The Embassy of France avails itself of the occasion of the present note to renew to the Department of State the assurances of its very high consideration. The CHAIRMAN. The committee will now stand adjourned. (The following material was submitted for the record :) COMMONWEALTH OF MASSACHUSETTS, The Honorable DANIEL A. REED, PORT OF BOSTON AUTHORITY, Chairman, House Ways and Means Committee, House of Representatives, Washington 25, D. C. DEAR CONGRESSMAN REED: So as to help conserve the time of the Committee on Ways and Means in the general revenue hearings we do not plan to make an appearance at the evening hearings on topic 40-excise taxes. We are nevertheless deeply interested in any action which lead to the removal or modification of the tax on passenger transportation. This tax was established as a war measure for the purpose of discouraging travel under wartime conditions and not primarily for the purpose of producing revenue and under the present conditions it works hardship on the port of Boston. For example, the long-established Furness Line which operates from Boston via St. Johns to Liverpool. A passenger booking from Boston to Liverpool is taxed on that portion of the voyage representing the journey from Boston to Halifax, even though the passenger remains on the ship, does not go ashore at Halifax and is making a through passage to the ultimate destination, Liverpool. It means a penalty against the passenger varying from $5 to $10 according to the type of accommodation, but this this is entirely avoided by those lines which sail direct to Liverpool without calling at a Canadian port. The same tax applying on inland rail transportation hampers our efforts to bring passengers to Boston. A passenger from Cleveland, Ohio, with rail and pullman accommodations to Boston is taxed about $5.50; a coach passenger would be taxed about $3.50. Because these imposts have increased the cost of doing business through Boston we are experiencing considerable difficulty in rebuilding our transatlantic passenger travel which, of course, was destroyed during the war and which we would hope to restore, barring artificial handicaps, to the position which it occupied prior to World War II. Your astute and courageous efforts in dealing with the taxation problem are being watched by those of us who are in the transportation field and we are confident that through you we may obtain some measure of relief in a distressing situation. Very truly yours. JOHN M. BRESNAHAN, Director. STATEMENT OF LOVELL H. PARKER, CHAIRMAN, SPECIAL TAX COMMITTEE OF THE NATIONAL COAL ASSOCIATION, IN RE TOPIC 40 OF GENERAL TAX REVISION HEARINGS EXCISE TAX RATES Mr. Chairman and members of the committee, my name is Lovell H. Parker, of Washington, D. C. I am chairman of the special tax committee of the National Coal Association. The National Coal Association is the trade association of the bituminous coal mine operators, and has in its membership the producers of ap proximately two-thirds of the Nation's commercial tonnage of bituminous coal. The tax on the transportation of property should be repealed in its entirety at the earliest possible moment. This tax was adopted as an emergency revenue measure in World War II. Like most emergency measures it is ill-considered and inequitable. The inequities occasioned by this tax should not be perpetuated as a part of our permanent tax system. If it is necessary to replace the revenue thus lost, such replacement revenue should be derived from nondiscriminatory sources. The transportation facilities of the Nation are essential to our economy, in peace and in war. The tax on the transportation of property is inimical to the development of those facilities, and is discriminatory against low-value, highfreight-cost commodities. The freight rate structures are extremely complex, and the imposition of this excise tax tends to throw them out of balance. The Interstate Commerce Commission has long recognized the importance of the freight rate structures to competition and commerce. We feel that the excise tax on transportation of property should be removed because it unbalances the rate structures established over a long period of years. The coal industry has lost a great deal of tonnage to foreign residual fuel oil dumped on the eastern seaboard in recent years. Such foreign residual fuel oil is imported in tankers and seldom is transported very far inland, and the excise tax on transportation of coal further hinders coal in its unequal competitive fight with this cheap foreign product. We urge the Congress to repeal this excise tax in its entirety. If, however, the rates are merely reduced, they should be reduced proportionately. Legislation has been introduced in this Congress which would reduce the tax on transportation of oil without corresponding reduction in the tax on the transportation of coal. The adoption of such a proposal would merely increase the inequities ccasioned by this outdated emergency legislation. STATEMENT BY LOUIS S. LAW, EXECUTIVE DIRECTOR OF THE CARIBBEAN TOURIST ASSOCIATION, ST. JOHN'S, ANTIGUA, BRITISH WEST INDIES Mr. Chairman and members of the committee, an unfortunate postal delay prevented my being advised in time of the date of your hearing on August 10 on the subject of the 15 percent travel tax as applied to the West Indies and Central America. For this reason I was unable either to apply for permission to appear before your committee or to submit a statement on the question. This association is sponsored by the four sovereign nations with dependent territories in the Caribbean area, viz the United States, United Kingdom, France, and the Netherlands. In addition, the Dominican Republic and the Republic of Haiti are also members. Its primary function is the development of the full potential of tourism in the area as the best and quickest means of improving the economic standard of its inhabitants. The greatest impediment to this has been the United States travel tax. In case this statement should seem exaggerated, I would explain that our objective is to extend the tourist season to at least 8 months in the year, to the end that all hotels will find it worthwhile to remain open and no hotel or other employees earning their living from visitors will be dismissed pending the start of a new season. The winter season, extending from mid December to mid April has brought full patronage throughout the area and the extra 15 percent on travel tickets has made little difference to the type of traveler who normally takes his vacation in winter. The summer tourists however, school teachers, clerical workers, etc., with a much more slender purse, are to a great extent kept away by the tax, which in many islands