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§ 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.

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(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,
Detroit, Mich., July 20, 1959.

Hon. WILBUR D. MILLS,

Chairman, Committee on Ways and Means,
House of Representatives, Washington, D.C.

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,
Managing Director.

PROVIDENCE, R.I., July 23, 1959.

Hon. AIME J. FORAND,
House Office Building,
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.,
Hartford, Conn.

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.

NEW JERSEY MOTOR TRUCK ASSOCIATION,
Newark, N.J., July 14, 1959.

Hon. WILBUR D. MILLS,

Chairman, Committee on Ways and Means,
U.S. House of Representatives,

Washington, D.C.

DEAR MR. MILLS: The New Jersey Motor Truck Association desires to be recorded in opposition to any increase in existing highway user taxes and respectfully requests that the association's opinion be included in the forthcoming public hearing by your committee on the subject of highway financing.

The association's position is outlined in the following telegram which was sent July 10 to all Members of the New Jersey congressional delegation:

"New Jersey Motor Truck Association, speaking for organized trucking industry in this State, strongly opposes new or increased highway taxes to finance completion of Interstate Highway System.

"The Secretary of Commerce, at direction of Congress, is engaged in a study concerning the general benefits being derived from an expanded Federal highway program. Report of this study, due in January 1961, will enable Congress to review entire financing structure and make such permanent adjustments as may be deemed necessary. Any increase in present tax load on highway users pending completion of study would be manifestly unfair.

"A solution to highway financing, keeping construction on schedule, was contained in House version of Highway Revenue Act of 1956. This provided for use of repayable advances chargeable against future tax revenues accruing to highway trust fund during later years of the program when revenues will exceed expenditures.

"Alternative solution would be issuance of revenue bonds secured by highway trust fund receipts. This principle is incorporated in two bills pending before Congress, H.R. 7780, by Representative Ostertag of New York, and Senate Joint Resolution 109, by Senator Case of South Dakota.

"A third approach would be allocation to highway trust fund of those excise taxes imposed against automotive equipment which presently go into general fund.

"We respectfully request you consider one of above alternatives to interim financing of highway program without increasing present level of highway user taxes."

Very truly yours,

D. J. CRECCA, Executive Director.

Hon. WILBUR D. MILLS,

MONTGOMERY, ALA., July 14, 1959.

Chairman, House Ways and Means Committee, U.S. House of Representatives, Washington, D.C.:

Our association including every type of commercial truck user requests to be recorded in the forthcoming hearing as opposed to any Federal gas tax increase or any compromise resulting in an increase we favor repeal of Byrd amendment to ease highway trust fund pinch.

Congressman WILBUR D. MILLS,

JAMES I. RITCHIE,

General Manager, Alabama Trucking Association.

Chairman, House Ways and Means Committee,
House of Representatives, Washington, D.C.:

BOSTON, MASS., July 14, 1959.

Understand the House Ways and Means Committee will hold public hearing on July 22 to consider a new highway-financing bill. This association, comprised of over 700 new-car dealers, in a wire to the members of the Massachusetts congressional delegation of June 30, 1959, noted its strong opposition to any increase in the Federal gas tax and requested that they make known our position to your committee. We respectfully ask that your committee note our objection to any increase in the Federal gasoline tax at this time and in view of the fact that it is not possible for us to attend the hearing we request that this wire be made a part of the official record of the proceeding of July 22, 1959.

WM. A. PLUNKETT,
Executive Vice President,

Massachusetts State Automobile Dealers Association.

THE ORDER OF UNITED
COMMERCIAL TRAVELERS OF AMERICA,
GRAND COUNCIL OF NEW ENGLAND,
July 14, 1959.

Hon. WILBUR D. MILLS,

U.S. Representative,

Chairman, Committee on Ways and Means,
House Office Building, Washington, D.C.

DEAR REPRESENTATIVE MILLS: I recently wrote to you on the subject of financing of the Federal highway program and sent along an excerpt from a resolution pertaining to the subject as unanimously adopted at the annual meeting of the Grand Council of New England, United Commercial Travelers of America, in June.

It is our understanding that your committee will conduct public hearings on the subject of the highway trust fund and problems of financing the Federal highway program, beginning on July 22.

In this connection I have been authorized and directed to write to you again and request that our organization be recorded at these hearings as strongly opposed to any increase in the Federal tax on gasoline and as favoring suspension of the pay-as-you-go amendment to the 1956 Federal-aid Highway Act so as to permit appropriations from general revenues to help finance the Federal highway program.

