Evening star., 1934-05-25
ASKS 40 PCT. CUT
IN TOBACCO TAX
House Committee Action
Seen as New Deal to Lower
Consumer Costs.
BY the Associated Press.

| BY the Associated Press
| A departure in recovery economies
J designed for once to lower consumer
prices-was proposed to the House to-
day when its Ways and Means Com.
mittee reported bill to reduce tobac-
co taxes 40 per cent.
The tobacco companies have agreed
i to pass all the reduction on to the
consumer, so that l5-cent pack OF
cigarettes will sell instead for 10.
To the accompaniment of a great
advertising campaign, an effort will be
made, if the bill passes, to increase
consumption to a point where the
Federal Treasury. may not, after all,
lose very much by the tax reduction.
Lower Liquor Tax.
Should the plan work, lower liquor
taxes may follow, and the whole trend
of administration efforts to rectify
prices for recovery may be affected.
Already urgent proposals have been
brought forward in Congress to clip
down the liquor levies in the hope that
bootlegging may be driven out, and
the legal liquor trade be put on q
basis where lower prices will mean in
creased Treasury returns.
One of the basic economic policies
of the administration has been to re-
store prices to a normal level. In
various ways emphasis has been placed
on q restoration to the level of 1926
No feature of the Governments trade
reports has been scanned more dill
gently by high officials than the price
index.
In approving the tobacco tax reduc-
ton bill yesterday, Ways and Means
Committee members did not 60 into
that feature of the situation They
treated it strictly as an excise tax
measure, taking the position that
present levies were unfair.
To Plug Gap.
Representative Vinson, Democrat, Of
Kentucky, who introduced the bill.
pointed out that the existing rates
were determined after adoption of the
prohibition amendment, to plug a gap
in Government receipts.
He added, however. that the pro-
posed reduction might be expected to
mean far greater sales to consumers,
with the result that the sum total Of
taxes would not diminish as much as
some might suppose.
Committee members likewise said
the bill was in no sense "a new deal
experiment" although they are aware
that if it works it may lead to other
changes in the tax structure, and If it
fails may face prospect of repeal
next session.
Long Discussions Held.
Long discussions with the tobacco
people preceded committee action.
The manufacturers are represented as
ready not only to give consumers the
full benefit of the reduction, but
willing also to exert every effort to
sell more tobacco products at the
lower prices. Other industries will
watch the result.
Committee members expressed the
view that with such an arrangement
the price paid the tobacco grower
would not suffer and might in the
long run increase.
The bills prospects still are uncer-
tain. Administration economists have
been studying it, and although 1t is
presumed to have some administra-
tion backing, there has been no public
White House request that it be placed
on the list for action this session. Its
supporters are hopeful.
Democratic members of the COM
mittee mad conferred with President
Roosevelt during formulation of the
measure and members understood the
bill would be brought up for House
action only if Congress does not boost
Federal expenditures in the deficiency
appropriation bill beyond the Presi-
| dents budget estimates.
The committee vote was II for the
reduction and 2 against. Two men,
bers voted present.
Under the bill, the cigarette tax is
reduced from SO to $1.80 a thousand
Levies on cigars. chewing and smoking
tobacco and snuff are reduced 40 per
cent.