theirgoods were subject to confiscation.2 This drasticmeasure was oftenenforcedwiththe utmostseverity. Besides the tributethe native " Indians " paid, in the same manner,threeothertaxes, amountingin all to fivesilverreales; one real forthe tithe (diezmospredia/es),one real forthe com- munityfund(cala de comunidad) and threerealesforthe church, under the name of the sanctoruzm.3 The tithe4was-theoretically, at least-paid by all residents

and ifthe whole amountwere not turnedin at

1 For accounts of the local governmentof the Philippines,see Reportof the

PhilippineCommissionof 1899, vol. i, pp. 44 ff.; also Foreman,The

Philippine

Islands, ch. xiii. These accounts relate mainlyto the simplerand

more uni-

formlocal governmentsestablishedby the modernreforms;the ancient system was much less uniform,and as the Maura law was not universallyintroduced, thereis stillmuchmorecomplexitythanwould appear fromthesedescriptions.

2

8

Decreeofthe Superintendencia,Sept. 25, I8I9.

Collectedby thegovernment,but paid overto the church.

No. 4.]

TAXA TION IN

THE

PHILIPPINES.

689

ofthe islands,evenby thosewho,forreasons of state or religion, or by favor,were exempt fromthe tribute.' Except as com- muted, the tithenever became of any importanceas a source of revenue to the government. It was originallyone-tenthof the fruitsof the soil or of any profitsor income and pertained

to the crown.2 But those who paid

exempt,so faras their estates were concerned; and for them the tithewas commutedand added to the tribute,at the uni- formrate of one real.3 From I635 to the middle of the nineteenthcenturythere was a furtheraddition to the tribute,at the rate of one-half real for each contributor,ostensiblyfor the conquest of Jolo. This was knownas the donativode Zamboanga.4 The tributedemanded fromthe mestizos(that is, ordinarily the sons by nativewomenof the Sangleyes,or Chinese traders, in the islands)was double in amountthat levied on the natives, and they paid two reales for the tithe, one real for the com- munityfundand threereales forthe sanctorum. Spanishmestizoswere exemptfromthetribute. This exemp- tion included the sons of Spaniards by native women and of natives by Spanish women.5 In 178I the provinceof Bulacan voted a special tax, to equip two boats of the varietyknown as vintas6 forthe protectionof the coasts of the archipelago fromthe inroads of the Moros. This tax, called the vintas,amountedat firstto one-halfreal for

the tributewere declared

1 Recopilacion de las Indias, bk. i, titlexvi,law I4 (Spaniards to pay); ibid., law i6 (estates [haciendas]of the kingto pay); ibid.,law I7 (knightsof the mili- taryorders to pay); royal CedUulas,Sept. 25, 1768, Oct. 14, 1785 (las religiones to pay on thefruitsof theirestates).

2 Ordenanzasde Intendentesde la Hacienda, 1786,arts. I55, i68.

3 Royal Cedula, July I2, I778, approving the royal decree (real auto) of Dec. II, '775; also the royal Cidula, May 23, i8o0.

4 The fortifiedportof Zamboanga,Island of Mindanao,was the outpostfrom whichthe warswiththe Moslems werewaged. Decree of the Superintendencia,Dec. io, I836, and the decision of the JutntaSuperiorDirectivade Apelaciones, June30, i8S6.

690 POLITICAL

SCIENCE

QUARTERLY.

[VOL. XVI.

each personwhopaid tributeand was afterwardsraisedto one

I

ganta ofpaddy. The provinceofPampangalaterjoinedBula- can inthepaymentofthevintas. This tributewas suppressed in I829 and itsplacewas takenbya tax on the coastingtrade (cabotage);revivedagainlater,itwas finallysuppressedin i 85I 2

