The Customs Tariff has been developed over the years to meet changes in New Zealand's economy, in the pattern of its industry, and in its trading relations with other countries. From a simple document, which was adequate for the colony's early conditions and aims, the tariff has grown into a complex instrument designed to meet the conditions of modern trade.
Provision for the collection of Customs duties was made as early as January 1840 on the eve of the establishment of British sovereignty over New Zealand. At the outset, duty was collected under the New South Wales tariff, but in May 1841 New Zealand was made a separate colony and one of the first laws to be placed on the Statute Book was the Customs Ordinance. This document was a simple tariff providing for duties at different rates on spirits, wine, tobacco, cigars and snuff, tea, sugar, flour, wheat, and all other grain or pulse. All other goods, except those which were the produce or manufacture of Britain, New South Wales, and Van Diemen's Land (Tasmania) – which were admitted free – were liable to a duty of 10 per cent. Thus the British preferential system was introduced with the first tariff, but it was discontinued in 1844. It was, however, reintroduced in 1903 and since then has remained an important feature of the New Zealand tariff.
In October 1844 Governor FitzRoy began a policy of free trade, and all Customs duties were abolished, the Property Rent Act being passed to replace the revenue lost through the abolition of Customs duties. It was soon found, however, that the new Act was not gaining the expected result and in April 1845 it was repealed and a Customs tariff reintroduced. In 1851 a new and more detailed tariff over a wider range of items was introduced. Frequent further changes were made up to 1879.
Until 1879 duties were applied mainly according to quantity (weight, number, etc.) but the tariff introduced in that year made provision for duty on a much greater number of items to be charged on an ad valorem basis; that is, charging duty as a percentage of the value of the goods. Other changes were made in 1895, in order to protect infant industries, and again in 1903, when the British preferential system was reintroduced in the Preferential and Reciprocal Trade Act and in 1907. A new procedure was adopted in 1921 and, for the first time, a commission was appointed to make the tariff review. Evidence was obtained from interested parties throughout New Zealand and the tariff was thoroughly revised on the basis of the evidence. A similar procedure was followed with the 1927 and 1933 tariff revisions. In 1921 provision was also made for the imposition of special duties to protect local industry. These special duties (known as “dumping duties”) may be imposed on imported goods of a kind made in New Zealand which have been “dumped” (that is, sold at prices lower than the current domestic value in the country of export, or sold at a price lower than the cost of production plus a reasonable profit, or have been the subject of any special concession – for example, subsidy, special bounty). Dumping duties are limited to the amount of the dumping or special concession, or to the amount by which the goods are sold below the cost of production plus a reasonable profit. Dumping duties may be levied in addition to the duties provided for in the tariff.