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(Letter from Stanley H. Horner later received for the record.)

APRIL 15, 1947. Senator HARRY P. CAIN, Chairman, Subcommittee Fiscal Affairs, United States Senate Committee on the District of Columbia,

Senate Office Building, Washington, D. C. HONORABLE SIR: Enclosed you will find suggestions with respect to S. 843. It was our intention to appear before your committee at the hearings on this bill and we had made arrangements (although not through your committee) to be notified when the hearings took place, but, through inadvertence, notice was not received. Therefore, we hope that this letter and enclosure will serve to present our views.

The purpose of the enclosed is to provide a compensating use tax on motor vehicles and trailers, to be collected upon each titling and retitling thereof in lieu of a sales tax.

This proposal has a number of advantages, some of which are enumerated below:

1. Under the amendments the proposed tax on motor vehicles and trailers would be paid at the time of each titling and retitling and be a condition precedent thereto. This eliminates all question as to the actual receipt by the collector of taxes of all taxes due whether purchase was made within or without District of Columbia.

2. Maryland has had in effect for many years an excise tax similar to the one outlined in the amendment, except that in Maryland retitling of a motor vehicle or trailer is not subject to the tax. It was substituted for the original Maryland sales tax. It remains in force as a substitute for the newly enacted Maryland sales tax insofar as motor vehicles and trailers are concerned. This method of taxation has proven entirely satisfactory.

3. H. R. 2290 as now drawn places District of Columbia motor vehicle dealers at a disadvantage. It means that District of Columbia dealers cannot compete on an equal basis in the sale of motor vehicles or trainers to residents of Maryland and Virginia. A resident of Maryland would be required to pay a 2-percent tax to the District of Columbia at the time of the purchase of the motor vehicle or trailer and an additional 2-percent tax to the State of Maryland at the time of titling and registering the motor vehicle or trailer there. If the resident of Maryland purchased his motor vehicle or trailer in Maryland, only the Maryland tax would be payable. A resident of Virginia who purchased a motor vehicle or trailer in the District would be required to pay the sales tax, although he would not be required to pay any comparable tax if he purchased the motor vehicle or trailer in Virginia. Based on present prices, $37 on new vehicles and $14 on used vehicles would be the average tax. A large number of Maryland and Virginia residents have always purchased their motor vehicles from District of Colunibia dealers. Aforementioned amounts of tax would, without doubt, eliminate such residents from making future purchases. Result will be that District of Columbia dealers, in order to retain this business, would establish branches in Maryland and/or Virginia. This not only imposes a financial hardship on the dealer but lessens the amount of income tax collectible by the District,

4. Motor vehicles and trailers are readily susceptible of this method of taxation because of the titling laws. No other type of merchandise may be handled in this fashion. The convenience, certainty, and rapidity of collec'

tion justifies making the distinction sought by the proposed amendinents. If it is your desire, it would be a pleasure for the writer to appear before you and your committee to discuss it further. A copy of this letter is being sent to each member of the District Committee. Yours truly,

WASHINGTON AUTOMOTIVE TRADE ASSOCIATION,
STANLEY H. HORNER,

Chairman, Legislatire Committee.

PROPOSED AMENDMENTS TO S. 843

(Submitted by the Washington Automotive Trade Association) Page 6: Between lines 22 and 23 insert the following subsection (6) of sec'tion 3: “(6) Motor vehicles and trailers, but the same shall be subject to the compensating use tax provided in title II hereof."

Page 9: Section 5, strike out the sentence from line 14 through line 18, reading as follows: "The tax imposed by this title on motor vehicles and vehicles which are propelled or moved by motor vehicles shall be paid as a condition precedent to the issuance of certificates of title therefor and the issuance of identification tags."

Page 29: Between lines 10 and 11 insert new subsection (i) of section 3: (i) In respect to the use of motor vehicles or trailers unless and until the same are titled or retitled in the District.”

Page 29: Section 4, subsection (a) line 12, insert at the commencement of said section the following : “Except as provided in subsection (d) of this section, every vendor, etc."

Page 30: Section 4, subsection (b) line 14 insert at the commencement of said subsection the following: “Except as provided in subsection (d) of this section, where the vendor, etc."

Page 31 : Between lines 3 and 4 insert the following subsection (d) of section 4: "(d) The tax imposed upon the use of motor vehicles and trailers shall not be collected by the vendor, but shall be paid by the purchaser to the Collector as a condition precedent to the issuance by the Director of Vehicles and Traffic of every certificate of title for any motor vehicle or trailer. Such payment shall be made at the time of the issuance of every certificate of title and upon such payment the purchaser shall be relieved by the necessity of filing any further return hereunder."

