The cost of service station operation at present is very high. Wages are high, materials are high, and equipment is both high and scarce. It would be an additional handicap to have another cent added to the gasoline tax at this time.

In conclusion, therefore, gentlemen, I repeat that it would be unnecessary and unwise to increase the gasoline tax at this time. I thank you, sir.

Mr. BATES. Thank you, Mr. McLaughlin.

You think that an increase in the rate would bring about a decrease in consumption?

Mr. MCLAUGHLIN. Yes, sir; I do.

Mr. BATES. That seems to be the theme of your discussion here. When the gas price during the past few months was increased, say— what was it a cent and three-quarters, something like that—was there less business done by the filling stations as a result of it?

Mr. MCLAUGHLIN. I do not think that we had time enough to get much change in that yet. People are not too conscious yet of price, but before the war, I saw two stations side by side almost reverse their gallonage because of a 1-cent difference in price.

Mr. BATES. Well, that would be natural, side by side.

Mr. MCLAUGHLIN. Yes; through competition.

Mr. BATES. Yes.

Mr. MCLAUGHLIN. In other words, the 1-cent margin there would change the gallonage from one to the other.

Mr. BATES. You would not expect that, of course, in a condition of the sort that we are discussing here, because in Maryland and Virginia, I understand, the tax is higher.

Mr. MCLAUGHLIN. It is higher; yes, sir.

Mr. BATES. Where would you expect to see a similarity of conditions such as you now mention under this bill, and not through competition? Mr. MCLAUGHLIN. Well, my point is that my station, the one I am operating at present, is located right near the District Line, the Maryland State line, and a lot of business comes into the District from nearby Maryland. The same thing is true of the Virginia business I mentioned.

Mr. BATES. What is the Maryland tax now?

Mr. MCLAUGHLIN. I think the Maryland tax is two cents higher than ours, and in Virginia it is perhaps three cents, I believe. I am not sure of those figures.

Mr. BATES. Has your organization had a chance to study this overall street improvement program to determine whether or not it is justified in view of all the conditons facing the motorists here?

Mr. MCLAUGHLIN. I understand the District petroleum organization has, but I am speaking merely as an individual here, Mr. Chair

man.

Mr. BATES. Of course, I can well understand, being on the District Line the Maryland tax just went up 1 cent more, did it not? Mr. MCLAUGHLIN. Yes, sir; it did.

Mr. BATES. That is a 2-cent differential. Of course, that probably will mean a great deal of business for those on the border line, with the 2 cents differential.

Mr. MCLAUGHLIN. That is right. Of course, there is one distinction there between an increase in the price of a product and an increase in

tax. The price of the product changes with a market, and it might go down at any time; whereas, if you once put a tax on it and it stays in most cases, it stays forever.

Mr. BATES. Thank you very much, Mr. McLaughlin.

Mr. MCLAUGHLIN. Thank you, sir.

Mr. BATES. The next witness is Mr. Lad Mills.

STATEMENT OF LAD MILLS, OPERATOR OF GASOLINE STATION, WASHINGTON, D. C.

Mr. MILLS. I am Lad Mills, and I am an operator of a gasoline station on Wisconsin Avenue and Q Street in Washington.

I have been in the gasoline business since 1930, and in this particular location since 1936, so I feel qualified to talk on this subject.

I am opposed to the increase in gasoline tax because, first of all, I believe it is unnecessary; and it is a rank extravagance, from figures which I have examined.

In the first place, as a small businessman, we realize that we have to budget our improvements to meet our income. I would like to go out and spend hundreds and hundreds of dollars in my service station, and make it the finest and nicest service station in the whole United States, but it is not good business; and it is my contention that Captain Whitehurst's program is not good business for the District.

I believe that because, from the figures that I have seen, he has asked for a terrific increase in the cost of operation over the next several years for the Highway Department.

He has available $25,000,000 over the next 3 years, and that more than doubles any year since 1939, which has been available for the District. That will allow the completion of the South Capitol Street project, and maintenance of highways at a standard which is certainly becoming with other communities of this size.

So, first, as a small businessman, I say the District government is business also and should be run in a business-like manner, and we should not be extravagant.

Public-thinking people today are now endeavoring to cut taxes to keep the cost of things down, and I believe that if we are to balance spending in the District, we will all be a lot letter off.