2. Recognition of Vassalage. -

The tribute could, in the

natureof things,be exactedfromthosenativesonlywhowere fullysubjugatedand livingin organizedcommunitiesunderthe Spanishlocal administration.But that did not preventthe effortto collectrevenuesfromthose" infidels" whowerenot sufficientlysubduedto be organizedintoregularmunicipalities butwhocouldyetbe compelledtorecognizeSpanishsovereignty. Long beforetheconquestofthe Philippines,the laws of the Indieshad providedthatall the" Indians" whomightbe con- queredshouldbe persuadedto paya moderatetributeinrecogni- tionof Spanishsovereignty.3This,as we have seen,was the originof the tribute,and itwas also the grounduponwhich, wheneverpossible,the wild,"infidel" tribesof the mountains and uncivilizedislandswererequiredto pay a tribute,which laterbecameknownas the "recognitionof vassalage." This tributewas collectedwithno regularitywhatsoever,and therewere,moreover,manylegalexceptionsto itsenforcement, thegeneralpurposeofwhichwas to bringthe nativesintothe foldof the church. Thus, forexample,it was providedthat the " Indians" whowere " in rebellion" shouldbe conciliated byall good means,evenbythe remissionof all taxes,to come intoobedience.4The acceptanceof baptismwas rewardedby exemption,5and in anycase conversionto the sacredfaithof theSpaniardscarriedwithittenyearsofexemptionfromtribute.

1 A ganta equals one-halfcavan,or three litres. Prior to i8iS a ganta was equal to 3.064I litres. 2 In additionto the tribute,therewas a heavylocal tax renderedin theformof compulsorylabor on roads,publicworksand churches. This could be commuted

intoa moneypayment.

It was one of the mostfertilesourcesof abuse of power.

3 Recopilacionde las

Indias, bk. vi,titlev, law I.

No. 4.]

TAXA TION IN

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69I

In i8461 the rate of the recognitionof vassalage for the negritos and "infidels" was fixed at one real per capita. In some places 2 the rate was made as high as onepeso per annum. But in lateryears the total amount collected fromthis source was onlyabout I2,000 pesos per annum.

3. Tze Cddulas Personales.-In

I884 the time-honoredtrib-

ute, the originalmainstayof the entire system of government and of the revenuein the Philippines,and the originalbasis of Spain's commerce with her dependencies,was repealed; and with it passed away the tithe,the caja de comnunidadand the sanctorum.3 The place of the ancient tribute,which had been renderedforso manyyears withso littlemurmuring,was taken

by a graduated poll tax, modelled upon that of the peninsula, and needless to say the innovationwas not popular. The tax was collectedby means of a certificateof identifica-

tion,known as

islands - Spaniards and foreigners,as well as natives,"'without distinctionof race, nationalityor sex, over eighteen years of

age"

Chinese,who paid another poll tax, the remontadosd infieles, not subject to the local administration,and the natives and colonistsof the archipelagoof Joloand of the islandsof Balabac

and Palawan. There were eventuallysixteendifferentclasses ofcdulas 6:

a cidula personal,4 which every resident5 of the

was requiredto obtain. The onlyexceptionswere the

I. Costing37.50 pesos; forall personswho paid

in one or more

Circularof the superiorgovernmentof June 12.

2 Sibuyan,for example,by conventionapproved by the Su erintendenciaon Feb. I5, I853-

8 Decree of the Gobiernogeneral,May 7, I884, and royal decree of March 6, I884. An amountequal to the proceedsof thesanctorumwas allowed thechurch fromthe proceedsof thecidulas.

4 The cidulas were firstissued by authorityof the royal decree of March 6, I884, under a provisional regulation dated July I5, I884. This regulation, somewhatamended, was approved by royal Decreto of July22, I885. It was amended furtherby the decree of thegeneral governmentof April25, i888, and the royal decrees of Dec. 12, I890, May I9, I893, and July 15, I894. Less importantamendmentswill be found in the royal decrees accompanyingthe budget each year. 6 Residence,one year.

692 POLITICAL

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[VOL. XVI.

quotas of the direct taxes' more than 400 pesos, exclusive of sur-

taxes; or those who enjoyed, fromone

receipts in excess of 8ooo pesos per annum,whetherpaid fromstate or local funds,or paid fromthe earningsof corporations,industries or individuals.2

2. Costing 30 pesos; for those with direct taxes of 300 to 400 pesos, or incomes of 6ooo pesos to 8ooo pesos.

or more sources, salaries or

3. Costing 22.50

pesos; forthose withdirect taxes of 200 pesos to

300 pesos, or incomes of 4000 to 6ooo pesos.

4. Costing I2.00 pesos; forthose withdirect taxes of 100 tO 200

pesos, or incomes of 2000

to 4ooo pesos.

5. Costing 7.50 pesos; fordirecttaxes of 50 to i oopesos, orincomes

of I000 to 2000 pesos.

