because the revenue under this bill is to be devoted to a highway program. Other users of motor fuel to the extent practical from an administrative point of view have not been subjected to the new 1-cent tax, but will continue to pay the present 2-cent tax" (H. Rept. No. 2022, 84th Cong., 2d sess., p. 40). This concept was approved also by the Senate Committee on Finance which, in limiting the tax increase to fuel used in vehicles registered for highway use, made the following observation: "Your committee limited the additional tax to registered highway vehicles to make the new revenue sources under this bill conform more closely with the purposes for which expenditures may be made under the trust fund; namely, a highway program” (S. Rept. No. 2054, 84th Cong., 2d sess., p. 4). By enacting the Highway Revenue Act of 1956 the Congress approved these policy pronouncements. The Air Transport Association is composed of substantially all of the U.S.flag certificated airlines. Our members are, of course, nonhighway users of gasoline and as such do not bear the gasoline tax increase imposed by the Highway Revenue Act of 1956. In the light of the congressional history set forth above, and in view of the fact that the current hearings before the committee are on the subject of the highway trust fund and the problems incident to the financing of the Federal highway program, the association assumes that the issues to be discussed before the committee do not involve our members. Consequently, we would not propose to take up the time of the committee by requesting permission to testify. However, we do wish to make one request which under the Congress' present policy is merely a technical one. In the event that the committee approves any additional increase in the Federal tax on fuel used in highway vehicles, those provisions of the Internal Revenue Code which deal with refunds of this tax should be amended to continue, with respect to any such increase, the refund policy established by the Congress in 1956 with regard to nonhighway users. Unless this is done the entire concept upon which the Highway Revenue Act is based will be overturned. Very truly yours, S. G. TIPTON. NATIONAL AVIATION TRADES ASSOCIATION, Hon. WILBUR D. MILLS, Chairman, Ways and Means Committee, Washington, D.C. DEAR MR. MILLS: The NATA is an association of 545 business facilities supplying goods and services in the general aviation field. Among our members are business enterprises serving agriculture through the aerial application of herbicides, pesticides, defoliants, and other agricultural chemicals; operators providing air taxi and charter services to numberless places for a wide variety of purposes; and gasoline stations supplying fuel to the vast public engaged in flying their own aircraft for business and pleasure. As a general matter, NATA members are opposed to an increase in the tax burden of the Nation. Our members are particularly opposed to the increase of the excise tax on gasoline and most especially to an increase in the tax on aviation fuel. Aviation should not be penalized with a gas tax increase, the primary purpose of which is the minimizing of the financing difficulties encountered in the FederalState highway program. Gasoline used in the air bears no relationship to this program. Previous efforts to include the development of small airstrips adjacent to towns in connection with the building of highways have not been successful. Requests for this sort of cooperative transportation development have not fallen on receptive ears. The people engaged in aviation do not conceive that they should be required to pay for improvements in this fantastic highway program. Aircraft operators are already paying a 3-cent Federal excise tax on gasoline. Although 1 cent of this is supposed to be refunded if used off the highway, we find that in many cases it is not reclaimed. In the case of aerial applicators, the Government denies this 1-cent refund to the applicator who bought the fuel and paid the tax and instead gives it to a farmer. The members of NATA beg you and your committee to disapprove of any increase in the Federal gas tax. In the unfortunate event that disapproval is not possible, we beg you to exempt aviation fuel from any increase imposed or recommended. Respectfully yours, ROBERT E. MONROE. Acting Executive Director. STATEMENT OF JOSEPH E. KELLER, GENERAL COUNSEL, PRIVATE CARRIER CONFEBENCE, INC., OF AMERICAN TRUCKING ASSOCIATIONS, INC., BEFORE COMMITTEE ON WAYS AND MEANS OF U.S. HOUSE OF REPRESENTATIVES, JULY 27, 1959 The Private Carrier Conference, Inc., of American Trucking Associations, is most appreciative of this opportunity to present its views on the problems being dealt with by the House Ways and Means Committee. The conference is an independent, autonomous organization affiliated with the ATA. Its membership includes over 3,100 manufacturers, distributors, farmers, and processors operating