KENNEWICK, WASH., January 27, 1932. Hon. JOHN W. SUMMERS, Washington, D. C.: Suggested tax of one-half cent kilowatt-hour by Ways and Means Committee is unjust. Amount to one-sixth of our second step in lighting. Hon. J. W. SUMMERS, Washington, D. C. J. P. MARTIN, E. H. BEHRMAN. THE PASCO HERALD, January 26, 1932. DEAR MR. SUMMERS: Several objections to the tax proposed before the Ways and Means Committee occur to me. In the first place, I feel that it violates one of the cardinal principles of a good tax-namely, to bear on people according to their ability to pay. Secondly, if we applied it to cooking rates, it would be discriminatory against the person who has gas available or other competitive fuel. Electric current use is not necessarily an indication of wealth or ability to pay. In fact, I rather think that many of us are using current as a matter of economy. And in the third place, would it be the plan to exempt irrigation power? If not, I might suggest that it would be equivalent to almost a 50 per cent increase in power bills for most irrigationists. For instance, the average rate for our district here is less than 1 cent per kilowatt-hour, yet it totals about $7.50 per acre. A one-half cent tax would make this charge in excess of $11 an acre for the power. I realize that more revenue must be obtained but do not feel that this is a very equitable or desirable source. Yours sincerely, O. H. OLSON. OKANOGAN COMMERCIAL CLUB, Hon. DR. JOHN W. SUMMERS, Washington, D. C. DEAR CONGRESSMAN. The agricultural interests of the Pacific Northwest depend upon electricity for the furnishing of water for growing and producing crops. This is particularly true in the apple industry where production can continue only by the supply of cheap electricity. All interests participating in the apple industry have suffered heavy financial loss during the past year and are unable at this time to obtain financing for the production of the 1932 crop. Placing of the additional burden of the proposed tax on the sale of electricity upon the apple industry, which is already overburdened with actual out-of-pocket losses and which is unable to obtain credit for existing requirements or necessary finances for future production, will be, without a doubt, a fatal blow to this industry. The importance of the apple industry to the Pacific Northwest may be realized from the United States Government statistics where in it is disclosed that onethird of all commercial apples grown in the United States are produced in the State of Washington. The proposed tax will increase the cost of water for the production of crops between 50 and 75 per cent. This water is available only by means of electric pumping, and without the water the apple industry is lost in this territory. We strongly urge that you do all in your power to defeat this measure. We are especially and vitally interested in seeing that no tax of this kind be applied to power delivered to the agricultural industry for irrigation purposes. Yours very truly, Howard Vieh, President. PASCO, WASH., January 27, 1932. JOHN W. SUMMERS, House of Representatives, Washington, D. C.: I protest tax on kilowatt-hour sales. C. S. ELLIOT. WENATCHEE, WASH., January 27, 1932. Representative SUMMERS, Washington, D. C.: Proposal tax of one-half cent kilowatt-hour on electric energy developed by water power seems direct blow at irrigation by pumps. Means from 50 to 75 per cent increase cost to consumers. Positively prohibitive. Affects adversely all industries using power in Northwest. Urge all efforts to defeat it. LAKE CHELAN CHAMBER OF COMMERCE, Chelan, Wash. KENNEWICK, WASH., January 26, 1932. Hon. JOHN W. SUMMERS, Washington, D. C.: Rumor says Ways and Means Committee considering sales tax one-half cent kilowatt-hour on all electric energy. Many irrigation districts using power for pumping and numerous small industries can not possibly pay any such tax if contemplated. M. M. MOULTON, Secretary. House of Representatives, Washington, D. C.: We strongly urge your opposition to measure proposing tax on electrical energy. BANK OF COMMERCE. PASCO, WASH., January 26, 1932. Hon. J. W. SUMMERS, House of Representatives, Washington, D. C.: We urge your influence to prevent increase of rate for electric power. House of Representatives, Washington, D. C.: Understand considering levy half cent kilowatt-hour tax on power consumption. Would mean twelve to fifteen hundred added to present taxation each year, which this theater can not endure. Power expenditure now out proportion. Lend all possible effort to levy defeat. LIBERTY THEATER. PASCO, WASH., January 26, 1932. JOHN W. SUMMERS, House of Representatives, Washington, D. C.: LEE PERRY CO. Hon. JOHN