Evening star., 1941-08-18
Tax on Radio Time
Opposed by Senate
Committee Witnesses
Broodeosting Official
Calls 1t Discriminatory;
Fly Dubious of Merit
By 7. A, OLEARY,

, ClO1l dhCcbAOllCb viz nAnoOhA va sAAN
proposed tax on time sold by radio
stations, and Ellsworth C. Alvord OF
the National Association of Broad
casters denounced it as unsound ano
discriminatory before the Senate
Finance Committee today
The proposed levy is one of the
new features of the $685. .000,Q 900 de-
fense revenue bill, passed BY the
House and due to 60 to the Senate
early next month.
Summing up the case for the
broadcasters, Mr.. Alvord testified:
; THE House Committee, on Ways
and Means predicted that this pro-
posed tax will produce S12500,000 In
its first full year of operation. This
figure, of course, represents the gross
revenue to be produced by the tax
Since it will be deductible for income
and excess profits tax purposes, the
net revenue will naturally be some
what less,
Levy Branded an Experiment.
THE tax is novel in form and un-
sound in principle. 1t discriminates
against and, imposes an undue
. burden upon an industry which
renders a real public service in nor
NAL times, and whose efficient func-
tioning in times of emergency is OF
the utmost Importance. Even with
out the tax, the industry is facing
. difficult and uncertain period, fol
Che defense program necessarily in
wolves dislocations and descriptions
of normal business activities. This
special tax would only multiply the
difficulties. It's imposition would al
oest be an experiment, and an ex-
pertinent which even much larger
amount of revenue could not con-
ceivably justify"
Answering one of the House argu-
ments for the tax, Mr.. Alvord in
sisted a Government license to op-
crate a radio station confers nc
monopoly, pointing out that virtually
. no locality in the country lacks
competitive broadcasting.
= Mr.. Alvord told the committee
the excise taxes on playing cards
distilled spirits, gasoline, admissions
and other articles are not intended
to be absorbed by the manufacturer
but are indirect taxes on the ulti-
mate consumer. The radio industry
he argued, cannot pass on this tax
on its time sales and maintain its
competitive position.
Sees No Advertising Increase.
Senator Bailey, Democrat, OF
North Carolina, asked Mr.. Alvord il
the volume of advertising is likely
to increase in the near future, be-
cause industries facing excess profits
taxes would prefer to put more into
advertising. He asked if that die
not occur in 1918.
Mr.. Alvord said he did not be-
ieve that expectation well founded
or borne out by statistics. The wit
ness also argued that a large part
of the Treasury's new revenue will
come from various sales taxes, and
that if advertising is discouraged by
the proposed tax on radio time, the
Treasury would lose more in sales
taxes than it would gain from this
levy. He said sales Of advertised
products which pay sales taxes
would not have to be reduced more
than one-half of l per cent to cost
the Treasury more than it will col
lect on radio time.
"I think it is a very dubious tax,
Chairman Fly declared in his tes-
timony when Senator Vandenberg
Republican, of Michigan asked him
if he is opposed to it, The COM
mission head added that he had
hesitated to say he was against it.
when you gentlemen have the task
of raising the money"
Newspaper Precedent Seen.
won't this, if enacted, set a pre-
cedent for taxing newspaper ad-
vertising?" asked Senator Davis,
Republican, of Pennsylvania. Mr.
Fly replied 1t might have that ef-
feet.
Senator Johnson, Democrat, of
Colorado recalled that Mr.. Fly had
emphasized at the outset of his tes-
timony that radio stations render
public service outside Of their COM
mercial programs, and asked:
'I gather from what you have
said that you regard this as a tax on
freedom of expression?"
Mr.. Fly replied that the free public
service the broadcasters render is
an important offset argument to
the contention that the new tax is
justified because radio stations
possess valuable franchise rights in
the air.
As approved by the House, the
special new radio excise tax would
take per cent of=the net time sales
above 100000 and up to S500000;
10 per cent between that point and
$1,000,000, and Is per cent above ST.
100000. Testimony was given the
committee to the effect that the
gross yield Of the new tax would be
more than $12,0o0,0o0, but that its
net addition to Federal receipts
would not exceed s5;ooe,oeo.
Free Time Cited.
+ Mr.. Fly said that is not a large
amount, but would have a substan-
tial effect on the broadcasting in
!dustry. He said it is not a big in
idustry sin money sense"
Fl. While fthe commission chairman
was describing how radio stations
give time for public debates by
i"you gentlemen" and other public
officials, and go to heavy expense
to give the public news flashes,
Senator Vandenberg interrupted
him to observe with smile.
You omitted fire-side chats. They
are very important"
Some of the Government de-
partments have even set up sta
tions of their own, haven't they?
Don't they have one down in the
Interior Department." Senator
Clark, Democrat, of Missouri in
quired.
mo, sir" Mr.. Fly answered. They
have studio down there. which
is convenient for tying in with
stations"
Among the factors Mr.. Fly asked
the committee to consider In action
on the radio tax we're:
That a broadcasting station must