Highway Trust Fund and Federal and Highway Financing Program

own dealers. But not to the extent we do. Neither is that tire evaporating.

So I think that in our case we are entitled to some different consideration than for merchants who handle hard goods, subject to being purchased on consignment without the tax applying.

Mr. HARRISON. I notice that you said the loss from spillage and evaporation is about 2 percent. It has been contended that in an efficient operation that need not be over a half of 1 percent. Is that correct?

Mr. ELLIS. I didn't hear you.

Mr. HARRISON. I said it has been contended that your figures on spillage and evaporation are excessive and that the actual loss should not be over a half of 1 percent.

Mr. ELLIS. That objection must come from the Treasury. They brought that up with me in a conference about a year ago where some man in Texas had made the statement that the wholesaler's evaporation and spillage losses should not exceed one half of 1 percent.

At that conference with Treasury officials I told them that I would send a questionnaire to the field and ascertain exactly what the percentage was. We sent those questionnaires to the field and the average percentage, based on 1,202 responses, was 1.23 percent. The range of those percentages was from about 0.86 to 2-plus percent, with the average, as I said, 1.23 percent.

So when some fellow in Texas says that they could be held to that amount-well, Texas is known for exaggeration, and this is probably another instance.

Mr. HARRISON. Your people would be willing to give the bond required, would they?

Mr. ELLIS. We would be very happy to give bond for faithful handling of this. As a matter of fact, we do it on the handling of State

taxes now.

Mr. HARRISON. What about the claimed loss of $2 million? Have you any comment to make on that?

Mr. ELLIS. You must have been reading Treasury's mail or something, because they have used that same figure to me, Congressman Harrison. They base their $2 million loss on that one-half of 1 percent which they would suffer because they didn't get the tax on evaporated and spilled gasoline.

My answer to that is I don't consider that as a loss. They were never entitled to it in the first place.

As to whether that amount is correct, that would be whatever the percentage was. I don't think they should have had it in the first place.

Mr. HARRISON. You do not want to be taxed on your spillage; is that correct-your losses?

Mr. ELLIS. That is right.

Mr. HARRISON. But taxed on everything else.

Mr. ELLIS. We will take the tax on the gasoline we handle and sell, but we don't think we should pay tax on what floats around in the air. Mr. HARRISON. Thank you.

The CHAIRMAN. Thank you, Mr. Ellis.

Our next witness is Mr. William L. Oswald.

Please identify yourself for the record, Mr. Oswald, by giving us your name, your address, and the capacity in which you appear.

STATEMENT OF WILLIAM L. OSWALD, CHAIRMAN OF THE LEGISLATIVE COMMITTEE OF THE KANSAS OIL MEN'S ASSOCIATION

Mr. OSWALD. My name is William L. Oswald. I am representing the Kansas Oil Men's Association.

The CHAIRMAN. Where do you live, Mr. Oswald?
Mr. OSWALD. Hutchinson, Kans.

The CHAIRMAN. You may proceed, Mr. Oswald.

Mr. OSWALD. My name is William L. Oswald, and I am a resident of Hutchinson, Kans., where I am an independent oil jobber. I am a former president of the Kansas Oil Men's Association, and have served on the board of directors of that organization for the last 16 years' time. At the present time, I am chairman of the legislative committee.

The Kansas Oil Men's Association is made up of a majority of about 90 percent of the independent jobbers in Kansas, and there are about 700 jobbers in the State. As jobbers, we collect pretty close to 65 percent of both the State and Federal gasoline tax. Some of you men probably don't know what an independent jobber is, and I will try to explain that to you as briefly as possible.

An independent jobber is a man who owns his own bulk plant, his own service station, buys his gasoline, his lubricating oils, his greases, and his accessories from either one or several suppliers, and who carries his own credit and generally conducts his own business independently of his supplying company.

I have been in this business as a jobber since 1932. My little company has grown until now I have 14 people in my employ, and one of these men has been in my employ 18 years and the majority from 6 to 10 years' time.

Now, as a representative of the Kansas Oil Men's Association, I am appearing before this committee in opposition to any proposed increase in Federal gasoline tax.

Today I am collecting a tax of 8 cents per gallon on every gallon of gasoline I sell in my service stations, 3 cents Federal tax and 5 cents State tax. I will tell you gentlemen one thing, after I have paid my income tax, both private and corporate, when I have paid my utility bills, when I have paid my State and local taxes, and when I have paid for the insurance premiums on my employees, I make a whole lot less on each gallon of gasoline I sell than the 3 cents a gallon that I collect for the Federal Government.

