Therefore, the grocery outlets for the chains and independents, the food outlets, recognize candy is a very important food item in their distribution.

It is true those figures were before the war. Candy consumption in 1941 was 19 pounds per capita. Few of us realize that the public consumed more pounds of candy before the war than it did chickens, grapefruit, or peaches, or canned tomatoes, but for cereals, or dried fruits, lamb, and mutton,

Lamb and mutton represents 6 pounds per capita, yet the public consumed candy at the rate of 19 pounds per capita. That was prewar. What would this same survey in Easton, Pa., show? They interviewed a large number of housewives and they found that 38 percent of the consumers, because the supply of candy was not there, said that they were buying cookies, peanuts, cakes, potato chips, pretzels, raisins, popcorn, dried fruit, in place of candy. So it is competitive with other foods and therefore should be given the same recognition in our tax legislation.

Mr. Steidel referred to that chart. I do not think I need refer to it further.

That information is presented merely to show that we have in our economy developed a method of working together various farm products in various foods. This proposal would segregate candy and confectionery as only one type of food and say that should be subject to taxation and yet exempt from taxation practicaly all of the other foods.

We feel that it is a type of discrimination and injustice to a particular industry which we are sure this committee will not support. Let me add just one thing to show the difficulty, the unfairness of it: We stopped on the way down here and bought a box of peanuts. I do not know what the Commissioners would rule as to whether or not peanuts are a food under this proposal, but here are some ordinary salted peanuts. They have been cooked, roasted we will call it, in a little grease.

Now, if you will take those same peanuts and run them through, put some chocolate coating on them, they become candy.

In one case these peanuts, at least according to one ruling, would be tax-exempt, putting grease and salt on them; but if we want to put chocolate or a coat of sugar on them, they would be subject to a tax.

We think that is a type of discrimination which Congress should not support.

Thank you very much.

If there are any questions, I shall be glad to answer them.

Mr. BATES. Mr. Gott, in the sales tax that has already been established throughout the country, what is the difference, if any, between the bills that are law and the bills introduced here?

Mr. GOTT. I am not a tax authority. Mr. Smith indicated what happened in Ohio. Ohio Legislature passed a retail sales tax.

The State collector attempted to collect the tax on candy. The case was taken to the Ohio State Supreme Court, and they ruled they could not assess the tax on candy.

That is due, I must admit, to the fact that the Ohio Constitution said there could not be placed a retail sales tax on any kind of food, but the Supreme Court definitely upheld the theory that candy was food and to that extent should be given the same treatment.

Mr. BATES. I think about 17 States have a sales tax. Is that right? Mr. WEST. Twenty-four States.

Mr. GOTT. Only four I know of, and one of them passed it last week, Maryland, at 2:30 a. m., I am told, Mr. Chairman.

But there are only four that I know of that have any discriminatory feature against candy.

Mr. BATES. In 20 of the States candy is exempt from the provisions of the sales tax; is that right?

Mr. WEST. I do not know. I think this was copied from New York City.

Mr. GOTT. A local tax, not a sales tax.

California has a sales tax in which this discriminatory provision exists, but I think in most of the other States where food is exempt, candy is also exempt.

We are not asking for special favors for the food group. We do feel if you are going to exempt food, you should exempt candy and confectionery.

If you do not exempt foods, I am sure the retailers will pay the tax the same as they do on other products.

Mr. BATES. Thank you, Mr. Gott.

Senator CAIN. Let me ask one question, sir.

How much money are we talking about if candy is included in your sales tax? How much of the total estimated revenue would come from the candy?

Mr. WEST. I do not know.

Senator CAIN. I wonder if the witness would know.

Mr. WEST. It would depend somewhat upon the figure, the amount set, below which there would be no tax.

Mr. STEIDEL. That chart shows that 65 percent of the candy sells for a dime or less. That bill excludes that from taxation. The bill calls for 50 cents or more.

