lower taxes throughout the Nation, and questioning the propriety of a contrary trend in the District of Columbia. It is true that there is a widespread demand for lower taxes everywhere, including the District. But concurrently, there is an even louder demand for better municipal services: better highways and parking facilities, more schools, higher standards of public service in the welfare and health fields, et cetera. I have repeatedly heard the two demands made concurrently from the same source. I merely wish to point out that we cannot have it both ways. If these improved services and facilities are to be provided by the District-and I consider it absolutely essential to the city's welfare, and to its future prosperity, that they be provided-then some means must be found to pay the bill. Mr. BATES. Thank you, Colonel. Then the Engineer Commissioner is going to supply the committee with this projected program over, say, a period of 5 years or so, with a revised estimate of cost? Colonel SHURM. I believe, sir, from the statement I have just read. General Young has prepared and is now having worked up a revised cost estimate for the 1948 budget and for capital improvements for which there have been appropriations in the past fiscal years, but which have not been built. Mr. BATES. Yes. Well, in addition to that, I wish you would see to it that the report is made of the projects of public works, that that also is included. The program that you are projecting in the future for what we call capital improvements. I would like to see that at least on a 5-year basis for other than the water system, which has got to be projected way beyond that. We do not know what the backlog of appropriations are at the present time, or do you? That is, the available cash, let us say, that you can go to work now with. Colonel SHURM. I think that the Budget Officer has that. Mr. FOWLER. I think we put that in the record this morning, Mr. Chairman. This is something else. Mr. BATES. 1947, 1948, 1952. That is all right. Those were capital improvements. Something of that type, on a separate sheet of paper, and break them down at each one of those years so we can get it right across the board. Commissioner YOUNG. Yes. Mr. BATES. But you have a backlog of appropriations which are still static? Are the funds still available? Mr. FOWLER. Some of the funds are available; yes, sir. Mr. BATES. They are not rescinded? Mr. FOWLER. No, sir. Mr. BATES. At the end of the year, they still stay on the books as available funds? Mr. WILDING. And, Mr. Bates, for the most part, these projects are only for planning money. The appropriation for the carrying out of the construction project itself has not been appropriated, but in some instances, partially appropriated. Mr. BATES. I think in the schedule of projects that you are speaking about in the Engineering Department, I wish you would schedule then over a period of years as to when you would like to put them into effect, and complete them. I think you have a tabulation somewhere, particularly on the highways. And also, if there is any money available at the moment, I would ike to know what it is. Of course, if it is only plans, that is something Ise. Is that all you have to say, Colonel? Colonel SHURM. Yes, sir. Mr. BATES. Thank you very much. Senator CAIN. I am going to ask the indulgence of Mr. Bates to permit me to satisfy a commitment that I gave in good faith yesterday o two persons who wanted to be heard in a serious way in order that hey might get away. Now, I am inclined to think that it is proper, if not only for that reason, but because they are going to be perhaps critical of any approach we have yet made to the general subject of taxation. Each one of them said that he would like about 20 minutes. Mr. Bates' permission, I would like to call them. With Mr. McKee, if you will be kind enough to sit with us. Our time has expired a little more rapidly than we thought. If it will suit your convenience, Mr. McKee, to restrict yourself approximately to 20 minutes, we shall be greatly appreciative of that. STATEMENT OF JEROME B. MCKEE, EXECUTIVE DIRECTOR, DISTRICT OF COLUMBIA RETAIL LIQUOR DEALERS' ASSOCIATION, WASHINGTON, D. C. Mr. McKEE. First, I want to give a report of the District of Columbia Retail Liquor Dealers' Association, of which I am executive director, and then I will go into the specific taxes from the report of the federation. Senator CAIN. Go right ahead. Mr. McKEE. Honored members, while there are many users of alcoholic beverages, as can be testified to by the income both to the Federal Government and to our city, these consumers hesitate to appear in public in defense of the complaints they make to retailers about the anticipated increased costs to them through the imposition of an increased gallonage tax on alcoholic beverages. Therefore, those engaged in the sale of alcoholic beverages have to plead their own case, and that of the consumer, which