6. Costing 5.25 pesos; fordirecttaxes of 12 to 50 pesos,or incomes

of 6oo to I ooo pesos. Also forthe wives and children,of bothsexes, over eighteen years of age, of all persons who paid taxes amounting

to over I00 pesos or enjoyed incomes amountingto 2000 pesos; always provided that such wives or children were not, on account of inde- pendent propertyor income, required to obtain cddulas of a higher class.

7. Costing 3.50 pesos; fordirecttaxes of 8 to 12 pesos inclusive,

or incomes of 200 to 6oo pesos. Or the wives and childrenofpersons who paid direct taxes of I2 pesos to I00 pesos, or had incomes of

6oo

to 2000

pesos.

8. Costing 3.00 pesos; for the wives and children,of both sexes,

more than eighteen years of age, of all persons who paid annually on account of direct taxes of 8 to I2 pesos inclusive,or enjoyed sala- ries or incomes of 200 to 6oo pesos inclusive.

9. Costing 2.25 pesos; for direct taxes of less than 8 pesos, or

incomes of less than 200 peSOS. In I890 this class was declared to include all persons not belonging to the higherclasses who enjoyed fixedincomes, and all domestic servants.3

1 The cedula was not considereda directtax. The taxes included were the industrialtax and the urbana tax. See, below,"the incometax."

2 The directtaxes weresupposed to be at the rate of half a tithe,or fiveper- centum; hence taxes at 400 pesos per annum would,theoretically,representan incomeof 8ooo pesos. The same proportionholdsgood in thesubsequentclasses, excepting 6, 7, .8 and 9, which included persons who enjoyed partial exemp- tion fromthe direct taxes on account of the comparativesmallness of their incomes,and hence in those classes the tax is less than fiveper cent of the income.

No. 4.]

TAXA TION IN

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693

I0. Costing2.00 pesos; forall personsnotincludedin thepreced- ingclassesor in subsequentclasses. In I890 thisclasswasdeclared to include wage workerswhose earningswere irregularor of a fortuitouscharacter. i i. Costing2.00 pesos; formilitaryofficersin activeservice.

Costingo.so pesos; forwivesand sons ofmilitaryofficers. CostingI.50 pesos; foragriculturalcolonists. Issued gratis; formonks,nuns,sistersof charity,"pastors of the asylumsof benevolence,"pauperswho receivedpublic aid, privatesin thearmyand navyand in thecivilguard(terciocivil) and forconvictsduringtheperiodoftheirimprisonment. IS. Issued gratisand knownas "privileged"(clase privilegiada); forpettygovernors(gobernadorcillos)or municipal"captains," and theirwives; for cabezasde Barangay and theirwives,and their

assistants, "knownat thattime by thenameofprimogenitos" 1

bornsons),"in recognitionof theirservicesin the administration and collectionof the tax."2 I6. A special citdula,gratis; forEuropeanagriculturistsin Para-

gua 8 (Island ofPalawan).

12.

I3.

I4.

(first-

Any personwas permittedto purchase a ddula of a higher

class than that which he was legally required to have.

enforcethe collectionof these taxes the properc/dula had to be exhibitedon the followingoccasions:

To

(i) Upon takingup any commissionorenteringupon anypub-

lic employmentunder the royal or insularauthority; (2) upon

enteringupon any provincialor municipaloffice; (3) upon mak- ing any contract,public or private; (4) upon presentingany claim,solicitingbusiness or appearingforanypurposebeforethe pettygovernorsor ministersof justice in thepueblos; (5) upon bringingany action before any courtof any authorityor before any officer;(6) upon matriculationin any institutionof learn-

employmentin industryor com-

ing; (7) upon entering any

merce,any profession,art or trade; (8) upon paymentof direct

1 Underthetribute,as explainedabove,thefirst-bornsonsof thecabezasde Barangay,or "personsadoptedas such,"wereexempt.It seemsthatthecabezas "adopted" theirassistants. 2Thiswas nottheoriginalreasonforthisexemption.See footnoteabove, concerningtheexemptionofcabezasdeBarangayinconnectionwiththetribute.

8

See royalorderofAug.20, i888. Thiswasa convictsettlement.

