Copra

American Tax On

New Processing Duty Threatens Industry

BRIEF reference was made in the last issue of the “Pacific Islands Monthly” to a development which had occurred in the United States and which threatened most seriously to effect the immediate future of the copra industry. We had only brief particulars then; but in the ensuing month we have been able to learn something further of what is pro posed.

A new tax bill was introduced in the American Congress early in the year. It proposed a multiplicity of taxes, and among them was provision for an excise duty on coconut oil equal to 5 cents per lb. It was then explained that the pur pose of the tax was to encourage two important domestic industries of the United States —namely, the production of cotton seed oil and the production of lard.

The proposal alarmed American copra interests. Obviously, such a tax would practically prohibit the importation of copra or coconut oil into the United States. But, for some reason, not a word of the proposal reached Australia; and only the mildest references were made to it in London.

The tax bill passed the House of Repre sentatives in Washington on February 21, by 388 votes to 7, and was sent on to the Senate.

On February 24 there appeared in the “New York Times” (page 14, column 5) a lengthy article reporting that the pro posed coconut oil excise duty had seriously alarmed the Philippines. It was indicated that the Philippine people were afraid that the tax would destroy one of their most important industries, and prepara tions were then afoot from one end of the territory to the other, to make a strong protest to U.S.A. It was pointed out that the Philippines annually produced and sent to U.S.A. between 400,000 and 500,000 tons of copra per annum; and if these exports were barred from U.S.A. by the new tax, the huge production would be thrown upon other markets and that inevitably would cause the ruin of coco nut planting in the Philippines.

Early in April, the San Francisco manager of Messrs. Burns, Philip & Co., Ltd., wrote that the proposed tax was not approved by the Finance Committee of the Senate. He appeared to take the view that the proposed tax ought not to be taken seriously, as it was “nothing but a lot of cheap politics.”

It subsequently transpired that, while there will be no tariff imposed on copra imported into the United States, it is still intended to impose what is called a pro cessing tax (in other words, an excise tax) of 3 cents per lb. on coconut oil.

This processing tax will be applied also to oil obtained from Sesame, Palm, Palm Kernel, Sunflower seeds, Whale, Fish and marine animals. But, apparently, it will not be imposed upon oils processed from cotton seed, ground nuts and soya beans.

An article elsewhere in this issue directs attention to the enormous increase in the production of Soya beans in the United States.

The latest information we have is that the tax in the above form has been recommended by the Senate Finance Committee, but still has to be confirmed by the Senate, and strong influences were working on behalf of Philippine Islands

interests to prevent the imposition of the tax so far as it applied to coconut oil.

The opinion of keen observers is that the tax of 3 cents per lb. is not absolutely prohibitory, as would have been the case had 5 cents per lb. been approved, but it is still so heavy that it is likely to pre vent the importation of the greater part of the Philippine Islands production. If that is so, and the Philippine Islands copra is thrown on to the European market, it must cause a considerable delay in the recovery of copra prices.