Canada Post Office's Taxation Errors
In 1966, the Universal Postal Union introduced a new method of assessing postage due to foreign destinations. For the first six months of 1966, the Canada Post Office incorrectly taxed underpaid international mail.
The "Universal Postal Convention" drawn up by member countries of the Universal Postal Union ("UPU"), are the rules applicable in common throughout the international postal service and the provisions concerning the letter post services. In 1964, the UPU Vienna Congress Universal Postal Rules introduced a new method of taxing unpaid and underpaid correspondence ("Vienna system"). The Vienna system came into effect on January 1, 1966. Initially, the system was not fully understood by all nations, Canada included. In fact, it took six months for the Canada Post Office to correctly tax all categories of postage deficient correspondence. This article first looks at the correct application of the Vienna system so that the reader can understand the Vienna system. The reader will then be fully prepared to understand the discussion of the Canada Post Office's taxation errors from January 1966 to early July 1966.
The Vienna System
Pursuant to Article 29 of the "Rules Applicable in Common Throughout the International Postal Service", members were to handle unpaid and underpaid mail as follows:
...unpaid or underpaid letters and single postcards are liable to charge, payable by the addressee or, in the case of undeliverable items, by the sender : the charge is fixed at double the amount of the deficient postage, multiplied by the ratio between the charge adopted for letters at the first weight step by the Country of delivery and the corresponding charge adopted by the Country of origin, provided that the charge to be collected is not less than 10 centimes [gold].[emphasis added]
The 1964 charging Rules did not deal with correspondence other than letters and single postcards. This oversight was corrected at the 1969 Tokyo Congress . Article 18 of the "Rules Applicable in Common Throughout the International Postal Servie" dealing with unpaid or unpaid mail describes the charge as, "Charge on unpaid or underpaid correspondence." [emphasis added]
The formula provided by Article 29 was clarified by Article 142 which provided instructions to the countries of origin and destination as to how underpaid items were to be marked
Article 142
Unpaid and Underpaid Mail
1. Items on which a charge is to be collected after posting, either from the addressee or, in the case of undeliverable items, from the sender, are marked with a T stamp (postage due) in the middle of the upper part of the front : beside the impression of this stamp the Administration of origin enters very legibly in the currency of its Country the double or single amount, as the case may be, of the underpayment, and under the fraction line, that of its charge valid for the first weight step letters.
....
3. The delivering Administration marks the item with the charge to be collected. It determines this charge by multiplying the fraction resulting from the data mentioned in paragraph 1 by the amount, in its national currency, of the charge in the international service to the first weight step for letters.
a) Correct Taxation of Surface Letters
i) UPU destinations
The cover below from Rexdale to Vallingby, Sweden, November 14, 1966, June 25, 1968, was underpaid. The UPU surface rate was 10 cents. The deficient postage was 5 cents.
Canadian Marking : Tax Fraction
The Canadian Post Office, the originating country, taxed the correspondence.
The tax marking is a fraction as described in paragraph 1 of Article 142. The numerator is the amount to be charged (in this case 10c, double the deficient postage), and the denominator is the Canadian international letter rate (the letter rate was 10c at the time of mailing)
The tax fraction was then used by the Swedish Post Office to calculate the amount to be charged. The 1964 Vienna rules made the calculation a simple matter without the necessity of using conversion tables.Swedish Calculation
As explained above, the delivering Administration determines the amount due by multiplying the fraction marked by the Administration of origin by the delivering administration's first weight step international letter rate.
The Swedish post office multiplied the Canadian fraction (10/10) by the Swedish international letter rate (60 ore).
In this case, the letter was charged 60 ore (label) and the amount due paid with a 60 ore stamp.
Swedish Due Label 60 ore
Swedish 60 ore stamp paying the tax
ii) Preferred surface letter destinations
The United Kingdom, Ireland, France, Spain and countries in the Americas were destinations to which a preferred surface letter rate applied. The surface letter rate until October 31, 1968, was 5 cents for the first ounce.
The letter below to London, England was shortpaid 1 cent.
Montreal to London, March 13, 1968
Shortpaid 1 cent
Canadian Taxe : 2/10
Numerator 2 : 2 cents (double deficiency)
Denominator 10 : 10 cents (International letter rate-NOT letter rate to the U.K.)