would pay their keep for 1 week. The stays of this type of traveler are much shorter and the turnover or numbers of individual travelers greatera most important factor for the transportation companies. The cruise business is considerably affected insofar as it concerns the Caribbean islands, by the fact that cruise steamers often bypass them to call at Venezuelan ports in order to avoid the tax. Some steamers this coming cruise season are scheduled to call at the Venezuelan island of Margarita, which in fact lies some 50 miles further north of the Equator than Trinidad, which makes the exemption from tax on a geographical basis, somewhat questionable. I believe I am right in saying that the tax was removed from travel to Europe and South America in order to encourage travel to those areas and to supply them with much needed United States dollars. I declare without fear of contradiction that the need of the islands of the Caribbean is much greater than that of Europe and South America and that the market for American goods in the Caribbean can be much extended if a healthier balance of currency can be achieved. The law, as it now stands, permits the evasion of the tax by people in the know and with connections in the area and, in the final analysis, while it is a con37746-53-pt. 4-39 siderable handicap to the full development of Caribbean tourism, it is produetive of a negligible amount of revenue as compared with the travel tax in general. My estimate is that it would pay the operation of the United States Government for 11⁄2 hours per annum. This is based roughly on a United States budget of $72 billion and receipts of $12 million from the tax on Mexico, Central America, and West Indies tickets. STATEMENT OF the Los AngELES CHAMBER OF COMMERCE, Los Angeles, CALIF., RE TOPIC 40, EXCISE-TAX RATES That, in the case of the taxes on long-distance telephone calls, telegraph, cable, and leased wire services, and transportation, such taxes discriminate against certain business and sections of the country and, pending the time when such taxes can be repealed, the rates should be substantially reduced. (Whereupon, at 10: 28 p. m., the committee was recessed.) GENERAL REVENUE REVISION TUESDAY, AUGUST 11, 1953 HOUSE OF REPRESENTATIVES, Washington, D. C. The committee met, pursuant to recess, at 7 p. m., in the Ways and Means Committee room, Hon. Daniel A. Reed (chairman) presiding. The CHAIRMAN. The committee will come to order. We are dealing first with the excise tax on distilled spirits. The first witness is Mr. R. E. Joyce, chairman, Tax Council of the Alcoholic Beverage Industry. Good evening, Mr. Joyce. If you will give your name and the capacity in which you appear, we will be very glad to hear you. STATEMENT OF R. E. JOYCE, CHAIRMAN, TAX COUNCIL OF THE ALCOHOLIC BEVERAGE INDUSTRY Mr. JOYCE. Mr. Chairman and members of the committee, my name is R. E. Joyce. I am chairman of the Tax Council of the Alcoholic Beverage Industry and vice president of National Distillers Products Corp. The council represents all branches of the wine and distilled spirits industry including distillers, rectifiers, importers, wholesalers, hotel operators, package store retailers, and tavern owners, operating more than 200,000 businesses and establishments. While we are concerned with the rates of excise taxes as they apply to both wine and distilled spirits, we understand that the wine industry will make its own statement to the committee and will confine our remarks to the rate of excise tax applying to distilled spirits. We were greatly pleased when your committee decided to hold hearings on the general subject of tax revision in an endeavor to remove existing inequities, simplify the needless complications in tax laws which have developed over the years, and generally secure a better balance of tax revenues. We appreciate the opportunity to participate in these hearings and offer our views on the present rate of the excise tax on distilled spirits. We feel that not only is the present method of selective excise taxes unsound, since it requires some 45 commodities and industries to pay a special tax over and above the taxes paid by industry in general, but even within the structure of these selective excise taxes the tax on distilled spirits is excessively high and discriminatory. President Eisenhower recently stated that "the wide variety of existing excise rates makes little economic sense and leads to improper discrimination between industries and among consumers." It is our position that this discrimination is more pronounced in the case of the $10.50 tax on distilled spirits than for any other article bearing an excise tax and we shall show that an adjustment of this rate to a maximum of $6 a gallon is necessary to bring that tax in line with the tax burden now being carried by other industries whose products bear an excise tax. Obviously, the elimination of inequities and injustices in the current tax laws involves the shifting of collections from some excessively taxed commodities to others to accomplish a fair distribution of the tax load among all taxpayers. We are frank to admit at the outset that the adjustment in the distilled spirits excise tax rate, which we feel is essential to achieve equity, will result in some loss of revenue in the Federal excise tax collections from our product. But in the case of distilled spirits, there are more compensating factors which would offset this apparent revenue loss than would apply to the adjustment of any other rate of tax. These factors will be apparent as we discuss the effects of the present high rate. We merely wish to emphasize at this point that if we are to reconstruct our tax laws so as to eliminate discrimination and inequities we must accept the fact that the "take" of the Federal Government will be decreased from certain sources of revenue where discrimination now exists. Only through such a realistic approach can we revise our tax structure to conform to the general principle that the tax burden should be distributed fairly among all segments of the economy and all classes of the population. DISTILLED SPIRITS BEARS A HIGHER TAX BURDEN THAN ANY OTHER COMMODITY The present $10.50 rate is far out of line with other excise rates. No other Federal excise tax rate is so high. It represents 500 percent of the cost of producing, warehousing and bottling this commodity. An equally high ratio of excise tax to cost of production would result in a $2,000 Ford sedan selling for $7,750, a 25-cent package of cigarettes for 49 cents and a $200 television set selling for $750. Since repeal of national prohibition, the distilled spirits tax rate (as shown in the chart below) has increased 854 percent. |