private motor trucks in the furtherance of their principal business. The conference fully supports the program for improved highways and concurs in the belief that construction of these new arteries of commercie will benefit our citizens and the general economy and welfare of the Nation. We are sympathetic with the dilemma being faced by the House Ways and Means Committee in bringing income and expenditures of the highway trust fund into balance for the 3-year period ahead. We are much opposed, however, to the suggestion of the administration that a tax increase is the only means by which this temporary problem might be solved. As has been pointed out, highway users are presently burdened with the entire cost of the highway program and, in addition, are contributing over $1.5 billion to the general fund. In this connection, it should be made clear that the great majority of private truck operators are engaged in distribution activities, both at the wholesale and retail level. These local deliveries of milk, bread, groceries, meat, laundry and dry cleaning, department store items, gasoline, newspapers, ice cream, soft drinks, etc., occur over city streets and neighborhood areas. The benefits of an improved Federal Interstate Highway System to these operators are therefore negligible or nonexistent since such private carriers simply do not use these type roads. To ask such citizens to accept another tax increase, in addition to the present heavy taxes already being assessed, would be grossly unfair. Private carriers, as good citizens, are willing to pay their fair share of the general highway program because of the contribution to the general economy, but cannot tolerate unjust and discriminatory additional taxes such as being proposed herein. There has been convincing evidence at these hearings that the road program should be stretched out rather than to impose new heavy taxes each and every time a temporary imbalance occurs in the trust fund. The committee, because of the large number of private carriers in the United States, will wish to be guided by the views which we are expressing in this statement. It is our sincere hope that the committee will pause to take a searching look at progress to date and resist the trend toward impulsive automatic calls for new taxes at the Federal level. CHAPMAN, WOLFSON & FRIEDMAN, Re proposed increase in Federal gasoline tax. Hon. WILBUR D. MILLS, Chairman, Ways and Means Committee, House of Representatives, Washington, D.C. DEAR MR. CHAIRMAN: This letter is submitted on behalf of the American Taxicab Association, Inc., in opposition to proposals presently being considered by your committee to increase the Federal tax on gasoline. The American Taxicab Association, Inc., with headquarters at 4415 North California Avenue, Chicago, Ill., is an association of approximately 1,500 taxicab fleet owners operating throughout the United States. The overwhelming majority of these fleet owners are very small businessmen operating an aver age of 10 taxicabs. In recent years of rising operating costs and relatively fixed fares, these operators have been under increasing financial pressure. The American Taxicab Association is in general opposed to any further increase in Federal gasoline taxes since gasoline is already overburdened with State and local and Federal taxes and since any further increase in operating costs would do serious damage to the taxicab industry. In addition to its general opposition to these proposed tax increases, however, the association respectfully submits that the gasoline tax has a peculiarly heavy incidence upon the taxicab industry and that its application to that industry is discriminatory and unfair. Very briefly the reasons for this position may be summarized as follows: 1. Unlike many other industries in which gasoline represents an incidental cost of operation, gasoline is the very lifeblood of the taxicab industry. Whether cruising or in the actual transportation of passengers, the taxicab operator is constantly utilizing gasoline and therefore is constantly being taxed in the course of his operations. In addition because the very nature of the business, involving almost entirely city driving, cruising, and idling, the average taxicab operator gets much less mileage per gallon of gasoline than the normal highway user, and thus pays a proportionately higher tax per mile. For all these reasons the impact of the gasoline tax upon the taxicab operator is much harsher than upon the average automobile owner or upon industries making incidental use of motor vehicles. 2. The taxicab industry is fundamentally local in nature, providing town and city common carrier transportation. It is estimated that only 2 percent of taxicab mileage is off-highway; 98 percent is recorded on city streets. Yet the proposed legislation would treat taxicabs in the same manner as industries and other motor vehicle operators utilizing the interstate highways extensively. 