W. SUMMERS, WHITE BLUFFS, WASH., January 26, 1932. House of Representatives, Washington, D. C.: Undersigned vigorously protest 5 mill power tax. Unreasonable burden especially country such as ours where irrigation farming is largely electrical. Such tax positively means abandonment of many of our farms. WHITE BLUFFS Grange. WHITE BLUFFS COMMERCIAL CLUB. Congressman JOHN W. SUMMERS, KENNEWICK, WASH., January 27, 1932. Washington, D. C.: We understand Ways and Means Committee now considering a tax of one-half cent per kilowatt-hour on all electricity consumed. This tax will increase our electric power cost 43 per cent. This amount of taxation is unreasonable and present business conditions of cold-storage-ice beverages and grape juice industries can not survive if such unreasonable increases in taxation are granted. Your urgent assistance is requested. Representative JOHN W. SUMMERS, CHURCH GRAPE JUICE Co. SEATTLE, WASH., February 2, 1932. House of Representatives, Washington, D. C.: Seriously doubt advisability or principle of Congress levying sales tax on electricity. Being motive power practically all our large industries. Believe such action will still further depress lumber, pulp, and other major activities. Also used in homes, farms and irrigation. If taxed at all should be imposed on municipal as well as private plants. Would further handicap Columbia Basin. S. H. HODGES, President Washington State Chamver of Commerce. STATEMENT OF HON. CHARLES A. EATON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY Mr. EATON. I appreciate the difficulties confronting the members of your honorable committee in determining the proper incidence of new taxes necessary for the balancing of our National Budget. For this reason, I regret the necessity of offering any arguments in opposition to the proposed tax on electrical energy. I do so because of the fact that this proposed tax will add to the costs of necessities of modern household life, such as lighting, cooking, sweeping, heating, refrigeration, and so forth. At the same time it will place a considerable additional cost of production on both farm and factory. In 1930, 644,421 farms had electrical service. There was consumed on these farms in that year 1,779,947,000 kilowatt-hours. This service cost the farmers $46,187,600. The addition of even 5 per cent of this amount will place an added burden on the farmers using electricity of $2,309,000. This tax on the farmers falls, of course, on various household usages, as well as increasing their cost of milking, water pumping, feed grinding, and so forth. In 1930 there were 20,149,352 domestic consumers of electrical energy. The average cost per kilowatt-hour during that year to the domestic consumer was reduced from 6.33 to 6.03 cents. This reduction saved the housekeepers of the Nation in that year over $33,000,000. The total number of consumers of electrical energy in 1930 was 24,351,457. The total cost of electrical energy to these consumers was $1,990,955,100. A tax of 5 per cent on this gross revenue amounts to almost $100,000,000 a year. At a time when our industries are running in some cases as low as one-quarter or one-third of their capacity, with increasing unemployment, I seriously question the wisdom of adding $100,000,000 a year to the cost of electrical energy. If, however, this new form of taxation becomes a necessity, I sincerely hope that your honorable committee will devise a means by which this burden will fall without injustice upon all alike. The power industry of this country is now taxed about 10 per cent of their gross revenue, or $200,000,000 out of a revenue of approximately $2,000,000,000. A 5 per cent tax levied upon all energy produced amounts to a 50 per cent increase to the total taxes carried by the power industry, which, of course, means that it must be passed on to the consumer. Whatever the outcome, the proposal of a levy of 5 per cent will greatly relieve the public mind, which has been deeply disturbed by newspaper reports that a tax of one-half cent a kilowatt-hour was originally proposed. Personally, I hope that means may be devised for raising revenue that will not add any further burden to the consumers of this most vital necessity in the homes and industries of our land. STATEMENT OF HON. JOE CRAIL, A REPRESENTATIVE IN Mr. CRAIL. I have asked permission to present to your committee a matter in which my home city is vitally interested, a matter which is now before the committee for consideration. Here is a telegram which I received this morning from the department of water and power of the city of Los Angeles, a municipally owned institution, protesting against the proposed tax against electrical power. It