Mr. WEST. What the sales would be above that, I do not know. Senator CAIN. A single candy bar would not be subject to the sales tax?

Mr. STEIDEL. The bill says the Commissioners have a right to exempt all articles under 50 cents, which would take in Hershey bars.

Mr. GOTT. 3.9 percent of the candy is sold at retail for over a dollar, and I should judge that not more than 14 percent is sold at retail for over 50 cents, so that you would eliminate automatically about 85 percent of the candy sales.

However, it is a discriminatory feature.

I will be glad to leave that.

Mr. BATES. We do not need that.

Is Mr. McMillan here?

Did you wish to testify?

Mr. MCMILLAN. I would like to do so briefly, if I may.

Therefore, the grocery outlets for the chains and independents, the food outlets, recognize candy is a very important food item in their distribution.

It is true those figures were before the war. Candy consumption in 1941 was 19 pounds per capita. Few of us realize that the public consumed more pounds of candy before the war than it did chickens, grapefruit, or peaches, or canned tomatoes, but for cereals, or dried fruits, lamb, and mutton,

Lamb and mutton represents 6 pounds per capita, yet the public consumed candy at the rate of 19 pounds per capita. That was prewar. What would this same survey in Easton, Pa., show? They interviewed a large number of housewives and they found that 38 percent of the consumers, because the supply of candy was not there, said that they were buying cookies, peanuts, cakes, potato chips, pretzels, raisins, popcorn, dried fruit, in place of candy. So it is competitive with other foods and therefore should be given the same recognition in our tax legislation.

Mr. Steidel referred to that chart. I do not think I need refer to it further.

That information is presented merely to show that we have in our economy developed a method of working together various farm products in various foods. This proposal would segregate candy and confectionery as only one type of food and say that should be subject to taxation and yet exempt from taxation practicaly all of the other foods.

We feel that it is a type of discrimination and injustice to a particular industry which we are sure this committee will not support. Let me add just one thing to show the difficulty, the unfairness of it: We stopped on the way down here and bought a box of peanuts. I do not know what the Commissioners would rule as to whether or not peanuts are a food under this proposal, but here are some ordinary salted peanuts. They have been cooked, roasted we will call it, in a little grease.

Now, if you will take those same peanuts and run them through, put some chocolate coating on them, they become candy.

In one case these peanuts, at least according to one ruling, would be tax-exempt, putting grease and salt on them; but if we want to put chocolate or a coat of sugar on them, they would be subject to a tax.

We think that is a type of discrimination which Congress should not support.

Thank you very much.

If there are any questions, I shall be glad to answer them.

Mr. BATES. Mr. Gott, in the sales tax that has already been established throughout the country, what is the difference, if any, between the bills that are law and the bills introduced here?

Mr. GOTT. I am not a tax authority. Mr. Smith indicated what happened in Ohio. Ohio Legislature passed a retail sales tax.

The State collector attempted to collect the tax on candy. The case was taken to the Ohio State Supreme Court, and they ruled they could not assess the tax on candy.

That is due, I must admit, to the fact that the Ohio Constitution said there could not be placed a retail sales tax on any kind of food, but the Supreme Court definitely upheld the theory that candy was food and to that extent should be given the same treatment.

Mr. BATES. I think about 17 States have a sales tax. Is that right? Mr. WEST. Twenty-four States.

Mr. GOTT. Only four I know of, and one of them passed it last week, Maryland, at 2: 30 a. m., I am told, Mr. Chairman.

But there are only four that I know of that have any discriminatory feature against candy.

Mr. BATES. In 20 of the States candy is exempt from the provisions of the sales tax; is that right?

Mr. WEST. I do not know. I think this was copied from New York City.

Mr. GOTT. A local tax, not a sales tax.

California has a sales tax in which this discriminatory provision exists, but I think in most of the other States where food is exempt, candy is also exempt.

We are not asking for special favors for the food group. We do feel if you are going to exempt food, you should exempt candy and confectionery.

