Municipal tariffs in Italy

«The Economist»,13 maggio 1911, pp. 1008-1009

Readers of the Economist may remember a letter from Turin, Italy, published a year ago, in which was described the rise of municipal protection incidental to the octroi, or municipal Customs tariff, levied in most Italian cities. The writer at that time only quoted the Turin case, as the problem, which was there discussed, ended in the victory of the municipal protectionists over the partisans of internal free-trade. But there remained the suspicion that the evil system was ruling in other towns also. The Riforma Sociale, a Turin Free-trade review, therefore, set on foot an inquiry, for ascertaining the facts. The results of the inquiry, which was conducted by Professor Giuseppe Prato, are published in the March-April supplement of the review.

Municipal protection appears to be widespread. The problem is of more than national interest, because the commercial treaties stipulated between Italy and foreign countries are, by these tariffs, set at defiance, and their value in not a few cases is practically reduced to nothing. A third of the Italian people live in walled towns, and it is the most wealthy portion of the population which consumes most foreign goods.

What is the use, then, to Great Britain, Germany, France, and Switzerland of signing a commercial treaty with Italy if every one of the councils and mayors of Italian towns can exclude foreign goods by a supplementary duty levied for the purpose of protecting the internal industry against the rivalry of external Italian and foreign goods? The fundamental octroi law gives the right to cities and towns of assessing consumable goods so as to bring in a local revenue. Local consumption and the revenue were the ideas underlying the system. As time went on the municipal tariff was used to serve private interests. The tariff items were multiplied, as in the State tariffs of protectionist countries. The Turin tariff, in schedule VI. and VII. (food and drink), contains 23 items of taxation, in schedule VII. (fuel) 10, in IX. (fodder) 4, in X. (building materials) 5, in XII. (soap and fats) 4, in XI. and XLLI. (furniture and miscellaneous) 11. At Genoa, in the above schedules, the taxation items are 30, 10, 3, 26, 6, and 14 respectively; at Venice, 26, 5, 0, 9, 9, 7; at Florence, 69, 11, 5, 22, 17, and 30; at Bologna, 27, 5, 5, 9, 1, 9.

This multiplication of tariff items is a sure index of protectionist purposes. Another sign is the high rate of duties. At Turin the tax on tapestry paper (carta da parati) is 20 lire per quintale (1 quintale equals 220 lbs avoir.), on stearic candles 15 lire, on chocolate and sweatmeat 25 lire, on furniture 20 lire per quintale, on liquors 40 centesimi (4d) per botde. At Genoa furniture is taxed from 10 to 25 lire per quintale, according to quality, looking-glasses at 25 lire, paper at 25 lire, perfumes and fine soaps at 50 lire, chocolate at 30 lire, stearic-candles at 30 lire. Florence taxes the porcelain with a 6 lire duty per quintale, artistic furniture with 25 lire, earthenwares (terracotte ornamentali) by 1.50, and perfumes by 30 lire. Venice taxes artistic crystals and glasses with a duty of 30 lire per quintale, furniture with 40 lire, looking-glasses with 30 lire. Each town taxes preferably the goods which are produced by a local internal industry, so as to exclude from the internal market the extra-mœnia produced goods. In some cases the protectionist purpose is made clear by a comparison of the duties levied on raw materials and on manufactured articles. The The following are the duties, in lire per quintale, on some peculiarly interesting

Clearly the municipal tariffs are so contrived as to admit free or tax lightly raw materials, and to increase the taxation of the article if more finished. The internal industry is thus permitted to introduce freely raw materials, and is protected by heavy duties against the external imports of semi-manufactured or wholly finished articles. The results of those Protectionist duties are, for the purpose of taxation, exceedingly small. The total income from municipal Customs in Rome in the year 1908 was 19,128,253 lire; but the protective duties contributed to this total only 1,369,028 lire, or a l-14th part. At Naples the total income in 1908 was of 11,143,591 lire, toward which the protective duties contributed 592,504 lire, or a l-20th part. At Florence in 1909 the protective duties give to the municipal exchequer 500,146 lire, surely a small proportion of the total octroi income of 7,390,333 lire. At Turin, in the year 1909, the income from protective duties was of 665,943 lire on a total of 13,821,014 lire, and the city income from protective duties is further lowered by the drawbacks granted on the goods manufactured intra-moenia when they are exported. In the year 1909 the city of Florence had to pay the sum of 106,745 lire for drawbacks, and the city of Turin the comparatively large sum of 1,010,720 lire. The drawbacks are, in reality, true export premiums, which are intended to benefit the external consumers at the expense of internal taxpayers. At Florence raw marble pays nothing (as in the above table) when entering the walls of the city; yet obtains a so-called drawback of 1.50 lire per quintale when exported sawn in boards, and of 6 lire if finished. In Turin iron and steel manufactures obtain, when exported, a drawback of 0.50, 1.50, and 5 lire, according to quality, notwithstanding that the raw metal paid nothing when entering into the city.

Thus, in Italian cities there flourishes a petty Protection of the meanest type, which we owe to ignorance and intrigue. But a reaction is at last beginning. The aldermen at Milan (which is the freest of all the great Italian cities from the taint of municipal Protection) are meditating the abolition of one of the last remnants in that city of protective duties, the duty on liquor, which was so contrived as to bring yearly to liquor makers and liquor sellers a net revenue of 600.000 lire at the expense of the municipal exchequer. One may hope that the example will be followed by others. But the deliverance of Italian consumers from the grotesque municipal imitation of State Protection will be facilitated if the Foreign Offices of the countries which have signed commercial treaties with the kingdom of Italy call the attention of the Italian Consulta (Foreign Office) to the infringements of international agreements which are perpetrated by our municipal legislators.