694 POLITICAL

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[VOL. XVI.

taxes; (9) upon presentingany claim or exercisingany civil

rightnotpreviouslymentioned,and upon acquiringany rightsor contractingany obligations; (I o) upon establishing identity;

(I i) upon realizingany kind of

deposits,collectingon lettersof credit,makingbills ofexchange, depositingmoneyin savingsbanks,confirmingpledges withthe montesde piedad, or pawn shops, and upon biddingat public auction; (12) upon becominga director,administrator,member, voter,shareholderor employeeofanyclass ofassociationor indus- trial undertaking; (I 3) upon travelling1beyond the boundaries of thepuebloof residence; and (14) upon enteringintodomestic service. The officersof the governmentwereauthorizedto call forand examinethe cldulas upon any and all occasions,and any person foundwithouta c6ddla (indocumentado)was subject to verysevere penalties. The c6dulas wereissued on the basis of a padrdnpreparedby

credits,making or withdrawing

the cabezas de Barangay and drawn up in practicallythe same manneras the padr6n for the tribute,the requiredinformation beingcollectedon schedules (hojas, literally,"1leaflets") filledout by the heads of households,giving the name and income of everypersonover eighteenyears of age in the household. The padrdn was made in triplicate: one copy for the cabeza, one for the gobernadorcilloand one for the treasurydepartment (administraci6nde hacienda publica). The heads of all institu- tions - monasteries,convents,prisons,etc. - who had persons entitledto c6dulas gratisunder their charge prepareda special padr6n; but any person not enteredin the padrdn mightpur- chasea cldula, ifhe so desired. The captains,orthepatrones,of all boats were required to submit a similarpadr6n for the persons living on the boats. The cabtza de Barangay was

held responsibleforthe collection of the taxes

enteredin the padrdn forhis cabeceria,and the captains,or the

patrones,of all boats were held similarlyresponsible. The c/dulaswerepreparedwithstubs and boreserialnumbers, so thateveryone issuedto the tax collectorscouldbe tracedand

on all persons

1 The cidsda thus islands.

served as a passport to all persons travellingwithinthe

No. 4.J

TAXATION

ZNr THE

PHILIPPINES.

695

accountedfor. The cidula stated the yearforwhichitwas valid, the numberof the class, the rate at which it was issued, the provinceand pueblo in which it was issued, the name of the personto whomit was sold, givingthe name of the provinceof which he was a native,his age, conjugal condition,profession and address, with properreferencesto the padron in which he was enrolled. To cover the costs of collection there was an allowance of six per cent (formerlyfiveper cent), of whichthreewentto the cabeza de Barangay, one to the governorof the province,one to the administratorof the hacienda p'blica and one to the gobernadorcillo. To completethe transformationof all the ancienttaxeswhich hadgrownout of thetributeexactedfromthe conqueredpeoples, the royal decree of July I5, I894, authorizedthe governor- general to providethe cddula of the tenthclass (2.00 pesos) for such pueblos and plantations1 of "sinfidels" as he thought proper,and in everycase to exact as the rate forthe recognition of vassalage an annual paymentof at least o.50 pesos. After the American occupation the ddulas personales were abolished; but, as the procedureof Spanish law was retained,it was soon foundthat the possession of such a documentforthe purposeof identificationwas necessary. Consequently,the mili- tarygovernmentdecided to issue such certificatesat the nominal and uniformrateofone peseta (0.20 pesos) each, an amountwhich it was assumed would be sufficientto coverthe cost of sale. Just previous to the American occupation the cddulas had yielded a revenue of about 7,000,000 pesos per annum,which was the largest item on the list of revenues at that time.

4. Chinese Poll Tax.- The Sangleyes, or Chinese traders,

residentin the islands,were the constant subjects of restrictive legislationand ofdiscriminatingtaxation. As earlyas I6I4 the

governorwas enjoined to collect license taxes fromthem for

1 The termrancherfas,here translatedas " plantation,"is used in the moun- tainous provincesof Luzon to designate a village or settlementnot organized as a puebZo. They were usuallygovernedby a native gobernadorcillo,under the guidanceofa missionary. In theVisayas similarsettlementsare calledsementeras,

-literally,

"plantations."

696 POLITICAL

SCIENCE

QUARTERLY.

