LEGISLATION. PORTO RICO. The act providing a civil government for Porto Rico, and for other purposes approved March 2, 1917 (39 Stat. 1954), provides as follows: SEC. 9. That the statutory laws of the United States not locally inapplicable, except as herein before or hereinafter otherwise provided, shall have the same force and effect in Porto Rico as in the United States, except the internal-revenue laws: Provided, however That hereafter all taxes collected under the internal-revenue laws of the United States on articles produced in Porto Rico and transported to the United States or consumed in the island shall be covered into the treasury of Porto Rico WAR-REVENUE ACT. The "Act to provide revenue to defray war expenses, and for other purposes" (H. R. 4280), passed Congress and was approved at close of business October 3, 1917, and took effect October 4, except as otherwise provided. The following is a general statement of the taxes imposed: The law provides an increase in the income tax and excess-profits tax. The rate of tax on distilled spirits is increased to $2.20, and if withdrawn for beverage purposes $3.20. A tax is imposed on rectified spirits, and there is also a floor tax on tax-paid distilled spirits held by retailer in a quantity in excess of 50 gallons, or by any other person, corporation, partnership, or association in any quantity, and which are intended for sale. The tax on wines is increased, and taxes are imposed on sirups, soft drinks, carbonated beverages, etc. The new rate of tax on fermented liquors is double the rate under the old law. The act imposes additional taxes on cigars, tobacco, and manufactures thereof. A war tax is imposed on facilities furnished by public utilities, taking effect November 1, 1917, as follows: On amount paid for freight transportation, on express charges, on amount paid for transportation of persons, on seats, berths, and staterooms in parlor cars, sleeping cars, or on vessels, and on the transportation of oil by pipe lines, and on telephone messages and telegrams for which a charge of 15 cents is made. Taxes are also imposed on life, fire, marine, and casualty insurance. War excise taxes are imposed on automobiles, motorcycles, piano players, graphophones, phonographs and records, moving-picture films, jewelry, real or imitation, yachts, pleasure boats, power boats, etc., sporting goods, cameras, perfumery and cosmetics and other similar articles, proprietary medicines, and chewing gum. There is a tax imposed on admissions to entertainments and on club dues, to take effect November 1, 1917. There is also an increase in the estate tax. Stamp taxes, taking effect December 1, 1917, are imposed on bonds of indebtedness, issues of capital stock, sales or transfers of 13034°-FI 1917- -50 capital stock, sales of produce on exchange, drafts or checks payable otherwise than at sight or on demand, promissory notes (except bank notes), conveyances, and other documents, parcel-post packages, passage tickets, and an additional tax on playing cards (effective Oct. 4, 1917). The act is estimated to raise approximately $2,535,000,000, including $76,000,000 increased postal revenues, during a twelve months' period. ILLICIT DISTILLING AND WORK OF REVENUE AGENTS. The number of illicit distilleries reported for seizure during the year ended June 30, 1917, was 2,232, which shows a decrease of 1,054, when compared with the number reported during the previous year. This marked difference, amounting to nearly 34 per cent, should not be attributed to a decrease in illicit distilling. It is rather due to the fact that information leading to the capture of illicit distilleries is no longer paid for by the Government; the result being that only voluntary information is now received from citizens interested in suppression of illicit distilling. There has been a great saving to the Government by the discontinuance of former practice of paying informers and possemen as the information furnished often led to useless raids. Besides the great saving above noted, it may be added that the courts have been to a great extent relieved of the enormous number of petty prosecutions with which their dockets have been hitherto overloaded. The following is a brief summary of work accomplished by revenue agents and their subordinate officers during the year ended June 30, 1917: Taxes reported for assessment, accepted offers in compromise, etc. Corporation taxes and individual income taxes. Munitions taxes. Estate taxes. Distilled spirits, tobacco, and miscellaneous taxes. Collections on account of oleomargarine frauds. Total.... $30, 391, 164. 22 12, 346, 334. 51 8, 183.53 3,491, 678. 48 774, 683.30 242, 214.50 47, 254, 258. 54 NOTE. The above receipts from oleomargarine include approximately $175,000, tax payments made on account of assessments on oleomargarine withdrawn at cent during various periods prior to July 1, 1914, and subsequently found on the market artificially colored and assessed at 93 cents per pound, or the difference between the -cent and the 10-cent rate. RECOMMENDATIONS. It is recommended that existing laws be amended and strengthened relative to tobacco manufacturers and dealers, oleomargarine, adulterated butter, narcotics, and corporation income, and estates as is set forth and described on pages 763, 765-767, 775, and 776. Respectfully, Hon. WILLIAM G. McADOO, W. H. OSBORN, Commissioner of Internal Revenue. Secretary of the Treasury. NOTE. For details of the Report of the Commissioner of Internal Revenue, see his annual report. FROM TABLES ACCOMPANYING THE REPORT OF THE COMMISSIONER OF INTERNAL REVENUE. TABLE SHOWING THE TOTAL NUMBER OF RETURNS BY CLASS *NON-TAXABLE. SPECIFIC EXEMPTION EXCEEDS NET INCOME **THE NET INCOME OF BOTH THE HUSBAND'S AND WIFE'S RETURNS WERE COMBINED AND COUNTED AS ONE |