If you do not exempt foods, I am sure the retailers will pay the tax the same as they do on other products.

Mr. BATES. Thank you, Mr. Gott.

Senator CAIN. Let me ask one question, sir.

How much money are we talking about if candy is included in your sales tax? How much of the total estimated revenue would come from the candy?

Mr. WEST. I do not know.

Senator CAIN. I wonder if the witness would know.

Mr. WEST. It would depend somewhat upon the figure, the amount set, below which there would be no tax.

Mr. STEIDEL. That chart shows that 65 percent of the candy sells for a dime or less. That bill excludes that from taxation. The bill calls for 50 cents or more.

Mr. WEST. What the sales would be above that, I do not know. Senator CAIN. A single candy bar would not be subject to the sales tax?

Mr. STEIDEL. The bill says the Commissioners have a right to exempt all articles under 50 cents, which would take in Hershey bars.

Mr. GOTT. 3.9 percent of the candy is sold at retail for over a dollar, and I should judge that not more than 14 percent is sold at retail for over 50 cents, so that you would eliminate automatically about 85 percent of the candy sales.

However, it is a discriminatory feature.

I will be glad to leave that.

Mr. BATES. We do not need that.

Is Mr. McMillan here?

Did you wish to testify?

Mr. MCMILLAN. I would like to do so briefly, if I may.

STATEMENT OF C. M. MCMILLAN, EXECUTIVE SECRETARY, NATIONAL CANDY WHOLESALERS ASSOCIATION, INC.

Mr. MCMILLAN. Mr. Chairman and gentlemen of the committee, I am C. M. McMillan, executive secretary, National Candy Wholesalers Association, Inc.

My association represents 1,600 wholesale distributors of candy located in the 48 States, the District of Columbia, and the Territory of Hawaii. In the District of Columbia we represent 11 wholesalers who supply most of the small independent retailers who sell candy.

For your information, more than half of all the candy produced in this country is distributed through small wholesalers, many of whom are one-man firms, depending almost entirely on their confectionery volume for their livelihood. The situation is similar here in the District. Therefore, we are rightfully concerned with any tax program proposed for the District as well as for other areas.

We do not, however, profess to be authorities on either taxation or candy. We certainly would not attempt to tell these distinguished committeemen what taxes they should or should not levy or whether or not food should or should not be taxed.

Our only desire is to bring to your attention the inequity of taxing one food item-candy and confectionery-and exempting from taxation competitive items made of the same raw materials and sold in direct competition with candy and confectionery. In this we concur wholeheartedly with the testimony given here by representatives of the National Confectioners Association.

We refer to the provisions of S. 843 and H. R. 2290 in which these bills would make exceptions of "candy and confectionery," and we respectfully ask for the following deletions:

On page 5, line 2, under "milk products", delete the words "other than candy and confectionery".

Lines 5 and 6, under "sugar products" delete the words "other than candy and confectionery".

Lines 7 and 8, under "cocoa products", delete the words "other than candy and confectionery".

The representatives of the manufacturers have shown you that candy and other confectionery contain some 77 agricultural products as ingredients; that candy and confectionery are recognized today by the armed services, doctors, dietitians, and parents as a vitally nourishing and wholesome energy food; that it contains in many cases the identical ingredients of other milk, sugar, and cocoa products which it is proposed to exempt.

Therefore, to set it aside from such competitive food items as being subject to a tax which is not applied to other food items is clearly discrimination which we believe you will agree is not fair to the manufacturers, distributors, and consumers of candy and confectionery.

Our wholesaler members and their retailer customers all handle some of the milk, sugar, and cocoa products which are competitive to candy and confectionery and which these bills would not tax.

We do not therefore feel we can point our fingers at any one or more of them and suggest that they ought to be taxed. But we do feel that in all fairness to our consumer customers they ought to be able to buy all competitive food items on the same tax basis.