economic conditions than the average State. This phase of the matter has been that subject of a very able study presented before the mid-year meeting of the American Petroleum Institute on May 18, 1933 ("Gasoline Taxation and Its Effect on Consumption ", by Sidney A. Swensrud). The study demonstrates that adverse economic conditions do not explain the relative reductions in consumption, but indicates that the principal cause was excessive gasoline taxation.

While economic conditions have undoubtedly contributed to reduced consumption, there can be no doubt that, in those localities where the taxes are 50, 75, or 100 percent or more of the retail cost of the gasoline, these taxes have been a large factor in cutting down the use of automotive transportation.

6. The Federal Government now has sources of tax revenue which were not available when the Federal gasoline tax was enacted.

As already shown, the Federal gasoline tax was hurriedly imposed, after the Senate committee had reported the Revenue Act, 1932, to the Senate, in an effort to balance the Budget and with full knowledge that this tax was objectionable because it placed a further burden upon an already over-taxed commodity and invaded a filed of taxation which had been fully occupied by the States. It was imposed originally for one year only with the thought that other sources of taxation would be found to replace it. At that time a tax upon beer or wines or distilled spirits could not be imposed. These commodities have now become subject to excise taxation and will yield to the Federal Government a revenue of not less than $500,000,000 per year, with the probability that the yield will more nearly approximate $600,000,000 when the customs duties are included. There can be no possible question but that had beer, wines, and distilled spirits been available for taxation at the time of the Revenue Act, 1932, was under consideration, the Federal tax on gasoline would not have been imposed. It is submitted that these new sources of taxation should now be used to replace the Federal gasoline tax. It is also well understood that other sources of Federal taxation can now be expected to yield increased revenues, such, for example, as the corporate and personal income taxes.

7. The excessive taxation placed upon gasoline is jeopardizing a source of tax revenue which is otherwise inherently sound.

It is universally recognized that the gasoline tax. properly levied, fully collected, and with the proceeds properly used, is a valuable and sound source of tax revenue. The gasoline tax should be first, reasonable in amount; second, fully collected; third, wholly applied to the construction and maintenance of roads. If these principles are followed, the gasoline tax will provide sufficient funds for a splendid highway system in the United States. But it is equally clear that an inherently sound tax can be abused. Gasoline taxation has been greatly overdone. Many of the States have increased their gasoline taxes beyond the point of reasonableness, and there has been an increasing tendency to divert the proceeds of this tax from highway construction and maintenance to other uses.

It is estimated that as much as $200,000,000 is being diverted from roads, and road work thereby curtailed. Much of this diverted money goes into channels that do not afford opportunities for employment such as are offered by the building and maintenance of roads. The Federal tax, superimposed upon these State taxes, has increased the total gasoline tax burden to a point where it is jeopardizing the source of revenue. The point of diminishing returns has been reached and passed.

The States are beginning to realize that they have overdone gasoline taxation and that the Federal tax has invaded an overburdened field of taxation. Nine States have memorialized Congress to repeal the Federal tax. These States are Arkansas, Mississippi, Montana, New York, Nevada, North Carolina. Oklahoma, Oregon, and South Dakota.

It is, of course obvious that the needs of the Federal Government for revenues are great. It may be reasonably expected that tax burdens will be increased. But the present emergency spending of millions of dollars by the Federal Government is in behalf of all industries, all commodities, all groups of people in an extraordinary effort to break the depression. Under such circumstances there is no consideration more important than that tax burden should be equitably distributed. There can be no justification for the selec tion of a single commodity, or a small, special group of commodities, to be the subject of excessive taxation. The time has come when Congress should recognize the inequities of its present tax levies. A start should now be made to follow the principles laid down in the report of the subcommittee on double

taxation-that is, to eliminate "double taxations, duplications, and overlappings." To quote again from the report of this committee, there should be "a revision of our taxation system as a whole in order that the tax burden may be more equally distributed."

APPENDIX A

STATEMENT OF FAYETTE B. Dow

State motor taxes equal to 38 percent of total State revenues, 1931 varies from 14 percent to 75 percent

[From Facts and Figures, 1933 edition, National Automobile Chamber of Commerce]

1 Total receipts; does not show actual allotments to States. Does not inclu de proceeds from bond issues. Figures on State revenues obtained from the U.S. Census Bureau.

2 Includes District of Columbia, $2,349,756.

APPENDIX B

TO STATEMENT OF FAYETTE B. Dow TO SENATE FINANCE COMMITTEE, MAR. 14, 1934

List of States and the counties and/or municipalities therein which levy a taz on gasoline, the rate of tax, and the purpose for which the revenue is used, as of Apr. 1, 1933

List of States and the counties and/or municipalities therein which levy a tax on gasoline, the rate of tax, and the purpose for which the revenue is used, as of Apr. 1, 1933-Continued

ALABAMA CITY AND TOWN GASOLINE TAXES

(T-Town; C-City; PJ-Police Jurisdiction, 3 miles as the crow flies, from city limits)

List of States and the counties and/or municipalities therein which levy a taz on gasoline, the rate of tar, and the purpose for which the revenue is used, as of Apr. 1, 1933-Continued

ALABAMA CITY AND TOWN GASOLINE TAXES

(T-Town; C-City; PJ-Police Jurisdiction, 3 miles as the crow flies, from city limits)

List of States and the counties and/or municipalities therein which levy a tax on gasoline, the rate of tax, and the purpose for which the revenue is used, as of Apr. 1, 1933-Continued

FLORIDA CITY AND TOWN GASOLINE TAXES

1 All gas in Bay County is from Panama City, where there is a storage tax (see P.C.).