Evening star., 1948-05-12
ID. T.. Heads Ask
Congress for
~ Sales Tax
Unable to See Other
Way to Meet Possible
13-MiIIion Deficit
By Don S. Worren

Adoption of a 2 per cent retail
sales tax as a means of meeting
an impending city deficit that
might range as high as $13,000,-
900 was urged on Congress today
by District officials and some
civic Spokesmen.
The Commissioners, testifying be-
fore the joint fiscal subcommit-
tees Of the House and Senate Dis
trict Committees. said they could
find no other adequate means Of
meeting the Districts revenue prob
lens for the next year and warned
that a large backlog of needs still
remain to be met in future years.
They coupled with proposals for
the sales tax a recommendation for
repeal of the present personal in
come tax after next year, with a
suggestion that new income levy
be enacted which would exempt
incomes up to $4,000.
Higher Federal Payment Asked.
The Commissioners also declared
there should be a higher Federal
paymnet toward District expenses
because the prospective pay raise
for Government workers would in
crease Federal income tax pay
ments from the District, while at
the same time adding heavily to
city operation costs.
The position of the Commissioners
was supported In general by Maj.
Gen. David McCoach, speaking for
the Board of Trade, which has been
urging adoption of sales tax. The
trade body is asking repeal OF in
come tax levy as of next January I.
Budget Officer Walter L. Fowler
brought in figures to show that the
possibility of solving the Districts
financial problems through enact
ment of the sales tax measure de-
pends largely on what Congress does
about increasing the salaries OF mu-
nicipal employees. Several Govern
ment pay increase measures now
are under consideration at the Cap
itol.
If a $450-a-year raise becomes ef-
fective next July l. Mr.. Fowler said.
the sales tax will meet revenue
needs only If the raise is granted on
a temporary basis-for one year
only.
IF the raise is permanent he
said, sit will be necessary to flnd
still further sources OF revenue.
Five Million Surplus Possible.
Mr.. Fowler said the sales tax
would give the District a $3.50, ,426
surplus in the fiscal year 194s. II
no pay raise is granted. A $3.50
raise for all municipal employees,
however, would convert this into
50, ,722 ,146 deficit in 1949.
If the increase Is for one year
only, a surplus of $2,623,435 could
be produced with the sales tax In
1850, the budget officer said. But
if the increase were permanent, he
added, another deficit would
materialize that year.
Chairman Cain of the Senate Dis
trict Fiscal Subcommittee thanked
Mr.. Fowler for his arithmetic, say
ing, his statement is very realistic.
if distressing
Edward A. Dent, the District
assessor, also testified briefly dur
ing this mornings session.
When Gen. McCoach finished his
statement, Chairman Cain said he
personally was very much IN favor
of the idea that If sales tax bill
is passed it should include provision
for repeal of the local income tax
law.
Tax on Gross Receipts Urged.
Several times during the hearing.
Chairman Bates of the House wing
of the joint committee said he
thought a straight 2 per cent tax
on the gross monthly receipts OF
merchants would be easier to ad-
minister than a separate tax on
each individual sale. He said this
was the system in % out Of 27
communities which used the sales
| tax.
! 10 v. Morgan, chairman of the
trade boards sales tax subcommit-
| tee, followed Gen. McCoach on the
stand to take issue with Mr.. Bates
on this point. The disadvantages
of the gross receipts tax, he said.
are that it does not permit exemp-
ton; that people forget they are
paying it, and that in stores max
ing large number of small sales,
the merchant makes considerable
profit on the tax.
i Senator Cain warned at the
outset that the District was fac
ing a deficit of about $500 900
in the year beginning July l and
that because of the prospect OF a
(See TAXES, Page A-6)