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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

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 líne, 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

a

man.

STATEMENT OF FRANK M. MCLAUGHLIN, WASHINGTON, D. C.

Mr. McLaughlin. Mr. Chairman, my name is Frank M. McLaughlin.

Mr. Bates. You are the owner of a filling station in the District of Columbia ? Mr. McLAUGHLIN. Yes, sir.

. Mr. BATEs. Step right forward, Mr. McLaughlin. We will be glad to hear you.

Mr. MCLAUGHLIN. I am an independent gasoline dealer in the District of Columbia. My location is 3103 Rhode Island Avenue NE.

My purpose here this morning, gentlemen, is to voice opposition to the proposed increase of 1 cent per gallon tax on gasoline sales in the District of Columbia. My opposition is based on the conviction that this proposed tax increase of 331/3 percent is both unnecessary and unwise.

It is unnecessary because funds now available and to become available under the present tax rate of 3 cents per gallon will be adequate to properly maintain existing highways and generously provide for new highway extensions.

It is unwise because it increases the price of gasoline to the consumer at a time when he is hopeful for a decrease in price. His reaction will be to buy less gasoline or to buy it elsewhere.

Then, too, the volume of gasoline sales to consumers outside of the District of Columbia is extremely high, and produces a tremendous tax income for our Highway Department.

This is considerably the result of moderate transportation rates and reasonable taxation on the product, creating a good competitive position for the seller. To disturb this position by an increase in tax would shift a vast amount of gallonage to other States, with a consequent loss of revenue to the District of Columbia.

The loss of gasoline volume would be accompanied by loss of sales of motor oils and greases, lubrication and other services, tires, batteries, accessories, and many other items. It would also affect the business of many other lines of merchandising and servicing.

As a service-station operator, I am immensely interested in highway development. Good roads and good streets attract the motorist. Increased mileage means increased gasoline consumption, and more sales for the service station. But I am strongly opposed to extravagant highway expansion out of revenues derived from excessive gasoline taxation.

I have talked to scores of motorists about this proposed tax, and I can candidly state that there is practically no sentiment at all for it.

In a few instances, the response to my inquiry was that additional revenue is needed to carry on the cost of District Government, and it is just as well to raise those funds from an increased gasoline tax as from any other source. But when it was mentioned that highway revenues must be used exclusively for highway purposes, with no diversions, the objection was usually withdrawn.

As stated before, it is my opinion that an increase in the gasoline tax at this time would affect the service station business adversely. If it did, it would react on real estate values, rental incomes, and perhaps, even on wages and employment.

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 un

I
necessary 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, saywhat 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

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

a

man.

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 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

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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 inust 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.

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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

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