[VOL. XVI.

acquiring residence (radicacion), and the royal officialswere empoweredto fix the rate of these licenses.' A bandoissued by the governorin I66o prescribesthe mannerin whichthese licenses shall be issued and the listing of the Chinese in a padron. Down to I755, when the non-ChristianChinese were expelled fromthe Philippines,their presence was regarded as essentialto tradeand to the industrialprosperityof the islands. It is not the least significantof the manyinterestinghistorical factsbuiltintothe citywall of Manila thatthe largestand finest gateway should be that " del Parian,"2 or leading fromthe dis- trictwithinthe walled citywherethe Chinesewere once allowed .to settle. In I 790 therate fortheChinese poll tax was fixedat sixduros per capita,equivalentto six pesos of eightreales each.8 But in I 828 the superiorgovernment,"recognizing,"in the wordsof a memorialsubmittedat thetime," thegreatadvantageswhichthe Chinese, or Sangleyes, enjoyed in the commercewhich they had in the Philippines,to the prejudice of the Spaniards and mestizos,and consideringthat the tributeof sixdutrosper annum which they were paying was very little compared with their gains and withthat which existedin Java, Singapore and other colonies in Asia, where they were permittedto trade,"decided that there should be a new padron, or tax list, made of the Chinese resident in the islands; that they should be divided into cabecerz'as,as were the natives; that the Chinese cabezas de Barangay shouldgive bond forthe tributeof theirrespective

and turn it in to the provincial

alcaldes, who were to receive three per cent of the collec- tions; that the Chinese were to be divided into three classes:

(i) the greater merchants,among whom were to be classed

cabeceri'as,and gatherthe same

such as

to the provincesof the Indian archipelago,or importedgoods

shipped goods or effectsto foreignlands or sent them

1 Recopilacion de las Indias, bk. viii, title xxix, law i i; also bk. vi, title ix,

law 13.

2 Mexicanformarketplace.

8 Royal Cedula,May 14. Foreman (p. 120) statesthat" taxes werefirstlevied

on the Mongul tradersin i828."

began in 1790, and license taxes were levied almost withoutinterruptionafter

I614.

This

is an error,as the special capitationtax

No. 4.]

TAXATION

IN

THE

PHILIPPINES.

697

forsale on theirownaccountor on commission,whetherfrom abroador fromotherprovinces;(2) lessermerchantsor shop- keepers,whoweresuppliedfromthe warehousesofthe capital or of theprovinces;and (3) artisansof everyclass; thatthe firstclass shouldpay tenpesosfuer/esper month,the second fourandthethirdtwo; thatanyChinamanwhofailedforthree monthsto payhistaxshouldbe deliveredoverto theownerof somehaciendato workas a daylaborerat a wagenot less than twosilverrealesanda rationof riceperday,and the masterof the haciendashouldpaythewagesto thealcalde mayorof the provinceuntilthetaxwas discharged. This schemeforthe taxationof the Chinesehad been pre- paredin Spain withoutsufficientknowledgeof the local con- ditions,and its enforcementwouldhave metwithmanygrave difficulties,some of whichwere,however,obviatedbeforeit went into effect. In the firstplace, therewere amongthe Chinesemanywhocouldbarelyearnthemeagrelivingtowhich theywereaccustomedandwhocouldnotpayeventhetwopesos permonthwhichthelawrequired. Consequently,a fourthclass at onepesopermonthhadtobe established.The thirdclasswas thenmadeto consistofoverseers,mastersor superintendentsof factoriesor shops,whilethe fourthincludedoperatorsandday laborers. In the secondplace,itwouldhavetendedto impede theentranceoftheChineseintocommerciallife,forwhichthey werewell fittedand whichhad beentheirfavoriteoccupation, andwouldhavedriventhemtocompetemoreandmorewiththe nativesin fieldswhichtheChinesehad notenteredheretofore. In thethirdplace,the dailywage of tworealesfordelinquent Chinesewhichthe governmenthadplacedas theminimumwas too high,beingmorethanthe nativesemployedas agricultural laborerscouldearn. To remedythis it was providedthatthe delinquentChinesewere to be employedon the publicworks andfortificationsandthat,iftheywere delinquentfora second quarter,theywereto be expelledfromthe islands. Another difficultyin the programforthis tax was thatno Chinamen wouldconsentto act as cabezasde Barangay,on accountofthe responsibilityfor the taxes on the padronfor the cabeceri'a.

698 POLITICAL

SCIENCE

QUARTERLY.

[VOL. XVI.