is stated in this telegram that they purchase 420,000,000 kilowatthours of electricity in a year, and that the tax proposed here would amount to $2,100,000 and that this tax would impair their ability to go ahead with the contracts which they have made with the Government of the United States in regard to the purchase of power from Boulder Dam and the building of the necessary transmission lines. I would like to have this telegram printed in the record. Mr. CRAIL. I have also a bundle of telegrams from hotel owners. and interurban railway lines as well as street-car lines, in which they say that this tax would be ruinous to them. I should like to have those printed in the record. Mr. RAINEY. You have that permission. Mr. CRAIL. I thank you. Mr. ALDRICH. Do you want all of them in the record? Mr. CRAIL. I particularly want the first two. If there is any objection, I do not care to have them introduced. Mr. ALDRICH. I have no objection to their going in, if they are different, but if they are all on the same subject Mr. RAINEY. Are they to the same effect? Mr. CRAIL. No; they are not to the same effect. Two of them I will leave. The rest of them are from hotel owners. Mr. TREADWAY. You may refer to the others, if you wish, stating whom they are from, and so forth, in the extension of your remarks. Mr. CRAIL. All right. Mr. HILL. In estimating the amount that the imposition of this tax on electric power would place upon the system in Los Angeles, what rate did they have in mind? Mr. CRAIL. That was half a cent a kilowatt-hour. Mr. HILL. That is all. Mr. RAGON. Let me suggest that Mr. Crisp, who brought this matter out, suggested that the rate would not be that, that that was merely an illustration he was using before the committee and that the rate he suggested yesterday was from 5 to 10 per cent, which would be quite different. Mr. CRAIL. Yes; that would be quite different. Thank you, gentlemen. (The telegrams referred to by Mr. Crail are as follows:) Congressman JOE CRAIL, LOS ANGELES, CALIF., February 3, 1932, House Office Building, Washington, D. C. We are seriously concerned over the press reports to the effect that the Ways and Means Committee of the House is considering imposing a tax of one-half cent per kilowatt-hour on the gross sales of electric energy. The department of water and power of the city of Los Angeles is a large purchaser of power from the Southern California Edison Co., having purchased 482,000,000 kilowatt-hours during the fiscal year 1930-31, and a tax in the sum mentioned would amount to $2,410,000 annually. This amount is in excess of 50 per cent of the annual surplus earnings of this department and a tax in this amount would seriously cripple the financing of necessary development and in addition to this would also affect the financing ability of the department in carrying out the obligations which this department and the city of Los Angeles have assumed by its contract with the Secretary of the Interior relative to purchasing our proportionate share of power generated at Hoover Dam and the construction of the necessary transmission lines and other necessary facilities. One-third of the power we sell is sold to a large number of manufacturing plants. The rate to such consumers which would result from the imposition of the tax mentioned would be such as to be prohibitive to large power users and would drive such manufacturers to install small independent plants and thus disrupt the orderly and economic development of the power industry both private and municipally owned on the entire coast. Will you please wire us collect full details of the proposed legislation and advise what steps you believe we should take to make effective our protest. Hon. JOE CRAIL, BOARD OF WATER AND POWER COMMISSIONERS, By ARTHUR STRASBURGER, President. LOS ANGELES, CALIF., February 4, 1932. House of Representatives, Washington, D. C.: Understand consideration is being given to taxing electrical producing companies on kilowatt-hour basis which would be passed on to consumers. Pacific Electric is one of largest power consumers on coast and financial conditions with us are such that we are in a desperate condition making it necessary to reduce wages of all officers and employees and curtail expenditures in all directions where it is possible to save a dollar. It would be unfair and unreasonable to impose tax of this kind and trust it will not be done. One way to do would be for Pacific Electric to pass on this increased expense to car riders, but conditions in this vicinity are such at this time that an increase in rates would mean loss of business and a step of this kind would be last resort and certainly not advisable. D. W. PONTIUS. |