In this case the British post office charged the minimum 3d.
b) Correct Taxation of Surface Post Cards
The post card below from Toronto to Budapest, November 15 1966 was underpaid. The UPU surface post card rate was 6 cents. The deficient postage was 4 cents.
Canadian Marking : Tax Fraction
The Canadian Post Office, the originating country, taxed the correspondence.
The amount to be charged was double the deficient postage. In this case the deficiency was 2 cents and the amount to be charged was 4 cents.
This is the Canadian tax marking:
The tax marking is a fraction. The numerator is double the deficient postage, 4 (cents). The denominator is the Canadian international letter rate, 10 (cents).
The tax fraction was then used by the Hungarian Post Office to calculate the amount to be charged, the Hungarian equivalent of 10 cents. The 1964 Vienna rules made the calculation a simple matter without the necessity of using conversion tables.
The international letter rates for Canada and Hungary were 10 cents and 100 filler, respectively. For charging purposes :
10 cents Canadian = 100 filler Hungarian
The Hungarian Post Office did not have to look this up since the Canadian letter rate was provided in the tax fraction.Hungarian Calculation
As explained above, receiving post offices calculate the charge by multiplying the originating county's tax fraction by the receiving country's letter rate:
In this case, the post card was charged 40 filler (blue pencil partially covered by postage due stamp) and the amount due paid with a 40 filler postage due stamp.
Hungarian 40 filler stamp paying the tax
c) Correct Taxation of Printed Matter
The printed matter envelope below from Winnipeg to Manila, December 5 1966 was underpaid. The UPU printed matter rate was 4 cents. The deficient postage was 1 cent.
Canadian Marking : Tax Fraction
The Canadian Post Office, the originating country, taxed the correspondence.
The amount to be charged was double the deficient postage. In this case the deficiency was 1 cents and the amount to be charged was 2 cents.
This is the Canadian tax marking:
The tax marking is a fraction. The numerator is double the deficient postage, 2(cents). The denominator is the Canadian international letter rate, 10 (cents).
The tax fraction was then used by the Philippines Post Office to calculate the amount to be charged, the Philippine equivalent of 10 cents. The 1964 Vienna rules made the calculation a simple matter without the necessity of using conversion tables.
The international letter rates for Canada and Philippines were 10 cents and 25 cents (Philippine), respectively. For charging purposes :
10 cents Canadian = 25 cents Philippine
The Philippine Post Office did not have to look this up since the Canadian letter rate was provided in the tax fraction.Philippine Calculation
As explained above, receiving post offices calculate the charge by multiplying the originating county's tax fraction by the receiving country's letter rate:
In this case, the printed matter item should have been charged 5 cents. However, the Philippines Post Office charged 4 cents.:
Handstamp applied January 24, 1967
4 cents affixed to back of envelope Cancelled January 26, 1967
For the charging of all correspondence then, the denominator of the tax fraction was the international letter rate of the originating country. The denominator for all deficient international correspondence originating from Canada should have been 10 cents. In the next section, Canada Post Office's incorrect taxation for the first six months of 1966 and its cost implications to addresses will be considered.
2. Canada Post Office's Charging Errors : January to Early July 1966
Initially, the Canada Post Office did not grasp the mechanics of the Vienna system . A review of how the Canada Post Office charged deficient post cards and printed matter from January to early July, 1966 points this out. This section shows how the Canada Post Office incorrectly charged international mail matter for the first six months of 1966.
a) Incorrect Taxation of Surface Post Cards (January to Early July 1966)
i) T 4/6 Error
The post card below from Scarborough to Netherlands was underpaid. The UPU surface post card rate was 6 cents. The deficient postage was 2 cents.
Canadian Marking : Tax Fraction
The Canada Post Office, the originating country, taxed the correspondence.
The amount to be charged was double the deficient postage. In this case the deficiency was 2 cents and the amount to be charged was 4 cents.
This is the incorrect Canadian tax marking:
Consequences of the Canadian Error for the Addressee
There are no Dutch charging marks on the post card. If the Netherlands post office had taxed it according to the Vienna system, the Canadian error would have caused the addressee to pay a charge 55% higher than the correct tax (27 cents instead of the 16 cents, not considering rounding and minimum charge) :
Collection of Higher Tax because of 4/6 Canada Post Error
An example of a higher fee collected from an addressee because of the Canada Post Office's error can be seen on page 14 of John D. Arn's "Canada-Cameo Definitive Issue" (2005) British North American Philatelic Society. Mr. Arn has kindly given me permission to post the image from his book:
The post card was mailed from Victoria to Stockholm, Sweden, on April 10, 1966, shortpaid 2 cents and incorrectly taxed T 4/6 as was the Dutch post card taxed above. The Swedish post card charged the addressee 40 ore (label affixed) based on the following calculation:
The correct amount that should have been charged was 24 ore:
The Swedish Post Office would have rounded this up to 25 ore.