The duty of making thepadron was, therefore,laid upon the

corregidores,or mayors,of the towns or districtswhere the Chinese resided, and collections were made by the a/caldes mayoresof the province. The firstpadron, satisfactorilycompleted in I83I, showed

5708 Chinese, of whom 7 were in the firstclass, i66 in the

second,4509 in the thirdand 830 in the fourth,while I96 were over sixtyyears ofage and exempt. But the attemptto collect the tax on this basis was beset with new difficultieswhich had not been anticipated. Eight hundredChinese preferredto return home rather than pay the tax. One thousand and eighty-threefled to the mountains,and fourhundredand fifty- three,who did not possess the means to returnhome,to fleeor to pay the tax, were compelledto work out theirtaxes on the public works. Hence in I834 the governmentsaw itselfcom- pelled to authorizethe intendenciato reduce the rates to such

a level that the taxes could be paid by the Chinese. The result was that the increasewas levied in the formof a special tax on Chinese industryand commerce,which is discussed in another connection,and the poll tax proper was restored to its old level. In i850,1 in connectionwith one of the many almost vain effortsto encourage the entranceof the Chinese into agricul- turalpursuits,two new classes were createdforthe poll tax,con- sistingof (i) Chinese engaged on estates raisingsugar, indigo and hemp in Luzon and the Visayas, and (2) Chinese engaged in agriculturein certain sparsely settled districts. The rates for these two classes were twelve and five reales,respectively. Those Chinese who chose to raise tobacco for the monopoly were to be exemptforfiveyears. The benefitsof thisact were afterwardsextended2 to Chinese engaged in fisheries,wood- cutting,mining,shipbuildingand in any employmentotherthan that of commerce. In I862 these rates became threeand two pesos, respectively.3 Nevertheless, as most of the Chinese

I

2

3

Decreto,August 5 and Bando of the same date.

Decreto,Dec. 22, I850.

Royal order,March 27, i86i.

No. 4.]

TAXA TION IN

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PHILIPPINES.

699

clung stubbornlyto theirold commercialpursuits,therewas, in spite of all this legislation,littlepracticalchange fromthe gen- eral tax of sixpesos per annum imposedin I790. An extensive revision of the law relating to the Chinese poll tax was made in I890, by virtue of the royal decree of February I3. Every Chinese, irrespectiveof age or sex, was required to be provided with a cJduZa de capitacionpersonal or document of identification. This document, or schedule, was preciselysimilar in characterand in effectto that which the nativeswere required to have and whichwas knownas the c/dula personal. It was validforone year only,and its cost thus constitutedan annual tax. The c/dulas were of eightdifferentclasses, as follows:

I. Costing30 pesos; 1 forall male Chinese over fourteenyears ofage whoseannualcontributionin theformof directtaxes 2 exclu- siveof surtaxesamountedto 400 pesos or more.

2. Costing25 pesos; forthosewhosedirecttaxeswereover 300

pesos

but not over 400 pesos.3

3. Costing20 pesos; forthosewhosedirecttaxeswereover200

pesos butnotover300 pesos.

4. Costing15 pesos; forthosewhosedirecttaxeswereoverioo

pesos but not over 200 pesos.

5. Costingio pesos; forthose whose directtaxes wereover 50

pesos butnotoverioo pesos.

6. Costing6 pesos; forall male Chineseoverfourteenyearsof

age notincludedin thefiveprecedingclasses.4

7. Costing 3 pesos; for Chinese womenover fourteenyears

of age.

8. Issued gratis;forall underfourteenyearsofage and forthose

physicallyincapacitatedforwork.

Anotherclass of cidula, calledprivilegiada, was issued gratis to the Chinese gobernadorcilloand to his wife; also to his lieutenantsand to the tax collectorsduringtheirtermof office.

1 Withoutthe surtaxes; see below.

2 The

8 The

cedulawas not regardedas a directtax.

ambiguityas to whichcidula a

Chinese payingexactly400 pesos should

purchaseexistedin the Spanish law.

4 It should be observed that this is the old rate of the Chinese poll tax of see above.

I790;

700 POLITICAL SCIENCE

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[VOL. XVI.

As was so universallythe practice with all Spanish taxes, these rates Were increased by several surtaxes. First, there was five per cent of the price as a "tconsumptiontax."