The second thing I want to bring out today is if the District tax is increased we will level off closely to the Maryland and Virginia prices. This will bring about a situation which might result in a price war in the District of Columbia and the outlying areas.

If you examine the history of price wars in the gasoline industry, you will find that they are generally started in the fringe of a metropolitan area where there are cinder driveways, "chick" sales type of buildings, low overhead. Irresponsible owners tend to sell gasoline at cut-rate prices very often to the ultimate loss of the consumer of that gasoline, and as a consequence those things spread just like a grass fire: they spread to all of the stations in the District, possibly in Virginia in the metropolitan area, into Maryland, and it will pull a lot of gasoline gallonage out of the District if the people are unable to meet that gallonage, into Maryland, into Virginia, with a resulting decrease in gasoline sales and the gasoline tax in the District of Columbia.

For those two reasons I am definitely opposed to the increase in the gasoline tax in the District of Columbia. First, because of the ex

travagance; secondly, because it will lead to price conditions which will lower the consumption of gasoline in the District of Columbia, and will result in less tax revenue.

Mr. BATES. Have you had a chance to examine this program?

Mr. MILLS. Yes, sir; I have.

Mr. BATES. What part of the program would you say might well be postponed? That is the only way this can be done, either by cutting down on expenditures or increasing the revenues.

Mr. MILLS. Yes, sir.

Mr. BATES. And in order to meet the revenues, if they are cut, you must cut the program. What would you suggest in that program ought to be cut?

Mr. MILLS. I noticed in the year '47 they allow for an operating increase of 42 percent. In the next year they jump over 65 percent. I do not want to get too technical, although this is-I do not want to get too technical on this because I am not thoroughly familiar with every phase of it, but I see no reason why the years 48 and 49 cannot be brought into line with the operating expenses for 1947, and I grant you that it is more expensive to run District affairs than it was before the war, and business affairs than it was before the war.

I do not see any need for terrific increases of 20 and 30 percent over the 1947 figures, and I am not going into the technical angle because I am not prepared to do so.

I think other members of our group here are prepared for that. But I think if we double the spending that we spent before the war, that is more than adequate to keep the District abreast of other municipalities of this size.

Mr. BATES. Thank you very much, Mr. Mills.
Mr. MILLS. Thank you, sir.

Mr. BATES. Our next witness is Mr. Sorrell.

STATEMENT OF CLYDE H. SORRELL, OWNER OF FILLING STATION ON BLAIR ROAD, SOUTH OF TAKOMA PARK, MD., WASHINGTON, D. C.

Mr. SORRELL. Mr. Chairman, my name is Clyde H. Sorrell, and I operate a small station on Blair Road, just south of Takoma Park, Md. I sell approximately 12 to 20 thousand gallons of gasoline per month, and in this position I know approximately 75 percent of my customers by their names, and I am personally acquainted with their needs, and also their opinions.

Every service station in Washington is protesting this addition taxation on gasoline, and it has had something similar to its own private Gallup poll. At my station, everyone I talk with, when asked to sign the petition, which I presume you gentlemen are familiar with, was only too glad to sign their names, with the exception of one hesitation, and that was of a school teacher who said if this increase in taxes was for the teachers' raise then she would gladly pay the difference. When I assured her it was just additional revenue for the Highway Department she would just as enthusiastically withdraw her objection and submit her signature.

As you gentlemen know, a service station is no longer something that consists of a pump on a sidewalk or in a front of a grocery store or a

side line of some dirty little garage. It is a place that public as well as yourselves can look for, expect, and receive courtesy, promptness, and service, plus cleanliness.

For example, when you are out for a drive and you want a soft drink. or you wish to wash up or just information you no longer go to a hotel or a restaurant; you naturally go to a clean service station. These expected services asked by the public require approximately 20 percent of each employee's day, therefore, constituting a heavy cost.

Gentlemen, if this tax is levied upon us, due to the high price of gasoline at present, it will be necessary for a dealer to make one of two choices. One would be to absorb the increase in price out of his profits, therefore, necessitating the reduction of his employees, hiring a lessskilled type of labor and doing away with cleanliness, courtesy, and the things we all look for and take for granted; he can increase the price a full cent per gallon and see his business decrease, which will also decrease the present rate of revenue to the District, until some station located in nearby Virginia and Maryland, with low overhead and cheaper labor, starts a discount cut and completely ruins his gallonage. I think that this is a very simple argument for the simple reason that the small-business man, in my opinion-I am not too well informed on the figures for the Nation-is still the backbone of this country, and from my own books-I keep a daily report-I can lay my finger on anything in that station, and I know every day just exactly how much business I am doing, and I can personally guarantee you that my station alone will increase its business 25 percent in 1947 over 1946, and it will hold that business during 1948, 1949, and 1950, because I think the next few years, 3 or 4 years even, will be the biggest business that the service-station operators have ever had, even though we are paying a higher cost of labor than we ever had.

