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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 de crease 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 1916, 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 you

talk to them the same as I have. 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. Bares. Now, you say you may increase your sales by 25 percent in 1947.

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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 23110 cents per gallon, and low-test gas is 2214 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. Bares. 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. Oh, 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 23110 cents in the District, and I believe—I am not positive—it is 24110 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?

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Ur. SARRELL. You mean the cost to me!
Vr. Bizes. No; the cost to the consumer,

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mately one-tenth in Maryland.

line tax when!

was approximatel-before this last raise that the oil companies gave

Nr. SKRILI. The cost to the consumer! The cost to the consunier Jr. SORRELL. It was to in the District, and 23 and approxiunderstand each other. The Maryland Legislature increased the gaso

Jr. Bites Perhaps, you do not understand me; perhaps, we do not Vr. Bites. Well, what was the cost to the consumer in Maryland

Mr. SORRELL. Two weeks ago, approximately 2 weeks ago.
in the District within the last month or so?
then, and what was it here? Have you changed gasoline costs here
Jr. SORRELL. Yes; I have. I increased it 1 cent per gallon.
Vr. Bites. That is because of the increase by-
Mr. SORRELL. By the oil companies.
Mr. BATES. So, today it is 24.1 in Maryland, and 23.1 in the District.
Mr. SORRELL. That is correct.
Mr: Bates. And the gas tax is 2 cents greater?

Mr. SORRELL. I believe you will find that true of a lot of stations
close to the metropolitan area.
Mr. BATEs. Well, thank you very much, Mr. Sorrell.
Mr. SORRELL. Thank you.

Mr. Bates. The next witness on our list is Mr. Horner.

STATEMENT OF STANLEY H. HORNER, REPRESENTING THE WASH-
INGTON AUTOMOTIVE TRADES ASSOCIATION, WASHINGTON,

D. C.

Mr. HORNER. Good morning, Mr. Chairman. I am Stanley H. Horner, and I represent the Washington Automotive Trades Association, an organization of retail automobile dealers engaged in business in the District of Columbia.

The servicing, repairing, and selling of used and new cars is one of Washington's largest industries. One of the most important assets to the future of this industry is good highways and streets, adequate to handle the traffic needs of our customers.

Realizing this, we have always advocated good roads and streets. We realize, too, that these facilities cost money, and are paid for by those who use them. But we further realize that any unnecessary increase in the automotive taxes that our customers pay will jeopardize the business potential of our industry which, squeezed to the breaking point during the war, is just beginning to recoup its normal operations.

Prior to the war the bottleneck in our business was keeping our used cars moving. Once our supply of new cars catches up with

. the present demand we will again be confronted with this problem.

The market for used cars prior to the war existed among the lower income groups, and it is this group that feels the pinch of high automotive operating costs, a large part of which is contributed to by present taxes.

A United States Department of Commerce survey, made before Pearl Harbor, revealed that 60 percent of all automobile owners earned less than $30 a week. While this figure may not hold true today, we do know that the operating costs of used car owners has yone so high that they will be priced out of the market.

The situation regarding the new-car market today is this: Eight months ago the automobile dealers of the country had the most fantastic backlog of orders, both as to number of units and dollar volume, ever recorded in the peacetime history of any product.

This backlog no longer exists. Instead, cash deals in the automobile business have come to a virtual standstill, and hundreds of thousands of orders have been canceled-even the credit orders.

The responsibility for this turn of events can be placed squarely on several factors which combine to make new-car ownership almost untenable for the average-income family in these days of inflationary spirals and high living costs.

This can be attributed to the original retail price of the car, the subsequent upkeep, the tax outlay at the time of purchase, license fees, and the high gasoline taxes imposed by Federal, State, and local units of government.

Leading economists are predicting flatly that this combination of factors will cause every segment of the industry, manufacturer, distributor, retailer, and servicemen to suffer business reverses in the very near future.

Something should be said here of the taxes being paid by purchasers of new cars. I think the simplest way to say it is by telling you that before the purchaser can shift gears on his new car he has to pay out an average of $90.71 in special taxes. Of this amount $70 represents the average excise tax collected by the Federal Government, tires and tubes account for another $4.50, and the District of Columbia charges another $16.21 to register it.

But that is only the beginning as far as taxes are concerned. The minute the new-car owner buys his first gasoline he starts paying more taxes, 3 cents to the District on every gallon and 112 cents to the Federal Government.

The average Washington motorist consumed 950 gallons of gasoline in the last year for which official figures are available, and which costs him $42.75 in taxes alone. This brings the total automobile tax bill to $135.46 in the first year of operation. And that is the picture that must be faced by the individual citizen if he intends to own a new car.

As previously indicated, the Automotive Trades Association is intensely interested in seeing our Capital City carry on with its highway and street-development program.

We believe that during this period of high construction costs and scarcities in personnel, material, and equipment that there is a serious doubt that the Highway Department can spend the very substantial sum available for new construction.

The Federal Aid Highway Act of 1944 authorized for appropriation to the District government the sum of $8,922,000. Only a small proportion has been spent and almost 2 years of this Federal highwayaid program has gone by.

Mr. SORRELL. You mean the cost to me?
Mr. Bares. No; the cost to the consumer.

Mr. SORRELL. The cost to the consumer? The cost to the consumer was approximately-before this last raise that the oil companies gave us?

Mr. BATEs. Yes, sir.

Mr. SORRELL. It was 22110 in the District, and 23 and approximately one-tenth in Maryland.

Mr. BATES Perhaps, you do not understand me; perhaps, we do not understand each other. The Maryland Legislature increased the gasoline tax when?

Mr. SORRELL. Two weeks ago, approximately 2 weeks ago.

Mr. BATES. Well, what was the cost to the consumer in Maryland then, and what was it here? Have you changed gasoline costs here in the District within the last month or so?

Mr. SORRELL. Yes; I have. I increased it 1 cent per gallon.
Mr. BATES. That is because of the increase by-
Mr. SORRELL. By the oil companies.
Mr. BATES. So, today it is 24.1 in Maryland, and 23.1 in the District.
Mr. SORRELL. That is correct.
Mr. Bates. And the gas tax is 2 cents greater?

Mr. SORRELL. I believe you will find that true of a lot of stations close to the metropolitan area.

Mr. BATES. Well, thank you very much, Mr. Sorrell.
Mr. SORRELL. Thank you.
Mr. BATES. The next witness on our list is Mr. Horner,

STATEMENT OF STANLEY H. HORNER, REPRESENTING THE WASH

INGTON AUTOMOTIVE TRADES ASSOCIATION, WASHINGTON, D. C.

Mr. HORNER. Good morning, Mr. Chairman. I am Stanley H. Horner, and I represent the Washington Automotive Trades Association, an organization of retail automobile dealers engaged in business in the District of Columbia.

The servicing, repairing, and selling of used and new cars is one of Washington's largest industries. One of the most important assets to the future of this industry is good highways and streets, adequate to handle the traffic needs of our customers.

Realizing this, we have always advocated good roads and streets. We realize, too, that these facilities cost money, and are paid for by those who use them. But we further realize that any unnecessary increase in the automotive taxes that our customers pay will jeopardize the business potential of our industry which, squeezed to the breaking point during the war, is just beginning to recoup its normal operations.

Prior to the war the bottleneck in our business was keeping our used cars moving. Once our supply of new cars catches up with the present demand we will again be confronted with this problem.

The market for used cars prior to the war existed among the lower income groups, and it is this group that feels the pinch of high automotive operating costs, a large part of which is contributed to by present taxes.

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