Evening star., 1932-02-11
ELECTRICITY TAX
LEVY IS PREDICTED
Federal Impost May Be Or.
.dered as New Revenue
Producer.
BY GEORGE E. DOYING.

A Federal tax on electricity Is ex-
pected to emerge from Congress as one
Of the items in the new revenue meas
ure nov being drafted by the House
Committee on WAYS and Means to
meet the Treasury deficit.
While the exact form of application
OF the new tax is not publicly known,
1t is probable that. in effect at least, it
VIII be in the nature of a gross re-
ceipts tax. A levy Of 5 per cent on
monthly bills hiss been suggested and
TINS would produce more than $780,
100000 year
Such tax says brief prepared
Tor the Ways and Means Committee by
a specialist Of the Federal Trade Com
mission, would prove an excellent rev.
enue producer, as it is being planted in
fertile ground, and yet it would not be
as harmful or obnoxious as some of the
tax impositions suggested by the Treas
ury Department.
Tax on Bills Proposed.
There is disclosed that no tax can
be imposed on energy consumed based
on money value such as one-fourth
OF a cent per klloWatt hour; therefore,
1t is recommended that a per cent
tax on the monthly bill be imposed. A
tax of this nature will as near as DOS
slble treat all users Of the energy on
the same basis and take care of the
divergent cost per kilowatU hour to the
several classes of users and raise rev.
enue of approximately sl07 900 000".
Objections have been made to the
proposed tax on the ground that it
would tend to retard development of
the power industry and would discrim-
mate severely between manufacturing
concerns producing their own electric
power and those buying it. 1t is claimed
also that it would upset the delicate
competitive balance between steam.
electric and water power. and would
divert much business from the power
companies to privately installed gen.
Grating plants in manufacturing estab-
lishmentS.
Such tax would increase by about
so per cent the aggregate taxes now
being paid by the electric utilities
whose tax bill in 1880 amounted to
s203.500000 equaling 1912 cents from
each dollar Of consumer revenue
Other probable tax increases are
faced by the electric utilities as re-
suit of the pioneering Of the States Of
South Carolina and Idaho in enacting
last year a tax Of one-half mill on
each kiloTatt-hour of electricity gen.
Grated within the State. In both cases
Federal district courts have sustained
the tax and the South Carolina law
now is pending before the Supreme
Court of the United States. while an
appeal by the Idaho utilities is antici-
pated.
Increase Proposed.
If this tax is sustained by the Su-
preme Court. it will almost certainly
be adopted by other States. In addi-
ton. proposal already is pending in
the South Carolina Legislature to dou-
bic the present half mill levy With
practically all of the States seeking new
methods of raising revenue and en-
deavoring to remove some Of the direct
taxes upon real estate, the utilities in
many instances present themselves as a
shining target.
OF course. it was pointed out today
by observers here, a tax on electricity
will indirectly and of necessity be
passed along to the consumers. 1t is
not expected that Federal tax, even
one aggregating more than hundred
millions, will cause any increase in
rates but certainly it will retard the
downward trend that has been in evi-
dence for long period.
(Copyright, 1922