thereby places the industry on record openly as fighting this suggested increase in liquor gallonage tax, plus the increased tax on beer and wine. At a tax hearing before the honorable Commissioners of the District in September 1946, I stated that as soon as supplies became available in sufficient quantities, so that rationing could be dispensed with in our neighboring States, that there would be a decline in sales by at least 15 percent for the year 1947. This has already come true, and if additional taxes on our products are imposed, then a further decline will take place. We recognize that our gallonage tax of 50 cents a gallon is low, and we recognize that our ratio of sales have been higher than any other area. However, all statistics are based upon States, as a whole, and no statistics are kept in regard to major cities separately. 99538-47-37 lower taxes throughout the Nation, and questioning the propriety of a contrary trend in the District of Columbia. It is true that there is a widespread demand for lower taxes everywhere, including the District. But concurrently, there is an even louder demand for better municipal services: better highways and parking facilities, more schools, higher standards of public service in the welfare and health fields, et cetera. I have repeatedly heard the two demands made concurrently from the same source. I merely wish to point out that we car not have it both ways. If these improved services and facilities are to be provided by the District--and I consider it absolutely essential to the city's welfare, and to its future prosperity, that they be provided-then some meats must be found to pay the bill. Mr. BATES. Thank you, Colonel. Then the Engineer Commissioner is going to supply the committee with this projected program over, say, a period of 5 years or so, with a revised estimate of cost? Colonel SHURM. I believe, sir, from the statement I have just read. General Young has prepared and is now having worked up a revised cost estimate for the 1948 budget and for capital improvements for which there have been appropriations in the past fiscal years, but which have not been built. Mr. BATES. Yes. Well, in addition to that, I wish you would see to it that the report is made of the projects of public works, that that also is included. The program that you are projecting in the future for what we call capital improvements. I would like to see that at least on a 5-year basis for other than the water system, which has got to be projected way beyond that. We do not know what the backlog of appropriations are at the present time, or do you? That is, the available cash, let us say, that you can go to work now with. Colonel SHURM. I think that the Budget Officer has that. Mr. FOWLER. I think we put that in the record this morning, Mr. Chairman. This is something else. Mr. BATES. 1947, 1948, 1952. That is all right. Those were capital improvements. Something of that type, on a separate sheet of paper, and break them down at each one of those years so we can get it right across the board. Commissioner YOUNG. Yes. Mr. BATES. But you have a backlog of appropriations which are still static? Are the funds still available? Mr. FOWLER. Some of the funds are available; yes, sir. Mr. BATES. They are not rescinded? Mr. FOWLER. No, sir. Mr. BATES. At the end of the year, they still stay on the books as available funds? Mr. WILDING. And, Mr. Bates, for the most part, these projects are only for planning money. The appropriation for the carrying out of the construction project itself has not been appropriated, but in some instances, partially appropriated. Mr. BATES. I think in the schedule of projects that you are speaking about in the Engineering Department, I wish you would schedule them over a period of years as to when you would like to put them into effect, and complete them. I think you have a tabulation somewhere, particularly on the high ways. And also, if there is any money available at the moment, I would ike to know what it is. Of course, if it is only plans, that is something lse. Is that all you have to say, Colonel? Colonel SHURM. Yes, sir. Mr. BATES. Thank you very much. Senator CAIN. I am going to ask the indulgence of Mr. Bates to permit me to satisfy a commitment that I gave in good faith yesterday o two persons who wanted to be heard in a serious way in order that hey might get away. Now, I am inclined to think that it is proper, if not only for that reason, but because they are going to be perhaps critical of any approach we have yet made to the general subject of taxation. Each one of them said that he would like about 20 minutes. Mr. Bates' permission, I would like to call them. With Mr. McKee, if you will be kind enough to sit with us. Our time has expired a little more rapidly than we thought. If it will suit your convenience, Mr. McKee, to restrict yourself approximately to 20 minutes, we shall be greatly appreciative of that. STATEMENT OF JEROME