TAX ON BAY RUM, ETC., FROM PORTO RICO.

JANUARY 13, 1909.-Committed to the Committee of the Whole House on the state of the Union and ordered to be printed.

Mr. PAYNE, from the Committee on Ways and Means, submitted the

following

REPORT.

[To accompany H. R. 22884.]

The Committee on Ways and Means, to whom was referred the bill (H. R. 22884) entitled "A bill more completely to accomplish the objects contemplated by section three of the act of April twelfth, nineteen hundred, chapter one hundred and ninety-one," having had the same under consideration, report it back to the House with an amendment and recommend that the bill as amended do pass.

The amendment strikes out all after the enacting clause and inserts in lieu thereof the following:

That upon bay rum or any article containing alcohol hereafter brought from Porto Rico into the United States for consumption or sale there shall be paid a tax on the spirits contained therein of one dollar and ten cents per proof gallon, to be collected at the port of entry by the collector of internal revenue of the district in which the port is located. The Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, is hereby authorized to make such rules and regulations as may be necessary to carry this act into effect.

The bill as amended is identical with H. R. 25122, reported by this committee in the Fifty-ninth Congress, except that there is now added in line 1, after the words "bay rum," the words "or any article. containing alcohol." The report on the bill in that Congress was as follows (Report 7095):

The Committee on Ways and Means, to whom was referred the bill (H. R. 25122) entitled "A bill to impose a tax on bay rum brought from Porto Rico into the United States," having had the same under consideration, report it back without amendment with a recommendation that the bill do pass.

The purpose of this act is to place bay rum imported from Porto Rico and the product of that island on the same basis as to the payment of internal-revenue tax as the bay rum manufactured in the United States.

The act of April, 1900, imposed upon articles from Porto Rico "a tax equal to the internal-revenue tax imposed in the United States upon the like articles of merchandise of domestic manufacture." Under this clause the Treasury Department has been collecting a tax of $1.10 per gallon upon bay rum from Porto Rico. By decision of the circuit court of the eastern district of New York, on the 6th day of December, 1906, the court held that, inasmuch as the internal-revenue laws of the United

States imposed no tax by their terms upon domestic bay rum, the imposition of such tax upon imported bay rum was unauthorized.

However, the distilled spirits from which bay rum is manufactured in the United States pay a tax of $1.10 per gallon. These distilled spirits and bay rum escape internal-revenue tax in Porto Rico, and therefore neither the bay rum imported from Porto Rico nor the spirits from which it is manufactured pay any internal-revenue tax. This bill is simply to equalize the conditions and places a tax upon the bay rum imported from that island.

This legislation is recommended by the Commissioner of Internal Revenue and by Secretary Shaw.

After the bill was reported to the Fifty-ninth Congress it was ascertained that, contrary to the information which had been given the committee, there then was an internal-revenue tax in Porto Rice on bay rum equal to the internal-revenue tax in this country, and the bill was therefore not pressed for consideration in the House.

On March 14, 1907, the legislature of Porto Rico amended the act whereby the internal-revenue tax in Porto Rico was levied so as to read as follows:

SECTION 3. There shall be levied, collected, and paid

(1) On all distilled spirits produced in Porto Rico, or brought into Porto Rico, a tax of twenty-six cents on each liter or fraction thereof: Provided, That for the purposes of this Act all spirituous liquors not otherwise provided for in this Act produced in Porto Rico, or brought into Porto Rico, of which, exclusive of water, distilled spirits form the chief component, shall be regarded as distilled spirits.

*

(7) On all proprietary medicinal preparations, patent medicines, toilet soaps, perfumery, and cosmetics, produced in Porto Rico, or brought or imported into Porto Rico, a tax of five per cent ad valorem: Provided, That bay rum, alcoholado, and similar aromatic compound preparations of alcohol, not used as a beverage, shall be considered as perfumery: And provided further, That a drawback shall be allowed on any tax-paid alcohol used in compounding any article referred to in this paragraph when such article is made strictly in accordance with such special regulations as the treasurer of Porto Rico may prescribe.

Articles subject to tax under the provisions of this act shall be exempt from taxation when exported from Porto Rico under such regulations, and after the making of such entries and executing and filing of such bond, as the treasurer of Porto Rico may prescribe: Provided, That the taxes paid on alcohol which is used in any article manufactured for export shall be refunded: Provided, That the manufacturer register beforehand with a special label the article intended for exportation, and in which case the treasurer shall determine the rules governing such cases in order to analyze the said article and supervise the manufacture of the same, if he should deem it necessary.