Because of the Canada Post Office fraction error, i.e. 4/6 instead of the correct 4/10, the Swedish addressee paid 40 ore instead of the correct 25 ore tax!
ii) T 2/6 Error
The post card below from Niagara Falls to Budapest, Hungary was underpaid. The UPU surface post card rate was 6 cents. The deficient postage was 1 cent.
Canada Post Office Incorrect Taxation
The Hungarian post office charged 40 fillers which appears to have been the minimum charge.
iii) Taxation of Airmail Post Cards
The air mail post card below, mailed from Lachine to Broma, Sweden, in May 1966 was shortpaid 2 cents. The air mail post card rate was 10 cents (the same amount as the international letter rate).
The Canadian tax fraction , covered by the Swedish stamp, is 4/10. This is the correct fraction. How did Canada Post get this one right? Based on the previous incorrect fractions this is how it may have happened:
The denominator was the air mail post card rate. However this was the same fraction obtained using the correct method:
The 4/10 fraction resulted in a charge by the Swedish post office of 25 ore calculated as follows:
This card confirms that the Canada Post office's error caused the addressee of the Arn post card to be charged an incorrect amount by the Swedish post office, i.e. 40 ore instead of the correct 25 ore)
b) Incorrect Taxation of Printed Matter
The printed matter envelope below from Kingston to Iver Heat, England, May 1 1966, was underpaid. The printed matter rate was 4 cents. The deficient postage was 1 cent.
Canada Post Office Incorrect Taxation
The correct Canadian fraction should have been 2/10The British tax was 2d. One can only speculate as to how the British Post Office came up with 2d. :
c) Incorrect Taxation of Surface Letters to Preferential Destinations
T 2/5 error
The surface letter rate to the United Kingdom was 5 cents for the first ounce. The letters shown below, mailed in early 1966, were both shortpaid 1 cent.
Toronto to Dundee, Scotland, January 11, 1966
5 cents preferred surface letter rate
Shortpaid 1 cent
Canadian taxe fraction : 2/5
Toronto to Dundee, Scotland, February 26, 1966
5 cents preferred surface letter rate
Shortpaid 1 cent
Canadian taxe fraction : 2/5
Error Taxe marking
The denominator was incorrect. 5 cents was the letter rate to Britain. The correct denomination was 10, the UPU letter rate.
Consequences of the Error
The incorrect taxe fraction could have resulted in a due charge to the addressee which would have been double the amount actually due because the incorrect taxe fraction would have been multiplied by Britain's minimum international surface rate of 6d. :
2/5 x 6 d. = 2.4 d. due
The correct taxe fraction would have produced the following result:
2/10 x 6d. = 1.2d. due
It does not appear that the British Post Office bothered to collect any charge on the letters shown above.
Canada Post Office Corrects Its Taxation Error
In early July, 1966, the Canada Post Office corrected the taxation error and began taxing international deficient correspondence with fractional markings whose denominator was 10, regardless of the class of correspondence.
Taxation Errors Made by Other Countries
It should be noted that Canada was not alone in charging correspondence incorrectly. Errors have been seen on covers charged by the Australian post office as well as the United States. In fact, the U.S. post office was taxing deficient correspondence incorrectly months after the Canadian post office corrected its taxation error.
Mailed from North Hollywood, October 18, 1966, the above post card's destination was Uppsala, Sweden. Since the international surface post card rate at that time was 7 cents, the amount shortpaid was 2 cents.
The New York post office caught the deficiency and applied the 6/7 tax marking. The 6 was struck out and 4 written in with a red pen.
The tax fraction was incorrect and should have been 4/11.
Numerator 4 : 4 cents (double deficiency)
Denominator 11 : 11 cents (International letter rate-NOT 7 cents, the international post card rate)
This article has not dealt with other issues such as how the Canada Post Office charged incoming mail with fractional taxation from January to early July 1966. The author has simply not come across that type of cover. A search at the archives containing Post Office correspondence of the period might uncover relevant information.