I am authorized by the international president of the Hotel Greeters of America to put our association on record as heartily in favor of the enactment of H. R. 91 or other legislation which will repeal the 15percent tax on the transportation of persons. We believe that this step is essential to the welfare of the travel business in general and the hotel business in particular.

Our association fully endorses the overall statement of the case for repeal of the travel tax made by the representative of the National Association of Travel Organizations.

I now wish to devote the few remaining minutes allotted to me in this hearing to a discussion of one important phase of this matter.

More than 25 years ago the Hotel Greeters of America originated. the slogan "See America First." We did not have then, and we do not have now, a narrow, nationalistic, or provincial attitude toward travel. We realize that people will go where they want to go and, since ours is a free country, this is as it should be.

But we do believe that the people of the United States of America should as a general rule see and know and appreciate first their own. part of the country and then other parts of America, before they attempt to become "unofficial ambassadors" through travel in other foreign countries. The overwhelmingly favorable response which our slogan, "See America First," has received down through the years is proof positive that the vast majority of Americans heartily endorse our slogan.

It is, therefore, with great concern that we view the situation in which United States citizens must pay a tax of 15 percent upon travel performed in the United States, Canada, Mexico, Central America, and the Caribbean, and our neighbors must pay a 15-percent penalty for visiting us and trying to travel in the United States, while at the same time our people can go everywhere else in the world, free of this tax, ever since 1947 when the Congress saw fit to repeal the tax on travel to many foreign countries. The United States travel industry and the Hotel Greeters of America have been looking ahead to the day when this committee and the Congress will grant us comparable treatment.

This situation is, in our opinion, deplorable. If it continues, our proud slogan will have to be revised to fit the present circumstances. In the interest of truth and accuracy it will have to become "See America First-and Pay 15 Percent More."

We sincerely believe that the repeal of this tax is a vital step toward maintaining our prestige as a nation. We are equally sincere in our belief that the repeal of this tax will materially stimulate the travel business and that the hotels and all other facilities which serve the traveling public will earn more money and pay more taxes on their normal operations as a result of such a move.

These facilities include the purveyors, the department stores, the drugstores, and many businesses of the communities.

Gentlemen, I am grateful to the committee for permitting me to present testimony on behalf of those who owe their complete dependence for sustenance upon the traveler.

Thank you.

The CHAIRMAN. Thank you very much for your presentation on the subject. Are there any questions?

The Chair hears none.

The next witness is Mr. Ross D. Netherton, American Automobile Association.

STATEMENT OF ROSS D. NETHERTON, LEGISLATIVE COUNSEL, AMERICAN AUTOMOBILE ASSOCIATION

Mr. NETHERTON. My name is Ross D. Netherton. I am legislative counsel for the American Automobile Association.

The CHAIRMAN. Without objection you may insert all of your re

marks in the record.

(Mr. Netherton's prepared statement follows:)

STATEMENT OF Ross D. NETHERTON ON BEHALF OF THE AMERICAN AUTOMOBILE ASSOCIATION

My name is Ross D. Netherton; I am legislative counsel for the American Automobile Association. The AAA has watched with great interest the work of the Ways and Means Committee in its present undertaking of a reexeamination of the national tax laws, and it is sincerely grateful for the opportunity to appear and participate in them. Elsewhere in the record of these proceedings our organization has expressed itself with respect to certain other tax matters and pending legislative proposals. At this time we are appearing in connection with the Federal excise tax on transportation of persons (title 26, sec. 130, Code of Federal Regulations, 1952 edition).

Our position with respect to this tax is similar to that recently taken by the National Association of Travel Organizations, and the American Society of Travel Agencies; we favor the immediate adoption of H. R. 91, which would repeal this tax.

The AAA is made up of over 700 affiliated automobile clubs and branches, located throughout the United States, and has over 4 million individual motorist members. We believe that our membership represents a cross section of that portion of the American public which is most keenly aware of the necessity of travel for business and recreation and the manifold advantages of travel when it is properly encouraged and carried on. During its 50 years of active service, the AAA has become the "travel headquarters" for its members; and as these people have traveled-whether by land, sea, or air-they have depended upon their motor clubs for help in planning and making arrangements for travel at its best. In this way our members have shown us their travel habits, their travel problems, and their travel preferences. Thus, also, we have come to know how great and wholesome the effect of travel, as an industry, is, not only upon the areas which we think of as "major tourist attractions" but upon the entire country. We have seen the far-reaching repercussions of regulatory action at any levels of government-both direct and indirect-which is aimed at the travel of the citizen from place to place. So, although the present 15-percent excise tax on the transportation of persons within the United States, and to Canada, Mexico, Hawaii, and the islands of the Caribbean is not a tax upon individual motorists as they drive in their own passenger cars, it is a tax which bears repressively upon an activity which the AAA has worked for years to encourage and to improve.