The effect of this amendment was to exempt bay rum, etc., coming into this country from Porto Rico and entering into competition with the American product, from all internal-revenue tax either in Porto Rico or in this country, and thus rendered the enactment of the proposed bill necessary to give the American product an equal chance in competition with the Porto Rican product.

The Government has been contending that these commodities, when imported to this country, are now subject to our internal-revenue tax, and considerable litigation has been had, but the decisions so far have been adverse to the Government. Already nearly half a million dollars has been collected, under protest, by the Government, but under the decisions of the courts will probably have to be paid back to the importers. The proposed act does not affect importations already made, nor in any way interfere with the cases now pending.

Amend title to read: "An act to impose a tax upon alcoholic compounds coming from Porto Rico, and for other purposes."

O

60TH CONGRESS, HOUSE OF REPRESENTATIVES. J REPORT 2d Session. No. 1853.

CONDEMNED CANNON TO COUNTY COURT, MARSHALL COUNTY, W. Va.

JANUARY 14, 1909.-Committed to the Committee of the Whole House on the state of the Union and ordered to be printed.

Mr. BRADLEY, from the Committee on Military Affairs, submitted the following

REPORT.

[To accompany H. R. 24151.]

The Committee on Military Affairs, to whom was referred the bill (H. R. 24151) to authorize the Secretary of War to donate two condemned brass or bronze cannon or field pieces and cannon balls to the county court of Marshall County, W. Va., having considered the same, report thereon with a recommendation that it do pass.

Your committee believe that, as the War Department have a number of these condemned cannon on hand, and as they are of no value except as old material, the bill should pass.

60TH CONGRESS, HOUSE OF REPRESENTATIVES. 2d Session.

AMENDING SECTIONS 3646 AND 3647, REVISED STATUTES.

JANUARY 14, 1909.-Referred to the House Calendar and ordered to be printed.

Mr. OVERSTREET, from the Committee on the Post-Office and PostRoads, submitted the following

REPORT.

[To accompany H. R. 25805.]

The Committee on the Post-Office and Post-Roads, to whom was referred the bill (H. R. 25805) "to reenact and amend sections thirtysix hundred and forty-six and thirty-six hundred and forty-seven of the Revised Statutes," having had the same under consideration, report it back to the House with the recommendation that it do pass. The bill is as follows:

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That sections thirty-six hundred and forty-six and thirty-six hundred and forty-seven of the Revised Statutes be, and they hereby are, reenacted and amended to read as follows:

"SEC. 3646. Whenever any original disbursing officer's check is lost, stolen, or destroyed, the Secretary of the Treasury may authorize the officer issuing the same, after the expiration of six months and within three years from the date of such disbursing officer's check, to issue a duplicate thereof upon the execution of such bond to indemnify the United States as the Secretary of the Treasury may prescribe: Provided, That when such original disbursing officer's check does not exceed in amount the sum of fifty dollars the Secretary of the Treasury may authorize the issuance of a duplicate at any time after the expiration of thirty days and within three years from the date of such disbursing officer's check: Provided jurther, That whenever any original check or warrant of the Post-Office Department has been lost, stolen, or destroyed the Postmaster-General may authorize the issuance of a duplicate thereof, at any time within three years from the date of such original check or warrant, upon the execution by the owner thereof of such bond of indemnity as the PostmasterGeneral may prescribe: And provided further, That when such original check or warrant does not exceed in amount the sum of fifty dollars and the payee or owner is at the date of the application an officer or employee in the service of the Post-Office Department, whether by contract, designation, or appointment, the Postmaster-General may, in lieu of an indemnity bond, authorize the issuance of a duplicate check or warrant upon such an affidavit as he may prescribe, to be made before any postmaster by the payee or owner of an original check or warrant.

SEC. 3647. In case the disbursing officer or agent by whom such lost, destroyed, or stolen original check was issued is dead or no longer in the service of the United States, it shall be the duty of the proper accounting officer, under such regulations as the Secretary of the Treasury may prescribe, to state an account in favor of the owner of such original check for the amount thereof, and to charge such amount to the account of such officer or agent: Provided, That in case a check drawn by any officer or agent of the Post-Office Department is lost, stolen, or destroyed, a duplicate thereof may be issued under regulations prescribed by the Postmaster-General, as set forth in section thirty-six hundred and forty-six."