Evening star., 1949-05-29
Travellers Notebook
End of Tax Loophole Or Tax Itself Is Certain
BY Jacques FutreIIs. J
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On May Is. the Notebook had
occasion to review the situation
under which thousands Of Amer
leans are cutting their vaction
costs by avoiding the Is per cent
United States transportation tax.
It was pointed out that smart
money" travellers were becoming
increasingly aware of the fact that
the tax dodge was legal. They
could-and they still can-buy
tax-free tickets by mail from
Canada and Mexico. Every day.
more people are learning how to
do 1t.
It was pointed out also that the
practice, by becoming 90 wide
spread as to nullify the levy. could
bring about q reopening Of the
tax question IN Congress. Three
courses Of action were cited:
reduction. repeal or plugging UP
the loophole.
Reaction followed fast. But
let's be modest enough to say 1t
was only o coincidence that. i've
days later. q bill was introduced
to prevent the tax dodge. One
Of its sponsors Is Senator Nc
Grath. chairman Of the Demo-
cratic National Committee. The
other sponsor Is Senator Brewster.
Of Maine. Thus the
bill has q bipartisan complexion.
Known as s. 1908. 1t Is . bill
"to amend the Internal Revenue
Code by imposing q tax on
amounts paid outside the United
States for transportation begin
ming in the United States. and for
other purposes. AS Of last Fri
day, no companion bill had been
introduced in the House. Since
tax bills must originate there.
Senate passage Is stymied until
the House acts.
Passage Almost Certain-There
are roughly a dozen bills before
Congress touching on the trans
portation tax. They call for re-
duction or repeal. Few have con-
ceded they were getting anywhere.
at least up to now. The differ
ences on the Hill about lowering
or increasing taxes are sharp. The
transportation tax is like the
proverbial drop in the bucket. and
little interest could be stirred UP
toward making 1t live issue.
Action on this tax carried the
danger of reopening the whole
question Of excise levies. 1t still
does.
Then, last month, came Can
ada's repeal of its own transporta-
ton tax. This action offered
Americans a convenient way to
buy airline tickets there for any
part of the world, tax-free. Econ
omy- minded persons explored the
situation further. and found train
and steamship space also could
be purchased In Canada without
paying the United States tax. It
was less easy to do, however.
What the McGrath-Brews
measure does is to prevent Sec
ton Of the Internal Revenue Code
from becoming an easily-fiouted
blue law" With a companion
proposal in the House. this bill
becomes the one to watch. And
American travellers can expect an
end to the legal tax dodge before
the summer Is over. OF course.
the whole tax may be repealed
Within q month after its enact
ment, the present McGrath bill
would impose on all agents selling
transportation. as well as public
carriers themselves, the respon-
sibility for collecting and paying
over the tax to the Federal Gov
ernment.
Tax Foes have allies - When
Congress acts on plugging the
loophole in the present code, 1t
will be equivalent to re-enactment
OF the tax. For there will be op-
portunities in committee and on
the Senate and House floors to
amend 8. 1908 by reducing the
Is per cent figure. Or an amend
ment could repeal the tax en-
tirely.
Passing the Mc0rath bill un-
changed reafnrms the tax. That
means transportation TO . num-
Der Of foreign resorts 7 Cuba.
Mexico, Canada and Bermuda. to
name . few-still will b within
the levy sone. Travel TO Europe
has been tax-free since the spring
Of 1o47.
When the McGrath proposal Is
passed, 1t also will debate the
argument Of the transportation
industry that the tax should be
repealed on the grounds 1t was q