The position of the American Automobile Association may be summed up in the resolution adopted by the delegates to the 1952 annual meeting of the association. It reads as follows:

"The 15-percent Federal tax on transportation, instituted during World War II in order to discourage civilian travel and to help pay for the war effort, has long outlived its usefulness. It has no reason for being, and must be considered an unreasonable levy on the millions of Americans who travel by air, rail, steamship, and bus.

"Many cogent arguments have been advanced for repeal of this tax, including

"(a) In 1947 the Congress removed the tax from all transportation except to points within the United States, to Canada, the Caribbean, Mexico, Central America, and Hawaii. To maintain the remainder of the transportation tax is to maintain a barrier of discrimination against Americans who travel within their own country and their own hemisphere.

"(b) In 1948 Canada repealed its wartime 15-percent transportation tax, enabling travel interests north of the border to undercut United States agencies by selling tickets through the mail; and attracting our citizens to travel tax-free in Canada, thus drawing trade away from domestic resorts and transportation lines.

"The continued existence of the tax serves to undermine the travel industry, which has become a major factor in the national economy. The American Automobile Association strongly urges speedy congressional action to repeal the 15percent Federal tax on transportation of persons,"

To this statement of position there are only a few points which we would wish to add and emphasize as matters for your serious consideration when legislative action is taken upon the basis of these hearings:

First. The travel which is being taxed under the present law, is frequently "necessary travel." It is estimated that about one-third of the airline, railroad, and steamship tickets which the public purchases are for the purpose of attending to necessary personal or official business. This is, therefore, not only a tax on travelers for pleasure but on the person who goes to his National or State capital to transact business there; on the commercial traveler and the businessman who must travel to supervise the operation of his branch offices or contact the market for his business. The transportation tax is, therefore, a tax on a necessity,

Second. Travel for recreation has become a major industry in all parts of the Nation, Interstate tourist travel alone annually results in well over $10 billion worth of business, and 26 States now list travel among their top 3 dollar-earning industries. How much bigger these industries would be if the 15-percent transportation tax was removed is, of course, impossible to say with precision. However, the logic of economics makes it plain that a 15-percent decrease in cost would inevitably attract more travelers, with a resulting benefit not only for the agencies of transportation but in even greater degree in the travel areas to which and through which the travelers go.

Third. It is not inconsequential that the present tax, with its effect of adding 15 percent to the cost of travel tickets, tends to discourage family travel. The AAA has long sought to show its members that every member of a family may find lessons and inspiration in all forms of travel and in every place a traveler passes. Necessity travel for one member of the family may-if costs permit it become recreation travel for the whole family. Perhaps even a significant event in the family's life together. Fifteen percent additional cost was thought drastic enough to discourage all but the most necessary travel during wartime, and so logic would seem to make it clear that the same result is being felt today. Only today we are permitting this repressive effect to discourage travel of the most wholesome and desirable sort.

Finally. It is noted that H. R. 91, introduced by Representative Scudder of California, now pending before this committee, recognizes the wisdom of repealing the transportation tax and would accomplish that objection. The American Automobile Association suggests that this bill is amply justified by the experience of recent years, and it is the hope of the AAA that after considering the facts this committee will recommend favorably on H. R. 91 and work for passage through the House without delay.

Mr. NETHERTON. I think for the committee's purpose it will be enough if I capsule the opening portion. Let me say, however, for the record, that the AAA has watched with great interest the work of the Ways and Means Committee in its present reexamination of the national tax laws and is sincerely grateful for the opportunity to appear and participate in them. Elsewhere in the record of these proceedings our organization has expressed itself with respect to certain other tax matters and pending legislative proposals.

At this time we are appearing in connection with the Federal excise tax on the transportation of persons. Our position with respect to this tax is similar to that recently taken by the National Association of Travel Organizations, and the American Society of Travel Agencies; we favor the immediate adoption of H. R. 91 which would repeal this tax.

The AAA is made up of over 700 affiliated automobile clubs and branches, located throughout the United States, and has over 4 million individual motorist members. We believe that our membership represents a cross section of that portion of the American public which is most keenly aware of the necessity and advantages of travel for business and recreation and the manifold advantages of travel when it is properly encouraged and carried on. So although the present 15-percent excise tax on the transportation of persons within the United States, and to Canada, Mexico, Hawaii, and the islands of the Caribbean is not a tax upon individual motorists as they drive in their own passenger cars, it is a tax which bears repressively upon an activity which the AAA has worked for years to encourage and to improve. The position of the American Automobile Association may be summed up in the resolution adopted by the delegates to the 1952 annual meeting of the association. It reads as follows:

The 15-percent Federal tax on transportation, instituted during World War II in order to discourage civilian travel and to help pay for the war effort, has long outlived its usefulness. It has no reason for being, and must be considered an unreasonable levy on the millions of Americans who travel by air, rail, steamship, and bus.