Page 31: Section 5, strike out the sentence from line 16 through line 20 reading as follows: "The tax imposed by this title on motor vehicles and vehicles which are propelled or moved by motor vehicles shall be paid as a condition precedent to the issuance of certificates of title therefore and the issuance of identification tags."

STATEMENT OF J. M. HEISER, PRESIDENT, FEDERATION OF BUSI

NESS MEN'S ASSOCIATIONS, INC., WASHINGTON, DC. Mr. HEISER. Mr. Chairman, my name is Joseph M. Heiser, and I am president of the Federation of Business Men's Association, Inc.

With your permission, I would like to present as evidence a crosssection of the various signatures obtained from members of our organization. This does not, in any manner, sense or form, signify the entire amount that was to be turned in.

Mr. BATES. What is this organization, Mr. Heiser, Federation of Business Men's Association? What is the membership, the total membership, and are many of these members of your organization also members of the board of trade, for example?

Mr. HEISER. The Federation of Business Men's Association, Mr. Chairman, is comprised of 27 member bodies which are distributed over the entire area of the District of Columbia.

The total membership in these various organizations is 4,281. As to the point relative to dual membership for the Washington Board of Trade, I might say that possibly 60 percent of our members may be members of the board of trade. It may not run quite that high, sir, but there is a considerable amount.

I might say here that the difference in position that may be taken by the Washington Board of Trade and the Federation of Business Men's Associations of Washington is that in the federation we all vote on any question after the committee reports as to whether we will support or oppose any given subject. Does that answer your question, please, sir?

Mr. Bates. What type of business is it? Small business, is it, that your federation particularly represents?

Mr. HEISER. I would say by and large, yes, sir; a great majority would be the smaller businessman.

Mr. BATEs. That is fine; thank you. You may proceed.

Mr. HEISER. I am the president of the Federation of Business Men's Associations, an organization comprising 27 member bodies, with a total membership of 4,284 business firms located and conducting their business in the District of Columbia.

The position of the federation on the various tax demands of the District government was stated in some detail at the hearing on Tuesday, April 1, 1947.

I am here today to reiterate our opposition to a gas tax increase. The Federation of Business Men's Associations believes that gasoline and registration fees at the present rates, plus the $8,922,000 authorized for appropriation to the District government by the Federal Aid Highway Act of 1944, is more than adequate for a sound highway program during the years 1946-49.

We doubt seriously that the $34,000,000 available to the District Highway Department during the years 1946-49 can be spent because of the known shortages of labor, equipment, and material.

The highway director himself has recognized these difficulties, and is aware that construction plans may be delayed because of the inflationary and out-of-line costs.

We offer as a concrete example the very recent statement of the District Commissioners regarding the Dupont Circle underpass that the original figure to complete this project was $2,750,000, but due to the increased cost of material and labor, this figure was raised to $3,800,000, a net increase in cost of $1,050,000, which will have to, of course, be referred to the fiscal committee for further appropriation to either start or complete this project.

We see no justification for an unneeded tax increase. Requests for more tax revenue, when present taxe funds cannot be spent, certainly amounts to taxation without justification.

The trend today, as exemplified by the present Congress, is toward tax reduction and wise spending, not new or increased taxes for only the sake of spending.

An increase in the gasoline tax rate would affect the pocketbook of not only every Washington businessman, but every resident of the city of Washington.

This proposed tax would very seriously affect the Capital Transit Co., whose bus mileage for the present year is approximately 8,600,000 bus miles, and it is my understanding that this mileage during the coming fiscal year will be increased approximately 3,000,000 bus miles, which will mean, under the proposed new gas tax, an increase of $100,000 in the operational expenses of the Capital Transit Co.

I might insert at this point, Mr. Chairman-and it is quite pertinent—hat one of the arguments now being used by the Capital Transit Co. before the Public Utilities Commission in support of a request for an increase in rates is that the gasoline tax increase will add materially to the company's operating expenses.

The approval of this 1-cent increase in gas tax per gallon would likewise mean the increase of operational expenses of the taxicab industry. In view of the fact that they have been paying over $1,000,000 a year taxes, and in view of the decreased patronage in the past year, it would work a severe hardship on this particular industry, as well as our dairies, food deliveries, drugs, and so forth. I mean by that the trucks that carry the various commodities to the various merchants in the city. In the last analysis it must, of itself, ·be passed on to the small businessman and wage earners who are the first to feel the impact of higher motorist taxes.

The period ahead will be one where the businessman must watch every element of cost in business operations, and discriminatory or unnecessary taxes should have no place in the cost of operating his business.

For these reasons, gentlemen, we hope that you will refuse any and all demands to increase the gasoline-tax rates.

Mr. BATES. Now, Mr. Heiser, have you had a chance to examine this program of the Highway Department?