When I learned through trade publications and the press that the Federal Government proposed to increase the tax on gasoline anywhere from 12 to 12 cents a gallon, I decided to make a personal survey at my stations and ask my customers what they thought of an increase in Federal gasoline tax. I wanted to be fair about it, so I took a little longer time than just asking them whether they were in favor or against the Federal gasoline tax increase, and I tried to point out to them the following things: First, the Federal Government spends 90 percent of the money on interstate systems and the State 10 percent. On the intrastate system and other Federal highway aid to our State, the Federal Government puts up 50 percent and our State puts up 50 percent.

Then I pointed out to my customers that the Federal Government collected in automotive excise taxes on gasoline, lubricating oils,

greases, tires, cars, and trucks in the neighborhood of over $3 billion annually. Yet, $1,300 million of this money which was collected from the highway users was diverted into the general fund.

Now, it appears to me, and it also appeared to my customers, that the Federal Government isn't very consistent. On one hand they say to the States that if you divert highway revenue you will be penalized on your Federal-aid allotment, and yet, on the other hand, the Federal Government takes these highway users' taxes and doesn't use them on the highways 100 percent.

Now, I will tell you, my customers are the type of people who, in a great many instances drive cars that were not new when they came into their possession. The customers that I have who drive $6,000 and $8,000 automobiles are few and far between. So, to 95 percent of my customers any small increase in taxes affects them, and affects them seriously.

These people are young people who have to watch their finances and they don't buy 18 or 20 gallons of gasoline at a time. They have $1 or $2 to spend and when they spend $1 on gasoline at the price of our products in Hutchinson, and this is true all over the State of Kansas, they will pay sales tax of 37 cents on each dollar they spend on the purchase of gasoline.

Well, of these customers that I have talked to in the last 4 or 5 days, and I talked to 68 of them, 64 were violently opposed to any increase and the other 4 didn't particularly think any increase was necessary. In fact, the comment that I heard most from these people was, "What the hell is the big hurry about this program? We have good roads, we are getting along pretty good, we are paying a high tax, so why should we have to pay any more?

"If the Federal Government wants to continue the program, why not extend the program for another 3 or 5 years? Why don't they do something original instead of always hollering about only one thing and that is raising taxes?"

I think that our highway department has done a very fine job, and I think they will continue to do a fine job in the future.

But I will say to you gentleman, that if you were visiting with the public every day, as I am, and you wanted to continue to serve the people of your community in the future, as I do, the last thing you would do is raise taxes on anyone.

Before you start raising any taxes I think you should at least be consistent, and use all of the Federal excise taxes that you are now getting in automotive taxes and put that money on the highways, as you make the States do, before you ask anybody to pay an increase of over 37 percent sales tax that they are now paying.

Another thing, I would like to call to your attention in closing, is that a person who drives a car or truck up and down the highways is not the only person who gets benefits out of these roads. How about the owners of businesses such as motels, restaurants, night clubs, fruit stands, soft drink stands and other industries that have sprung up along these roads and have benefited by them? Why not let them pay some of this tax instead of saddling all of it on the users of gasoline?

If there are any questions any member of this committee wants to ask me about Kansas on this subject, I will be very glad to try to

answer the questions. But I am here to talk on this subject and this subject alone. I want you to know that I came down here on my own accord, I paid my own expenses to come down here, and I am not a wealthy man. I couldn't afford to hire an attorney to come down here with me and pay his expenses, because I just can't make that kind of money out of my small business.

I have received 49 telegrams since I have been here from small businessmen, and individual men of the street, protesting any increase in the motor fuel tax.

I would like to have those made a part of the record.
The CHAIRMAN. All right, sir, without objection.
(The information referred to follows:)

W. L. OSWALD,

Sheraton-Park Hotel,

Washington, D.O.:

HUTCHINSON, Kans.

We oppose the increase in the Federal gasoline tax of 12 cents.

NAVAJO FREIGHT LINES, INC.,
KENTON C. REED.

HIAWATHA KANS., July 21, 1959.

W. L. OSWALD,

Sheraton-Park Hotel,

Washington, D.C.:

I am glad you took time to represent Kansas at the hearing on increasing Federal gasoline tax. I have about 1,500 regular customers, mostly farmers, all with whom I have discussed increasing Federal gasoline tax. Oppose it because they believe that funds from present tax, if economically applied, are ample to maintain the program. They oppose the present diversion of automotive taxes from highway building. They think present waste of funds should be eliminated and no increased gasoline tax should be approved by Congress. DEAN KIMMEL.

LAWRENCE, KANS., July 21, 1959.

W. L. OSWALD,
Sheraton-Park Hotel,

Washington, D.C.:

Diversion of current funds and tax increase is unnecessary.

BILL OSWALD,

Sheraton-Park Hotel, Washington, D.C.:

Protest.

G. HATFIELD.

CONCORDIA, KANS., July 21, 1959.

Am against increase in motor fuels tax. It's already high enough.

ED FUNK.