Many cogent arguments have been advanced for repeal of this tax, including: (a) In 1947, the Congress removed the tax from all transportation except to points within the United States, to Canada, the Caribbean, Mexico, Central America, and Hawaii. To maintain the remainder of the transportation tax is to maintain a barrier of discrimination against Americans who travel within their own country and their own hemisphere.

(b) In 1948, Canada repealed its wartime 15-percent transportation tax, enabling travel interests north of the border to undercut United States agencies by selling tickets through the mail; and attracting our citizens to travel tax-free in Canada, thus drawing trade away from domestic resorts and transportation lines.

The continued existence of the tax serves to undermine the travel industry, which has become a major factor in the national economy. The American Automobile Association strongly urges speedy congressional action to repeal the 15-percent Federal tax on transportation of persons.

To this statement of position there are only a few points which we would wish to add and emphasize for your serious consideration when legislative action is taken upon the basis of these hearings:

First: The travel which being taxed under the present law, is frequently "necessary travel." It is estimated that about one-third of the airline, railroad, and steamship tickets which the public purchases are for the purpose of attending to necessary personal or official business. This is, therefore, not only a tax on travelers for pleasure but on the person who goes to his National or State capital to transact business there, on the commercial traveler and the businessman who must travel to supervise the operation of his branch offices or contact the market for his business. The transportation tax is therefore a tax on a necessity.

Second: Travel for recreation has become a major industry in all parts of the Nation. Interstate tourist travel alone annually results in well over $10 billion worth of business and 26 States now list travel among their top 3 dollar-earning industries. How much bigger these industries would be if the 15-percent transportation tax was removed is, of course, impossible to say with precision. However, the logic of economics makes it plain that a 15-percent decrease in cost would inevitably attract more travelers, with a resulting benefit not only for the agencies of transportation but in even greater degree in the travel areas to which and through which the travelers go.

Third: It is not, we think, inconsequential that the present tax, with its effect of adding 15 percent to the cost of travel tickets, tends to discourage family travel. The AAA has long sought to show its members that every member of a family may find lessons and inspiration in all forms of travel and in every place a traveler passes. Necessity travel for one member of the family may-if costs permit it-become recreation travel for the whole family. Perhaps even a significant event in the family's life together. Fifteen percent additional cost was thought drastic enough to discourage all but the most necessary travel during wartime, and so logic would seem to make it clear that the same result is being felt today. Only today we are permitting this repressive effect to discourage travel of the most wholesome and desirable sort.

Finally: It is noted that H. R. 91, introduced by Representative Scudder, of California, now pending before this committee, recognizes the wisdom of repealing the transportation tax and would accomplish that objective. The American Automobile Association suggests that this bill is amply justified by the experience of recent years, and it is the hope of the AAA that after considering the facts of this committee will recommend favorably on H. R. 91 and work for passage through the House without delay.

The CHAIRMAN. We thank you very much.

Mr. NETHERTON. That concludes my testimony on the 15-percent tax on the transportation of persons. However, earlier this evening it was pointed out that the 3-percent tax on the transportation of personal property has resulted in certain inconsistencies which should be eliminated in any general revision of the tax structure. I am speaking of inconsistency which arises when a motorist crosses a river on a ferry boat he must pay a tax, but when he crosses the same river in the same automobile on a bridge or in a tunnel, the tax is not paid.

The CHAIRMAN. We thank you very much for your testimony. The next witness is Mr. J. D. Durand, Air Transport Association of America.

STATEMENT OF J. D. DURAND, SECRETARY AND ASSISTANT GENERAL COUNSEL, AIR TRANSPORT ASSOCIATION OF AMERICA, WASHINGTON, D. C.

Mr. DURAND. Mr. Chairman, I have a full statement which I should like to file for the record, and then for the purpose of taking up just as little time as possible, I would like to summarize the two main arguments in that statement.

The CHAIRMAN. Without objection, it is so ordered. (Mr. Durand's prepared statement follows:)

TESTIMONY OF J. D. DURAND, SECRETARY AND ASSISTANT GENERAL COUNSEL OF THE AIR TRANSPORT ASSOCIATION OF AMERICA, WITH RESPECT TO REPEAL OF 15 PERCENT TRANSPORTATION TAX

Mr. Chairman and members of the committee, my name is J. D. Durand. I am secretary and assistant general counsel of the Air Transport Association of America. The association includes as its members practically all of the certificated, scheduled airlines of the United States. We appreciate this opportunity to appear before your committee for the purpose of supporting H. R. 91, and other similar bills now pending in your committee, to repeal the 15 percent transportation tax.