3. Taxicabs are common carriers and the taxicab industry is a public utility. The industry is subject to State and local regulation as to conditions of service and rates which may be charged. The taxicab industry is not free to pass along to the public increased operating costs imposed by additional taxes, without, at best, a long period of regulatory lag, which represents a loss of revenue which can never be recovered by the operators. 4. Taxicab service is in competition with local transit systems. Nevertheless under the law as presently enacted and as proposed to be amended by the bills before your committee, the competing local transit systems receive a rebate of 1 cent for each gallon of gasoline used in common carrier service. Moreover, it is clear that to the extent to which interstate highways are used, local bus services certainly impose a greater degree of wear and tear upon highways. It is respectfully submitted that this discriminatory treatment of taxicab operators is not justifiable and that they should be at least put on a par with competing local transit systems. For the reasons stated above the American Taxicab Association, Inc., is opposed to the enactment of any increase in the Federal gasoline tax. Notwithstanding action which may be taken by the Congress with reference to the gasoline tax increase proposals the association respectfully submits that an amendment should be adopted which would place the taxicab industry on an equal footing with other local transit systems. For that reason we have prepared and appended hereto a suggested amendment to the Internal Revenue Code which will accomplish this objective. This amendment provides that the rebate presently provided for local bus systems under section 6421 of the Internal Revenue Code be extended to all common carrier public passenger land transportation services the rates for which are fixed by local or State regulatory agencies. It is respectfully requested that this letter and the attached amendment be incorporated into the record of the proceedings before your committee and that the views of the association and its suggested amendment be taken into account in your consideration of this matter. Sincerely yours, SUGGESTED AMENDMENT OF SECTION 6421 OF THE INTERNAL REVENUE CODE OF 1954 Section 6421 of the Internal Revenue Code of 1954 as revised by the suggested amendment, with language deleted in black brackets and language added italicized is shown below: § 6421. GASOLINE USED FOR CERTAIN NONHIGHWAY PURPOSES OR BY LOCAL TRANSIT SYSTEMS. (b) LOCAL TRANSIT SYSTEMS.— (1) ALLOWANCE.-If gasoline is used during any calendar quarter in vehicles while engaged in furnishing [scheduled] common carrier public passenger land transportation service [along regular routes] the rates for which are fixed by local or state regulatory agencies, the Secretary or his delegate shall, subject to the provisions of paragraph (2), pay (without interest) to the ultimate purchaser of such gasoline the amount determined by multiplying (A) 1 cent for each gallon of gasoline so used, by (B) the percentage which the ultimate purchaser's tax-exempt passenger fare revenue derived from such [scheduled] service during such quarter was of his total passenger fare revenue (not including the tax imposed by section 4261, relating to the tax on transportation of persons derived from such [scheduled] service during such quarter. (2) LIMITATION.-Paragraph (1) shall apply in respect of gasoline used during any calendar quarter only if at least 60 percent of the total passenger fare revenue (not including the tax imposed by section 4261, relating to the tax on transportation of persons) derived during such quarter from [scheduled] service described in paragraph (1) by the person filing the claim was attributable to tax-exempt passenger fare revenue derived during such quarter by such from such [scheduled] service. (2) TAX-EXEMPT PASSENGER FARE REVENUE.-The term "tax-exempt passenger fare revenue" means revenue attributable to fares which were exempt from the tax imposed by section 4261 by reason of section 4263 (a) and 4263(b) (relating to the exemption for commutation travel, etc.). SUGGESTED AMENDMENT OF SECTION 6421 OF THE INTERNAL REVENUE CODE OF 1954 A BILL To amend Section 6421 of the Internal Revenue Code of 1954, as amended Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That Section 6421(b)(1) of the Internal Revenue Code of 1954 (relating to gasoline used for certain nonhighway purposes or by local transit systems) is amended by striking out the word "scheduled" after "furnishing" and further amended by striking out "along regular route" and inserting in lieu thereof the following: "the rates for which are fixed by local or state regulatory agencies". SEC. 2. Section 6421 (b) (1) (B) is amended by striking out "scheduled" wherever it precedes the word "service". SEC. 3. Section 6421(b) (2) is amended by striking out "scheduled" wherever it precedes the word "service". SEC. 4. Section 6421(d) (2) is amended by inserting after "4263 (a)" the following: "and 4263 (b)”. AUTOMOBILE MANUFACTURERS ASSOCIATION, Hon. WILBUR D. MILLS, Chairman, Committee on Ways and Means, DEAR MR. CHAIRMAN: We respectfully request that this letter, setting forth views of the motor vehicle manufacturing industry, be made a part of the record of the committee's hearings on the Federal highway trust fund deficit. First, we believe the long-term building schedule established by Congress in the 1956 Highway Act should be adhered to fully. The need for better highways is urgent. They will reduce traffic accidents and transportation costs. They will mean increasing employment within the States, through new business and industrial developments generated by the better highways. Second, we believe it would be premature and prejudicial at this time for Congress to impose further special taxes on motorists, or to institute new allocations to the highway trust fund from Federal automotive excise taxes. Before such measures are considered, a more basic question should be resolved. From the start of the Federal-aid program for highways in 1916, Congress recognized that road improvements are not made for the exclusive benefit of motorists. The benefits extend to the total economy, to national defense, and to many essential public services. Therefore, prior to 1956, all Federal highway funds came from the General Treasury. They were not linked with any special motorist taxes, even though it is true that special Federal taxes on motorists through the years have exceeded total Federal highway expenditures. In order to launch the new road program in 1956, Congress for the first time earmarked special motorist taxes, to finance the entire Federal cost. Recognizing that this was a major policy departure, which should be fully reviewed later, Congress also directed that a comprehensive study be made of benefits flowing from the road system, in order that an equitable long-range policy could be developed for motorist and general tax support for the program. This Federal study of highway tax equities is to reach Congress in January of 1961. We believe an interim fiscal program should be developed to cover the anticipated 2-year deficiency in the fund. We are confident that a form of highway revenue bonding or repayable credit financing can be used, until the time when Congress has before it the facts on which to base a sound long-term highway tax policy. Sincerely yours, HARRY A. WILLIAMS, PROVIDENCE, R.I., July 23, 1959. Hon. AIME J. FORAND, Washington, D.C.: In meeting assembled July 21, our board members vigorously opposed an increase in the Federal gasoline tax and requested we advise you to this effect on behalf of all of the members of our association. Will you please record our opposition with Hon. Wilbur Mills, chairman of the House Ways and Means Committee, before whose committee hearings start today. Our sincere thanks for your usual fine cooperation. RHODE ISLAND AUTOMOBILE DEALERS ASSOCIATION. MOTOR TRANSPORT ASSOCIATION OF CONNECTICUT, INC., Honorable Members of the House Ways and Means Committee: The Motor Transport Association of Connecticut, Inc., a trade association representing the motor transport industry of the State of Connecticut, is vehement in its opposition to any increase in the Federal tax on gasoline. During the fiscal year ended June 30, 1958, the Federal Government collected $3,600 million in road-use taxes, of which $2,100 million went into the road fund for highway construction and maintenance, $1,500 million was diverted to other purposes. It is our position that the present road-use taxes should be applied to highway construction before any tax increase is put upon the gasoline consumer. Connecticut motor vehicle operators now pay what amounts to a 41 percent sales tax on a gallon of gasoline. The 6 cents State tax plus the 3-cent Federal tax now costs the Connecticut motor vehicle owner 90 cents on every 10 gallons of gasoline purchased. That is a sales tax four times larger than the tax on luxuries (furs, jewelry, etc.). In 1957 the Federal Government collected $51.8 million from Connecticut motor vehicle owners in Federal automotive taxes. An increase of 12 cents per gallon would cost the Connecticut highway users $11.5 million per year. It is the opinion of our people that it would be most unfair to increase this tax burden at a time when 42 cents out of every automotive tax dollar collected by the Federal Government is diverted to the general fund for nonhighway purposes. Also any additional increase in the Federal tax on gasoline would impose an added and unfair burden on not only the commercial motor vehicle operators of Connecticut but on every motor vehicle owner in our State. We earnestly urge the honorable House Ways and Means Committee to reject any proposal to increase the Federal tax on gasoline. |