Down to the year 1784 so unproductive were the Philippines to the Spanish revenues, that the treasury deficit was supplied by an annual grant of 250,000 dollars provided by the Mexican government. A capitation tax was irregularly collected from the natives; also a custom-house duty (almojarifango) on the small trade which existed, and an excise (alcabala) on interior sales. Even to the beginning of the present century the Spanish American colonies furnished the funds for the military expenses of Manila. In 1829 the treasury became an independent branch of administration. Increase of tribute-paying population, the tobacco and wine monopoly, permission given to foreigners to establish themselves as merchants in the capital, demand for native and consumption of foreign productions, and a general tendency towards a more liberal policy, brought about their usual beneficial results; and, though slowly moving, the Philippines have entered upon a career of prosperity susceptible of an enormous extension.

The capitation tax, or tribute paid by the natives, is the foundation of the financial system in the Philippines. It is the only direct tax (except for special cases), makes no distinction of persons and property, has the merit of antiquity, and is collected by a machinery provided by the Indians themselves. Originally it was levied in produce, but compounded for by the payment of a dollar (eight reales), raised afterwards to a dollar and a quarter, and finally the friars have managed to add to the amount an additional fifty per cent., of which four-fifths are for church, and one-fifth for commercial purposes.

The tribute is now due for every grown-up individual of a family, up to the age of sixty; the local authorities (cabezas de barangay), their wives and eldest or an adopted son, excepted. A cabeza is charged with the collection of the tribute of his cabaceria, consisting generally of about fifty persons. There are many other exceptions, such as discharged soldiers and persons claiming exemptions on particular grounds, to say nothing of the uncertain collections from Indians not congregated in towns or villages, and the certain non-collections from the wilder races. Buzeta estimates that only five per cent. of the whole population pay the tribute. Beyond the concentrated groups of natives there is little control; nor is the most extended of existing influences—the ecclesiastical—at all disposed to aid the revenue collector at the price of public discontent, especially if the claims of the convent are recognized and the wants of the church sufficiently provided for, which they seldom fail to be. The friar frequently stands between the fiscal authority and the Indian debtor, and, as his great object is to be popular with his flock, he, when his own expectations are satisfied, is naturally a feeble supporter of the tax collector. The friar has a large direct interest in the money tribute, both in the sanctorum and the tithe; but the Indian has many means of conciliating the padre and does not fail to employ them, and the padre’s influence is not only predominant, but it is perpetually present, and in constant activity. There is a decree of 1835 allowing the Indians to pay tribute in kind, but at rates so miserably low that I believe there is now scarcely an instance of other than metallic payments. The present amount levied is understood to be—

Which at 4s. 6d. per dollar makes a capitation tax of about 8s. 6d. per head.

The Sangleys (mestizos of Chinese origin) pay 20 rials government tribute, or 25 rials in all, being about 14s. sterling.

There are some special levies for local objects, but they are not heavy in amount.

The Chinese have been particularly selected to be the victims of the tax-gatherer, and, considering the general lightness of taxation, and that the Chinese had been invited to the Philippines with every assurance of protection, and as a most important element for the development of the resources of the country, the decree of 1828 will appear tolerably exacting. It divides Chinese settlers into three classes:—

Not consenting to this, and if unmarried, they might quit the country in six months, or pay the value of their tribute in labour, and they were, after a delay of three months in the payment of the tax, to be fineable at 2 rials a day. At the time of issuing the decree there were 5,708 Chinese in the capital, of whom immediately 800 left for China, 1,083 fled to the mountains and were kindly received and protected by the natives, 453 were condemned to the public works, and the rest left in such a condition of discontent and misery that in 1831 the intendente made a strong representation to the government in their favour, and in 1834 authority was given to modify the whole fiscal legislation as regarded the Chinese.

The Chinese, on landing in Manila, whether as sailors or intending settlers, are compelled to inhabit a public establishment called the Alcaiceria de San Fernando, for which payment is exacted, and there is a revenue resulting to the State from the profits thereof.