INTERNAL-REVENUE TAX-CIGARS-PHILIPPINE ISLANDS. Cigars shipped from the Philippine Islands to the United States are not subject to internal-revenue tax under section 3402, Revised Statutes. Prior to the passage of the act of July 1, 1902 (32 Stat., 691), the Philippine Islands were "within the exterior boundaries of the United States" within the meaning of section 3448, Revised Statutes, and subject to its provisions; but since its passage the provisions of that section have been inoperative in those islands, section 1 of that act providing in effect that the laws of the United States shall not apply to the Philippine Islands. No internal-revenue tax therefore can be imposed under the laws of the United States on cigars shipped into this country from the Philippine Islands. DEPARTMENT OF JUSTICE, September 11, 1902. SIR: I have the honor to acknowledge the receipt of your letter transmitting a letter from the Commissioner of Internal Revenue and requesting my opinion as to whether cigars shipped from the Philippine Islands "are subject to internal-revenue tax as well as duty under the laws of the United States." Section 3402, Revised Statutes, provides that "All cigars imported from foreign countries shall pay, in addition to the import duties imposed thereon, the tax prescribed by law for cigars manufactured in the United States." In the Fourteen Diamond Rings case (183 U. S., 176) the Supreme Court held that goods brought from the Philippine Islands were not "imported from a foreign country" within the meaning of our revenue laws. In view of this decision, cigars shipped from the Philippine Islands to the United States are not subject to internal-revenue tax under said section 3402, Revised Statutes. Section 3394, Revised Statutes, imposes internal-revenue tax "upon cigars which shall be manufactured and sold, or removed for consumption or use," said tax to be paid by the manufacturer of the cigars. Section 3448, Revised Statutes, reads as follows: "The internal-revenue laws imposing taxes on distilled spirits, fermented liquors, tobacco, snuff, and cigars shall be held to extend to such articles produced anywhere within the exterior boundaries of the United States, whether the same be within a collection district or not.” 66 In The Cherokee Tobacco" case (11 Wall., 616) it was held that section 3448 is in force in the Indian Territory, and supersedes a prior treaty with the Cherokee Nation of Indians. The court said (page 620): "The language of the section is as clear and explicit as could be employed. It embraces indisputably the Indian territories. Congress not having thought proper to exclude them, it is not for this court to make the exception. If the exemption had been intended, it would doubtless have been expressed." Mr. Justice Bradley (with whom concurred Mr. Justice Davis), after expressing his reasons for dissenting from the opinion of the court, said (page 624): "This view is strengthened by the fact that there is territory within the exterior bounds of the United States to which the language of the 107th section of the recent act can apply, without applying it to the Indian Territory, to wit, the territory of Alaska." It is clear that Alaska was then understood by the court to be within the exterior boundaries of the United States, and therefore within the provisions of said section. No reason can be found why the Philippines, prior to the passage of the act of July 1, 1902, "Temporarily to provide for the administration of the affairs of civil government in the Philippine Islands, and for other purposes," were not also within the provisions of said section. They were "within the exterior boundaries of the United States," and were not, prior to July 1, excluded from the provisions of said section. But the first section of said Philippine act of July 1, 1902, provides in effect that the laws of the United States shall not apply to the Philippine Islands. I am therefore of the opinion that since said act went into effect, the provisions of said section 3448 have been inoperative in the Philippines. The provisions of section 3394 undoubtedly apply only to cigars manufactured within the bounds of our internal revenue laws, i. e., within the territory where these laws are operative. If this view is not correct, there was apparently no necessity for the passage of section 3402, which says that "all cigars imported from foreign countries shall pay an internal revenue tax." In the Porto Rican or Foraker Act of April 12, 1900, Porto Rico was excepted from the operation of our internal revenue laws, but under section 3 of said act a tax was imposed upon "articles of merchandise of Porto Rican manufacture coming into the United States and withdrawn for consumption or sale," "equal to the internal revenue tax imposed in the United States upon the like articles of merchandise of domestic manufacture." No such provision was made in the Philippine act with reference to the collection of an internal revenue tax on articles coming into the United States from the Philippines. I am therefore of the opinion that no