Customs Duties, the portion of the revenue derived from a tax on imports. In some countries, customs duties are imposed on certain exports also. The origin of the term is connected with the long conflict between the crown and parliament as to the right of taxation, although the practice it signifies is as old as the Roman empire, and is even to be traced among the ancient Greeks. To meet the claims made by the House of Commons to the exclusive right to vote all supplies, it used to be maintained that there were certain duties on exportation and on importation to which the crown had acquired a right by custom (although it is certain that customs duties existed in England prior to the Norman Conquest), and after the power of parliament over this branch of taxation had been fully established it retained its old name. This tax, which originally was a sort of premium of insurance for protection from robbery, after the excise came in force was always applicable distinctively to goods changing place. There were customs not only upon things leaving and things coming to the British dominions, but also upon commodities transferred from one part to another. In Scotland the duty on commodities imported into any town from a foreign country was called the great custom; and the duty charged by a burghal corporation on commodities coming within its walls from the country districts was called the small or petty customs. After 1707 the Scotch customs duties became the same as those of England. At present the term customs duties applies in the United Kingdom solely to the tax levied on commodities imported from abroad.
The tax on imports was of old a simple percentage, familiarly known to the readers of English history as 'tonnage and poundage,' from the method in which it was levied on the tun of wine, or the pound ad valorem of other merchandise. These were subsidies granted first to the crown, and then for the maintenance of the authority and dignity of the state. That is to say, they were forms of public revenue; and many complications arose by the additions and alterations of successive governments. Out of this confusion, no doubt, arose the belief that customs duties might be utilised for fostering domestic industries and discouraging foreign competition. When it came to be held as an established principle, with regard to any trade, that the customs should be adjusted in such a manner as either to aid or to impede it, the regulations regarding that trade alone would have complexity enough for a whole code of customs laws, the original object of which was mere revenue. The more complex the arrangements, the more open were they to the operations of the smuggler or defrauder, and, consequently, regulation had to be added to regulation, till the whole became a chaos. Frequently the duties were such as to act as a prohibition to importation, and they always added a heavy increase to the price. Sometimes there would be relaxations in favour of the produce of British colonies, and sometimes of some favoured country with which Britain had a treaty of reciprocity. Then, to encourage trade and manufactures, it was considered politic to allow goods to be imported for re-exportation abroad, or to be imported for the purpose of being worked up into a manufacture, and there would be a difference between the extent of encouragement granted to that manufacture if it were for home consumption or for exportation. The method in which such relaxation was accomplished was at first by charging the duty on the importation, and afterwards repaying it by what was called a 'drawback;' and this was subse- quently accomplished in an easier method for the importer, by allowing him to 'bond' the goods in the government warehouses until the duty was paid, or the conditions which dispensed with it fulfilled. An ordinary importer was also allowed to 'bond' his goods, instead of being compelled, as in the old times, to pay duty on arrival of the vessel whether he had sold his cargo or not. See BONDED WAREHOUSES.
In the year 1825 the laws of the British customs were consolidated into some half-dozen statutes. It will give a conception of the confused and cumbersome condition into which the system had merged, to note that the number of acts repealed on the occasion of the consolidation was 443, and it was afterwards discovered that several had been omitted. There was still a long list of customs duties; but the free-trade legislation of 1846 cleared away a great mass of this burden on the commerce of the country, and there has been steady abbreviation of the list of duties or Tariff (q.v.). One by one, articles of food have been exempted; and nearly the whole customs revenue is now derived from spirits, wine, tobacco, tea, coffee, and dried fruits. The tendency has for some time been to concentrate the customs duties on a few articles, and yet they supply an enormous amount of revenue. The British revenue for the year ending 31st March 1900 was £119,840,000, and to this amount the customs contributed £23,800,000. Down to 1845 the tariff included some 1200 articles.
The defects which, according to the doctrines now prevalent in Great Britain, are to be avoided in a code of customs, are—1. The prohibition or discouragement of the importation of useful commodities; 2. Encouragement to the smuggler; and 3. Loss of revenue by raising the duty to the height which discourages importation. Under the first head, see CORN LAWS, and FREE TRADE. The second is connected with the view that on stimulants the duty cannot be too high, even though it should greatly impede their importation; but on the other hand, if the smuggling trade be encouraged, the stimulant is not only obtained without any contribution to the revenue, but the people become demoralised and trained to crime. Under the third head a memorable example was furnished by the old sugar-duties of France, which were so high that the native agriculturists could make sugar from beet-root cheaper than the duty-paid foreign sugar.
The collection and general management of British customs duties is under one great central department of the government in London. The office of receiver-general was in 1871 united with that of the comptroller-general, and there is a fourfold division into the paymaster's, examiner's, accountant's, and auditor's branches. The annual cost of collecting the customs dues and managing the necessary establishments is about £952,000, although the tariff contains now only twenty dutiable imports.
In the United States, the number of dutiable articles is large. Of the total imports the dutiable have nearly double the value of the free goods. In 1890-95 the total imports had a value of from 655,000,000 to 870,000,000; and in the years of largest imports the customs duties reach a value of 200,000,000, being by far the largest item in the total national revenue—say, from 300,000,000 to $400,000,000. The very large surplus from customs has led to keen debate. See also TAX, EXCISE.