Second, there were a number of surtaxes, ostensiblyfor the supportof the provincialand municipalgovernments. Latterly, and down to the time of American occupation,these amounted to fiftyper cent and were designated as for the "benefit of the treasury." Third, there was a surtaxof eight per cent, to be distributedas follows: one per cent for the general treasury,two, for the cost of collection and five,to forma fundto meet the expenses of sendinghome insolventChinese. The totalcostof theccdu/aswas, therefore:class I, 48.90 pesos; class 2, 40.75 pesos; class 3, 32.60 pesos; class 4, 24.45 pesos; class 5, I6.30 pesos; class 6, 9.78 pesos; class 7, 4.89 pesos. It was expresslyprovidedthat any Chinaman might purchase a cdue/abelongingto a higher class than that in which he was listed,withoutbeing requiredto give any explanation. To enforce the purchase of these documents,the Chinese

required to produce them on every occasion when they came in any way in contact withthe governmentor when it mightbe necessaryto establishtheiridentity,and certainofficials were authorizedto call forand inspect the cdulas at any time. The cdiea had to be presented in court whenevera China- man had business there; to notaries,whenevertheir services were required; to the captain of the port and to every ship captain, when the Chinaman desired to travel,etc., etc. Any

Chinamanfound withouta

to severe penalties,and in case of actual inabilityto purchase

were

c/dula (indocunentado)was subject

one might be deported. The officersof collectionwere held accountableforthe price of thecdie/as foreverypersonentered in thepadron and could onlybe relievedfromthe responsibility forpaymentby provingsickness on the part of a contributor, sufficientto incapacitate him for work for four months,his death or departurefromthe islands.

No. 4.)

TAXATIOX

ZNTHE

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701

i. In General.-In

II. THE INCOME TAX.

18781 the systemof taxes in forcein

thePhilippineswas roundedoutbytheadditionof a tax on all incomesexceptthosefromagriculture,it beingthe established

policyof the Spanishgovernmentto nurturethatoccupation. Thiswas theonlytaxin the Islands knownadministrativelyas

a directtax. It was leviedunderthe guiseof twotaxes: one,

on theannualrentalvalue of urbanreal estate,calledthecon- tribucidndirectasobrela propriedadurbana,but commonly knownas the" urbana" tax; and anotheron salaries,dividends and profits,called the contribucio'ndirectasobrela industria, el comercio,las profesionesy las artes,a namecommonlyabbre- viatedintothe " industrialtax."2 The rateof theincometax was halfa tithe,or fiveper cent of the net income. Very low incomeswereentirelyexempt,anda partialexemptionwas

grantedto thosejustabovethelowest.

2. The "Urbana" Tax.-This wasoriginallyleviedat therate

of fiveper cent upon the net rentalvalue of all housesand

buildingsofbrick,ofmasonry,ofironandofwood,whetherinhab-

itedbytheirownersor notandwhatevermightbe theusesto whichtheywereput; andalso uponthoseofbambooand nipa,3 whenrentedor usedforcommercialor industrialpurposes. Absolute exemptionwas grantedfor buildingsownedand occupiedbyreligiouscommunities,thosewhichservedas resi- dencesfortheparishpriests,thoseused as hospitals,housesof benevolenceor schools,when not privatepropertyor when grantedbytheownerforsuchuse freeofrent,housesinhabited byforeignconsuls,whenownedbythegovernmentswhichthey represented,and when those governmentsgranteda similar franchiseto the representativesof Spain,andpublicbuildings ownedand usedbythe state.

1 Royaldecree,June14.

2 Thiscommonnameispeculiarlyunfortunateandhasgivennrsetoa complete misunderstandingofthetruecharacterofthetax. 3 The commonnativehousehas a bambooframe,withnipa thatchforroof andwalls.

702 POLITICAL

SCIENCE

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[VOL. XVI.

Temporaryexemptionwasgrantedto housesof bambooand nipa,whenoccupiedbytheirowners,and to edificesofwhatever materialsruinedby earthquakes,typhoons,floodor fireand those whichwere in processof constructionor of complete reconstructionand forone year thereafter. The netrentalvalue upon whichthetax was to be assessed was determinedbydeductinga fixedallowance,fortheexpenses of repairsandmaintenance,fromthe grossrentalsreceivedor whichmighthave been receivedhad the edificebeen rented. This allowancewas fortyper cent in the case of structures of brick,masonryor iron and fiftyper cent in the case of structuresof wood or of bambooand nxipa. The taxwas assesseduponall proprietors,withoutdistinction ofclassornationality,withthe sole exceptionthatnativeswho paidtributewereto be exemptif theirurbanatax wouldnot exceed fourpesos per annum; if it reachedor exceededthat sum,such nativeswereto be exemptfromthe tribute;if it exceededtwelvepesos, this e