internal revenue tax can be legally imposed under the laws of the United States on cigars shipped from the Philippine Islands. Respectfully, HENRY M. HOYT, The SECRETARY OF THE TREASURY. TONNAGE TAX-PORTO RICO-MARINE-HOSPITAL SERVICE. The tonnage tax collected in Porto Rico under section 14 of the act of June 26, 1884 (23 Stat., 57), as amended by section 11 of the act of June 19, 1886 (24 Stat., 81), should be so deposited as to be available for the maintenance in part of the Marine-Hospital Service. DEPARTMENT OF JUSTICE, September 17, 1902. SIR: I have the honor to acknowledge the receipt of your letter of the 14th ultimo inclosing a letter "from the collector of customs at San Juan, P. R., in which he requests a decision whether tonnage tax collected in Porto Rico shall be so deposited as to be available for the maintenance in part of the Marine-Hospital Service." Under section 4585, Revised Statutes, there was formerly assessed and collected by the collectors of customs "from the master or owner of every vessel of the United States arriving from a foreign port, or of every registered vessel employed in the coasting trade, *** the sum of 40 cents per month for each and every seaman who had been employed on such vessel since she was last entered at any port of the United States; and such master or owner was authorized to retain such sum from the wages of such seaman. Section 4803, Revised Statutes, provided that all such moneys should be "placed to the credit of the fund for the relief of sick and disabled seamen,' of which fund separate accounts should [shall] be kept in the Treasury." Section 15 of "An act to remove certain burdens on the American merchant marine and encourage the American foreign carrying trade, and for other purposes," approved June 26, 1884, repealed said section 4585, Revised Statutes, and provided that the expense of maintaining said Marine Hospital Service should thereafter be borne by the United States out of receipts for duties on tonnage provided for in that act. Such tonnage duties are levied in Porto Rico under section 14 of said act of June 26, 1884, as amended by section 11 of the act of June 19, 1886. It will readily be perceived that the tonnage taxes collected under the provisions of said act of June 26, 1884, as amended, constitute a special and separate fund for a distinct and specific purpose, viz, for the maintenance of the Marine-Hospital Service. The reasons assigned for my opinion of July 15, last, wherein it was held that certain head money levied on immigrants should be accounted for and included in the "immigrant fund," as is done in the case of alien passengers "arriving at ports of the United States," are applicable to the case under consideration. Section 4 of the Porto Rican act of April 12, 1900, provided that all collections of duties and taxes in Porto Rico under the provisions of the act should be paid into the treasury of Porto Rico "to be expended as required by law for the government and benefit of Porto Rico." It was held in said opinion of July 15, last, that the duties and taxes referred to in said section 4 are those levied and collected as such and which, without special legislation, would be covered into the general fund of the treasury, and be devoted to the general purposes of government. If we permit the tonnage dues collected in Porto Rico to be covered into the Porto Rican treasury, the money thus collected will be devoted to a purpose entirely foreign to that contemplated in the law providing for the support of the Marine-Hospital Service. It is reasonable to believe that Congress, in extending the laws of the United States not locally inapplicable to Porto Rico (sec. 14, Porto Rican act), and in nationalizing Porto Rican vessels and admitting same to the benefits of our coasting trade, intended that Porto Rico should have the benefits of the Marine-Hospital Service. As that service is supported and maintained out of a separate fund provided for that purpose, it is believed that Congress intended that tonnage dues collected in Porto Rico should not be paid into the Porto Rican treasury, but should augment the Marine-Hospital fund. If the benefits of the Marine-Hospital Service were meant to be extended to Porto Rico under the provision of said section 14 of the Porto Rican act, there is no reason to believe that Congress intended to except Porto Rico from the burden of such service. In other words, if part of the law is applicable to the island, it is all applicable. Inasmuch as it will undoubtedly require the money thus collected in Porto Rico to maintain the Marine-Hospital Service there, the spirit of said section 4 of the Porto Rican act will be carried out, as well as the letter of the laws relating to the Marine-Hospital Service, made applicable to Porto Rico by section 14 of said Porto Rican act. I am, therefore, of the opinion that the tonnage tax collected in Porto Rico should "be so deposited as to be available for the maintenance in part of the Marine-Hospital Service." Respectfully, HENRY M. HOYT, The SECRETARY OF THE TREASURY. |