B. McKEE, EXECUTIVE DIRECTOR, DISTRICT OF COLUMBIA RETAIL LIQUOR DEALERS' ASSOCIATION, WASHINGTON, D. C. Mr. McKEE. First, I want to give a report of the District of Columbia Retail Liquor Dealers' Association, of which I am executive director, and then I will go into the specific taxes from the report of the federation. Senator CAIN. Go right ahead. Mr. McKEE. Honored members, while there are many users of alcoholic beverages, as can be testified to by the income both to the Federal Government and to our city, these consumers hesitate to appear in public in defense of the complaints they make to retailers about the anticipated increased costs to them through the imposition of an increased gallonage tax on alcoholic beverages. Therefore, those engaged in the sale of alcoholic beverages have to plead their own case, and that of the consumer, which thereby places the industry on record openly as fighting this suggested increase in liquor gallonage tax, plus the increased tax on beer and wine. At a tax hearing before the honorable Commissioners of the District in September 1946, I stated that as soon as supplies became available in sufficient quantities, so that rationing could be dispensed with in our neighboring States, that there would be a decline in sales by at least 15 percent for the year 1947. This has already come true, and if additional taxes on our products are imposed, then a further decline will take place. We recognize that our gallonage tax of 50 cents a gallon is low, and we recognize that our ratio of sales have been higher than any other area. However, all statistics are based upon States, as a whole, and no statistics are kept in regard to major cities separately. 99538-47- -37 While the apparent sales or consumption for 1946 were 5,071,391 gallons, an increase over 1945, this was brought about by availability of quality blends, bonds, and so forth, beginning in August 1946. The retailer, being depleted of this type of merchandise, naturally purchased more of it than if he had had a supply on his shelves, so that a good portion of it is on the shelves of the various retailers, and not actually consumed. And you will notice that the newspapers would stress types of merchandise that was only available to the consumer, which are now being sold at less than Federal taxes. To prove my point, the last quarter of 1946 for the District of Columbia, shows an apparent consumption of 1,071,150 gallons, against the last quarter of 1945, when it was 1.257,521 gallons. For the 2 months of this year, January and February, the apparent consumption was 707,388 gallons against January and February 1946, of 818,245 gallons, whereas wine for the first 2 months of the year declined from 207,817 gallons in 1946, to 109.216 gallons in 1947. Those statistics are the figures of the Alcoholic Beverage Control Board. Attached hereto is the statistical report of apparent consumption of distilled spirits for the month of January 1947 and 1946, which indicates the decline in consumption throughout the Nation. You will notice for that month a decline of 27.4 for Washington, and I will go into the subject further. The State of Virginia has an increase of 11.6. You might ask what is the cause of this decline. A reduction in visitors to the city, as can be testified to by the ability to obtain rooms in our hotels, which did not exist until August 1946, plus the agitation for reducing Government personnel, who now realize that they have to watch their expenditures; the increased costs of living items has also reduced the people's purchasing power of luxury items such as liquor and its kindred lines. We should not forget that our metropolitan area, especially Virginia and Montgomery County, were on a rationed basis, with the result that if the citizens there could not obtain a sufficient quantity under the rationing system for entertainment purposes, they came to Washington for it, as we were not on ration. Since rationing has been abandoned, they are purchasing the majority of their requirements in their own States. As a comparison, the State of Virginia buys direct from the distilleries, and they have no State tax added to that cost, whereas the retailer in Washington purchases over 90 percent of his needs from local wholesalers, who, after all, have an expense of operation, which has to be added to their costs and passed along to the retailer. Our greatest problem for competition purposes is the State of Virginia, which merely marks the price up 33% percent, less the last $3 of Federal excise tax, so that they can sell a popular brand for $3.15 a fifth, or at the rate of $37.80 a case. If the suggested increased gallonage tax goes into effect, and the retailer attempts to compete with Virginia, his profit will shrink to 11 cents a fifth, which is economic suicide. To give a concrete example of what happens when prices of a commodity are raised in one area so that they cannot compete with nearby |