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GENTLEMEN: We wish to go on record as being opposed to the proposed 12cent increase in Federal gasoline tax as a means of raising additional funds for the Federal highway construction program.

Any increase in motor-fuel tax would further increase operating costs to the extent that rate increases would become necessary, thereby the cost would eventually be passed on the consumer. This would only add to the inflationary spiral which the present administration is striving to control.

We trust that a favorable decision will be rendered on this proposal.
Respectfully yours,

FLOYD N. GORRELL,

Controller.

DALLAS LEASING CO., INC.,

Dallas, Tex., July 24, 1959.

Hon. WILBUR D. MILLS,

Chairman, House Ways and Means Committee,

Washington, D.C.

DEAR SIR: Our company wishes to go on record as opposing any increase in the Federal gasoline tax.

Motor fuel already carries an unbalanced percentage of its cost in taxes and puts an added burden on this phase of the truck-leasing business.

Ultimately these increased costs must be passed to the consumer and in turn do nothing but promote the spiral of inflation.

Here, again, it is our firm belief that only through sincere efforts of our elected representatives to cut Government spending, control and appropriate money available more judiciously, will we ever have sufficient revenue needed for such programs as the Federal highway-construction project.

Respectfully,

C. L. BAKER, Jr., Executive Vice President.

AMERICAN FEDERATION OF LABOR AND
CONGRESS OF INDUSTRIAL ORGANIZATIONS,

DEPARTMENT OF LEGISLATION,
Washington, D.C., July 24, 1959.

Hon. WILBUR D. MILLS,

Chairman, House Ways and Means Committee,
House Office Building, Washington, D.C.

DEAR CHAIRMAN MILLS: I shall appreciate your courtesy in including this letter in the record of the current hearings on the condition of the special trust fund of the National System of Interstate and Defense Highways.

The AFL-CIO consistently has opposed the imposition of excise taxes, including a tax on gasoline. On the contrary, the AFL-CIO has favored placing greater reliance upon the more progressive individual and corporate income taxes.

While the deficits for the current fiscal year and fiscal year 1961 have been estimated at $496 million and as much as $800 million, respectively, it still is not clear exactly just how much additional revenue is needed, nor in fact whether an increase of 12 cents per gallon is actually required. It may well be that, at least for the present, a smaller tax increase might prove sufficient.

The AFL-CIO takes this occasion to reaffirm its support for maintaining the carrying out, on schedule, of the National System of Interstate and Defense Highways construction program. With respect to additional financing, the necessity for which may be demonstrated, it would appear preferable, in our opinion, that additional moneys with which to replenish the special trust fund be obtained through and from the general Treasury revenues. Thanking you for your attention in this matter, I am, Sincerely yours,

ANDREW J. BIEMILLER, Director.

INTERNATIONAL UNION, UNITED AUTOMOBILE, AIRCRAFT &
AGRICULTURAL IMPLEMENT WORKERS OF AMERICA-UAW,
Washington, D.C., July 28, 1959.

Hon. WILBUR D. MILLS,

Chairman, House Ways and Means Committee,
House Office Building, Washington, D.C.

DEAR CHAIRMAN MILLS: May I ask your courtesy in adding this letter to the record of the hearings on the condition of the special trust fund of the National System of Interstate and Defense Highways, following AFL-CIO Legislative Director Biemiller's July 24 letter to you on this same subject.

On behalf of the UAW, may I state that we wholeheartedly support AFL-CIO in this opposition to the imposition of excise taxes, including taxes on gasoline and its recommendation for greater reliance upon more progressive individual and corporate income taxes, also its recommendation that the highway construction program be continued on schedule, the necessary additional financing during the early years of the program to be derived from general treasury revenues as needed to replenish the special trust fund. This can be done by repealing or suspending the Byrd pay-as-you-go rider and by lengthening the financing period without lengthening the construction period.

In addition, we join with others who are wholeheartedly opposed to any increase whatever in the gas tax and to any earmarking of any part of the excise taxes on cars, trucks or parts. Such an increase is not only regressive in general effect; it would be a direct blow against sales, production and employmenti n the U.S. automobile industry at a time when unemployment is still severe in many automotive centers throughout the country. In view of the fact that other and better methods of financing are available, we hope that you and other members of your committee will solve the financing problem during this interim period in a way that will not only continue the highway construction program without any slowdown in road building or employment, but also without handicapping other segments of our economy, such as those employed in the production of automobiles, trucks, oil, tires, parts and accessories.

Sincerely yours,

PAUL SIFTON, National Legislative Representative.

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