After all, Washington is only a metropolitan area of approximately 10 miles, and we do not have the expense of a highway department that a State would have. Say they had a repair job which would be 100 miles away from where the depot where the equipment is. In Washington they do not have to travel over 5 miles to get there, so they can do a job in a day that perhaps a State department would take a day to get their equipment there, a day to do it, and a day to get their equipment back. Therefore, our expenses should be less in repair.

I would like to add in closing that no person could have any idea of just how strongly the District residents feel against this tax, and unless they contacted them personally, it is hard to find out. It is hard in the District to have a vote or have some means of getting a clear picture of just how they feel, so, I would just like to invite you or any member of the committee to be a visitor at my station, and I will be only too glad to introduce you to my customers personally and let talk to them the same as I have.

you

That is about all that I can say.

Mr. BATES. Is your station on the District line, near the District line?

Mr. SORRELL. No, sir; it is approximately 31⁄2 blocks south of the District line.

Mr. BATES. Pretty close.

Mr. SORRELL. Yes, sir.

Mr. BATES. Now, you say you may increase your sales by 25 percent

in 1947.

Mr. SORRELL. Yes, sir.

Mr. BATES. What would you consider that to be due to? Why is that? Because of the increase in the Maryland tax?

Mr. SORRELL. No, sir. It is due to the increase in business. There are more cars coming on the street every day; the people, the price now is too high in gasoline; the average price of high-test gasoline in the city today is 23 cents per gallon, and low-test gas is 2216 cents per gallon; and this figure, as it is, stands too high. But I think if we intend to lower that price instead of increasing that price why we will show a greater business than it has ever been shown in Washington, and I feel that if the board here will give us their confidence, and place their confidence in the small businessmen, we will more than produce a 25-percent increase, and which will take care of any expenditures the Highway Department will have.

Mr. BATES. Do you consider you will suffer from competitionMr. SORRELL. Yes; I do.

Mr. BATES. If we increase the gas tax. What would be the difference, in your opinion, between conditions, say, before the Maryland gas tax went into effect-when did that take effect? Within the past few weeks?

Mr. SORRELL. Within the past few weeks; yes, sir.

Mr. BATES. What else would intervene to make the situation more competitive than what you had 2 weeks ago where the gas tax of Maryland went up 1 cent and if the District tax went up 1 cent?

Mr. SORRELL. Well, it is just a simple answer, and it means that a person today, due to the high cost of living has to budget his money. Mr. BATES. No; I am speaking about competition.

Mr. SORRELL. Óh, competition.

Mr. BATES. Yes.

Mr. SORRELL. I think that the competition will tend to be greater because the rents in Maryland are much lower than they are in the District, and the salaries are lower. I know myself that I could not compete with a Maryland station with low rent and low salaries, as far as discounts and a discount war is concerned.

Mr. BATES. If they had to pay a cent more per gallon for gas they would be at a disadvantage, would they not?

Mr. SORRELL. Well, they-I think that it pretty well evens itself up. You take labor in Maryland. Perhaps they pay their men $30 a week. I pay mine forty-five.

Mr. BATES. Well, what do you charge for gas in the District, hightest gas, and what do they charge in Maryland, across the line?

Mr. SORRELL. Right now is it 2310 cents in the District, and I believe I am not positive-it is 2410 cents in Maryland.

Mr. BATES. Even with the increase in the gas tax?

Mr. SORRELL. I believe it is; a small difference.

Mr. BATES. What was it, say, 6 or 8 weeks ago, before the gas tax went into effect?

Mr. SORRELL. I believe the Maryland stations, those that are within a radius of a mile of the District line, are consuming-the service station owners and operators are trying to consume that tax themselves, because they now cannot compete.

Mr. BATES. What was the cost of a gallon of gas in Maryland across the line, and what was it in Washington, say, before the gas tax went into effect in Maryland?