Hon. FRANK IKARD, SAN ANTONIO, TEX., July 23, 1959. House of Representatives, Washington, D.C.: I share the deep concern with oil jobbers all over the country regarding our Federal highway program. The gasoline and diesel fuel consuming public were led to believe by the enactment of the Federal Aid Highway Act of 1956 that the tax was to be used solely for this highway program. Now because of many diversions of these funds the program will apparently be stopped or new finances will have to be provided. Understand hearings are now being held before the House Ways and Means Committee of which you are a member to provide the necessary financing of deficits in the program. It is hoped that you will not only oppose any increase whatsoever in the Federal gasoline tax but that you will attempt to have the funds which have been diverted replaced from some other source. Would appreciate having your views on this important matter. LESLIE R. NEAL. The CHAIRMAN. Our next witness is Mr. Wilcox. Will you please identify yourself for the record by giving your full name, address, and the capacity in which you appear? STATEMENT OF IRA F. WILCOX, CHAIRMAN, CONNECTICUT HIGHWAY USERS CONFERENCE Mr. WILCOX. Mr. Chairman and members of the honorable House Ways and Means Committee: My name is Ira F. Wilcox, of Merrow, Conn. I am a former Master of the Connecticut State Grange and am now the chairman of the Connecticut Highway Users Conference. The conference is made up of the following organizations in Connecticut: Automobile Club of Hartford. Automobile Legal Association. Connecticut Association Street & Highway Officials. Connecticut Automotive Trades Association. Connecticut Conference Farm Organization. Connecticut Chamber of Commerce. Connecticut Farm Bureau Federation. Connecticut Manufacturers Carbonated Beverages. Connecticut Milk Producers Association. Connecticut Motel Association. Connecticut Motor Club. Connecticut Petroleum Association. Connecticut Petroleum Council. Connecticut Petroleum Carriers Association. Connecticut Road Builders Association. Connecticut Rural Letter Carriers Association. Connecticut State Grange. Eastern Greyhound Lines. Fruehauf Trailers Co. Greater Hartford Flood Control Commission. Hartford Chamber of Commerce. Highway Safety Commission. Peter H. Mortensen, Inc. Motor Transport Association of Connecticut, Inc. New Haven Trap Rock Co. Connecticut Motor Stage Association. My statement in opposition to any increase in the Federal gasoline tax is very brief. I will not take the valuable time of the committee to recite many figures that could, in the opinion of the Connecticut Highway Users Conference, substantiate our claim that this proposed tax would impose a tremendous burden on the Connecticut highway user. Connecticut motorists now pay what amounts to a 41 percent sales tax on a gallon of gasoline-6 cents State tax and 3 cents Federal tax. Every time we purchase 10 gallons of gasoline we pay 90 cents in taxes. In Connecticut, highway users have just experienced another severe blow-the diversion of $21.5 million from the State highway fund to the general fund for nonhighway purposes. Thus, it can be seen that Connecticut highway users are now being called upon by the State government to finance not only the highway program on the State level, but also to pay $21.5 million of their license and registration fees into the general fund. I need not inform the members of your honorable committee of the unfairness of such a move. In addition, the Federal Government diverts 42 cents out of every dollar collected in automotive excise taxes to the general fund. It is our firm belief that at a time when the highway users of the Nation are paying 42 cents out of every dollar collected in automotive excise taxes into the general fund, and when the Connecticut highway user is paying and will pay more than his fair share into the general fund of the State of Connecticut, that an increase in the Federal gasoline tax is unwarranted and unfair. For years the Connecticut Highway Users Conference has strongly recommended that highway user taxes be earmarked for highway development. The Hayden-Cartwright Act apparently agreed with our stand. We stand on that position today and sincerely urge you to reject any proposal to increase the Federal tax on gasoline. We respectfully submit that an increase in the Federal gasoline tax would place a tax on this necessary commodity four times greater than the tax on luxuries-jewelry and furs. This, in the opinion of the Connecticut Highway Users Conference, is most inequitable. Thank you. The CHAIRMAN. Mr. Wilcox, we thank you, sir, for bringing to the committee the views of the Connecticut Highway Users Conference. We appreciate your coming to the committee. Mr. WILCOX. Thank you. The CHAIRMAN. Are there any questions? If not, that concludes the call of the calendar today. Without objection, the committee adjourns until 10 o'clock in the morning. (Whereupon, at 5:40 p.m. the committee adjourned, to reconvene at 10 a.m., Thursday, July 23, 1959.) HIGHWAY TRUST FUND AND FEDERAL AID HIGHWAY FINANCING PROGRAM THURSDAY, JULY 23, 1959 HOUSE OF REPRESENTATIVES, Washington, D.C. The committee met, pursuant to adjournment, at 10 a.m. in the committee hearing room, New House Office Building, Hon. Wilbur D. Mills (chairman) presiding. The CHAIRMAN. The committee will please be in order. Our first witness this morning is our colleague from South Carolina, Hon. John L. McMillan. We appreciate your being with us, Mr. McMillan, on this subject matter. You are recognized. STATEMENT OF REPRESENTATIVE JOHN L. MCMILLAN, OF SOUTH CAROLINA Mr. MCMILLAN. Mr. Chairman and members of the committee: I certainly appreciate the opportunity you have given me to say a few words this morning with reference to the bills you have under consideration at this time. I will not take but a few moments of your time, because I know how busy you are, and how many more bills you have following this. I will not take more than 5 minutes of the time you have allotted me. I will confine myself to one single point in my statement, since I know you have a number of witnesses who will bring out other points on this proposed legislation. That point is the dangerous encroachment of Federal taxation into an area which is by history and by commonsense the province of the individual States. For roughly four decades, the State gasoline tax has