Mr. HEISER. We have, and to a certain extent-not in detail, Mr. Chairman. Our position is that while they are very commendable and we are in favor of all these improvements as advanced by the Highway Department, we feel that at the present time, due to the almost prohibitive costs of building, shortage of labor and material, these various items can be prolonged. I mean by that, put off.

Mr. BATES. Postponed.

Mr. HEISER. Until such time as the conditions in the country become more normal.

Mr. BATEs. Thank you very much, Mr. Heiser.
Mr. HEISER. Thank you, sir.
Mr. BATES. Is Mr. Daniel Smith here?

STATEMENT OF C. G. HATHAWAY, PRESIDENT, VETERANS CAB

ASSOCIATION, WASHINGTON, D. C. Mr. HATHAWAY. Mr. Smith, vice president of the Veterans Cab Association, is not here, but I am C. G. Hathaway, president of the Veterans' Cab Association of Washington, D. C.

Mr. Chairman, I represent over 200 veteran cab drivers in Washington, D. C. We have a young organization, as you know. We are just out there starting out. We are striving for survival at the present time due to the fact that our men have paid inflationary prices for automobiles.

It goes back to the taxes that Mr. Horner brought out earlier today. Ninety-some-odd dollars that they have to pay in special taxes is what they are up against. Over 82 percent of our men still owe a substantial payment on their automobiles today, so they are the men who will be affected most by the tax increase on gasoline today.

The average cab driver out on the street today pays approximately $185 a year in special taxes. He has a registration fee of $24, and a Public Utility Commission license costs $25; he consumes approximately 3,000 gallons of gas a year, which means that he pays

in special taxes somewhere in the neighborhood of $135 a year; which, as I said, would be $185 per year.

If this proposed tax goes into effect, the average cab driver will pay approximately $30 per year more than he is paying today, so they feel that an increase in gasoline today is not needed.

We feel that the Highway Department has adequate funds that have been contributed from the motor-vehicle taxes, and contributions made by the Federal Government for road aid. We feel that that is an adequate fund to carry on the program in a moderate form.

9953847----46

Mr. Bates. I suppose your association has given some study to the possible savings, have they not, of the continuous operation in the District-without stopping, say, at every intersection—and good roads?

Mr. HATHAWAY. Well, as I say, Mr. Chairman, we feel that there should be some adequate changes, but the streets here today are adequate for operation, normal operation. Of course, we feel, lír. Chair

man, that

Mr. Bates. You think they are in fairly good condition, generally speaking?

Mr. HATHAWAY. Yes, sir. It is their opinion that they are, and as I say, adequate conditions at the present time exist, and any increased taxes at this time would certainly affect them inasmuch as they are paying an inflationary price for automobiles, and they are paying inflation prices to be businessmen.

Mr. BATEs. How many cab licenses are there in the District today?

Mr. HATHAWAY. I would say somewhere in the neighborhood of 9,000, before the inspection last time; which, incidentally, has doubled itself since ODT lifted its regulations after the war, and it has decreased now due to the fact I have talked to many fellows in our organization, and they were not able to pay the fifty-some-odd dollars to get their cabs back on the streets now, so it probably is in the neighborhood of 6,500 now.

Mr. BATES. Were there many of the boys who could not get their cabs back on the street because they could not pay $50 ?

Mr. HATHAWAY. That is exactly right.

Mr. BATEs. How many less were registered, say, under the latest registration?

Mr. HATHAWAY. Well, as I said, approximately 3,000 cabs.
Mr. BATES. Three thousand.?

Mr. HATHAWAY. Yes, sir. I do not say that all of that is due to the fact that they cannot pay the levy, the tax; but I do say they were held up, and I have talked to a great many of the drivers in our association, and they have come to us and borrowed money in order to put the cabs on the street.

Mr. Bates. What seems to be the trouble that they cannot make both ends meet? What is the real answer to that?

Mr. HATHAWAY. Well, the real answer to it, Mr. Chairman, is that the fares are supposedly decreasing, and the cabs are increasing so, consequently, in view of the fact, as I say, that they paid the inflation prices for their automobile, and every time they turn around there is an additional tax, they feel that they cannot make it, Mr. Chairman. I only brought out the fact that they were not able to go through inspection, to pay the additional tax, to point out to you that they are living from hand to mouth.

Mr. BATES. There is no limitation as to the number of licenses which will be given out each year, is there! The sky is the limit; is that it!

Mr. HATHAWAY. The sky is the limit in Washington, D. C.
Mr. BATEs. How does that compare with other communities?

Mr. HATHAWAY. We have more cabs in Washington, D. C., for the amount of people here than any other community or any other State in the United States.

Mr. BATES. Any other community?
Mr. HATHAWAY. That is right.

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