been the chief source of funds to build and maintain the roads our people need. Federal intrusion into this field goes back to 1932, when the Congress enacted a temporary 1-cent gasoline tax to help fight the depression. For various announced purposes, the Federal levy has tripled to 3 cents a gallon, and it is now proposed to increase it again. While I can think of nothing more important to our economy than good roads, I can think of nothing more destructive to it than to pile tax upon tax on the people who use those roads to the point at which the users rebel. There is a clear danger that if the Federal Government forces its way further into the gasoline tax field the States will be preempted from this legitimate source of tax revenue-historically their right. South Carolina now collects a gasoline tax of 7 cents a gallon from its motorists. The Federal Government collects its 3 cents. To state the matter simply: If the Federal tax is permitted to rise to the level of the State levy-and that is the direction in which we seem to be drifting the combined tax will be sufficient to drive many of our people from our highways. The effect on both Federal and State revenues would be disastrous. We people in South Carolina are proud of our roads and I think the record in the U.S. Bureau of Public Roads will reveal that our roads rank second to none in the United States. The State of South Carolina during the past 25 or 30 years has set aside in a separate fund all taxes collected on gasoline and other types of motor fuel-also, license feesfor the specific purpose of building roads in our State. The taxes collected on gasoline and other items in connection with motor fuel do not go into the regular State treasury and cannot be used for any purpose other than building and repairing our roads. While I have heard much said about the evils of duplicate and overlapping taxation, I have seldom seen a clearer case than this. The path to sound highway financing can hardly be seizure by the Federal Government of the tax source upon which the States have historically relied for better roads. This principle itself is fundamental. When added to the fact that present Federal excise on gasoline, vehicles, tires, and lubricants— paid by the road user-come to more than the Federal share of the road program, the conclusion is inescapable. I personally find it impossible to justify increasing the Federal gasoline tax as much as a fraction of a mill at this time. My sincere hope is that your great committee and the Congress will be able to divert some other funds from the Treasury to take care of the present emergencies in carrying out the roadbuilding program as the present Federal excise taxes on automobiles, in addition to the gasoline tax and tax on other automobile accessories, including automobile tires, will collect sufficient funds to pay for this program in due time. I hope that your committee will try to find some other means of recommending to the President and to the Congress the way for paying this bill without increasing the gasoline tax. The CHAIRMAN. Mr. McMillan, we thank you, sir, for coming to the committee and giving us your thinking on this matter. We appreciate it very much. Are there any questions? Mr. Mason. Mr. MASON. Mr. McMillan, the Federal Government today is collecting a billion and a half from highway users not earmarked for the road program that is going into the General Treasury to be used for general purposes. That billion and a half collected from highway users should go toward this road program, and it would more than take care of it. Mr. MCMILLAN. I certainly agree with you, Mr. Mason, that the Federal Government should first earmark every penny collected from the motorist before additional gas taxes. The CHAIRMAN. Mr. Harrison will inquire. Mr. HARRISON. I understand the people in your district are principally small farmers; is that right, Mr. McMillan? Mr. MCMILLAN. That is correct, and they do the greater part of their driving on farm-to-market roads. Mr. HARRISON. Do you think your small farmers would like to have their gasoline tax increased, realizing that 42 percent of this money is to build throughways through cities that cost $4 million a mile? Mr. MCMILLAN. I doubt seriously if but very few of the farmers in my district or State would ever use those superhighways. Mr. HARRISON. Thank you. The CHAIRMAN. Thank you very much. Our next witness is our colleague from Georgia, the Honorable James C. Davis. We appreciate having you before the committee. You are recognized, sir. STATEMENT OF REPRESENTATIVE JAMES C. DAVIS, OF GEORGIA Mr. DAVIS. Thank you, Mr. Chairman. I appreciate the opportunity to appear before this great committee on this important legislation. As you gentlemen well know, the problem of keeping construction moving on the Interstate Highway System is of great concern to Congress and to the people. In creating the Interstate System and the Highway Trust Fund in 1956, Congress and the people were told that this system of roads could be constructed in 16 years for a cost of $27 billion, or a little more. Congress, acting in good faith, levied additional taxes on the motorists and earmarked the amount of these taxes it was told was sufficient for the program. The additional taxes paid by the motorist were directed to the general fund. Within the short time of 2 years, before serious construction was even underway, we were told that the estimate had risen from $27 billion to some $40 billion. This indicates that either there is waste and extravagance due to the knowledge that regardless of cost, the road program must be completed in a certain short period of time, or those responsible for planning and estimating were incapable or were reckless. Now we are told that the trust fund is insufficient and that additional taxes are needed to keep the program going. Congress placed the burden of paying for these roads on the motorist. In adopting that philosophy, Congress has, in my opinion, obligated itself to use the motorists' taxes for these roads. Since creation of this program, we have extracted from the motorist a billion and a half dollars more than has gone into the fund. This billion and a half dollars is more than even the new estimates say is sufficient to do the job. I realize that there are those who oppose taking money from our general fund for building roads. However, it was only a few days |