oleo-tax repeal can be believed. The domestic oil producers are being told that their already high prices would be raised even further. When the processing taxes were first enacted they were intended to create an economic balance within our domestic agriculture. It was judged best for our whole economy to levy moderate import and internal taxes on cheaper oils. The whole effect of recent developments, however-including the proposed repeal of the oleomargarine taxes and the reduction of tariffs in the recent general agreement on tariffs and trade at Genevahas been to upset the balance so carefully worked out in the legislation of the early 1930's. Since the balance is being disturbed, we are now advocating that the processing and import taxes, as outlined above, be taken off. Another aspect of this situation is the current world shortage of fats and oils. Last year the world produced only 20,000,000 tons of oils and fats-that is approximately 44,000,000,000 pounds-as against nearly 22,000,000 tons in 1935-39. In the meantime, the world's population has grown larger. Also, some of the former sources of supply are now dry or almost dry. Manchuria, formerly the world's principal source of soybeans and soybean oil in international commerce, has been shut off from world trade; and that product, as you know, is going back into Russia. The coconut industry of the Netherlands Indies once a major source of supply-is still largely paralyzed. World exports of fats and oils in 1948 have been forecast at only 3.7 billion pounds; more than 40 percent below the 1935-39 average. World supplies are being allocated through the Food and Agriculture Organization. The shortage and the allocations would preclude a huge influx of foreign oils, and the present removal of the processing taxes on imported oils would not have the disastrous effects possible in a severe depression. It would, moreover, be consistent with the theory of the House bill in giving consumers the cheapest possible product. That concludes my direct testimony, Mr. Chairman. The CHAIRMAN. Mr. Holman, have you gentlemen given any special attention to the suggestion of the Chair at the opening of the hearing, posing the question whether there could be a series of regulations that would protect the consumers' choice, that would not be based upon a tax? Mr. HOLMAN. I have our legal department at work on the problem, Senator. I do not know what success they will have. Also, we have the legal departments of two additional member associations, who employ very competent counsel, studying the question. We hope to come to some conclusion on the matter, and we will be glad to furnish it to you at the very earliest possible date. I think you said you wanted to have these suggestions in by the end of the week. (The memorandum appears on p. 97.) Being a great lawyer yourself, you know how fast lawyers work. The CHAIRMAN. I cannot agree with either of your propositions. Have you any further suggestions, Mr. Holman? Mr. HOLMAN. No further suggestion at this time, Mr. Chairman. The CHAIRMAN. You have the form of your amendments attached to your statement? Mr. HOLMAN. Yes; they are attached as a part of my statement. The CHAIRMAN. Thank you very much, Mr. Holman. Mr. HOLMAN. I thank you, sir. (The proposed amendments and tables previously referred to are as follows:) PROPOSED AMENDMENT No. 1 To H. R. 2245 H. R. 2245 is amended by striking out all language following the enacting clause and inserting the following new sections: "SEC. 1. Section 2300 of the Internal Revenue Code (26 U. S. C. sec. 2300) is amended by adding at the end thereof the following proviso: 'Provided, however, That effective July 1, 1948, the provisions of sections 2300 to 2315, inclusive, and sections 3200 and 3201 of the Internal Revenue Code (26 U. S. C. secs. 2300-2315; 26 U. S. C. secs. 3200-3201) shall be applicable only to oleomargarine which is yellow in color as defined in section 2301 (a) (2) of said code.' "SEC. 2. Section 2301 (a) (1) of the Internal Revenue Code (26 U. S. C. sec. 2301 (a) (1)) is amended to read as follows: 66 ''§ 2301. TAX-(a) RATE.-(1) Upon oleomargarine which shall be manufactured and sold, or removed for consumption or use, there shall be assessed and collected a tax at the rate of 10 cents per pound.' "SEC. 3. Section 2305 of Internal Revenue Code (26 U. S. C. sec. 2305) shall be renumbered section 2315 and the following new section 2305 shall be inserted: "'§ 2305. VENDORS. "(a) DEFINITION.-Every person who sells, vends, supplies, serves, or furnishes oleomargarine at any place where meals or lunches are served or sold for the use and consumption of others, except to his own family, shall be held to be a vendor of oleomargarine. "(b) NOTICE REQUIREMENTS.-Every vendor of oleomargarine shall, in addition to the requirements of State or local law, display in such manner as to be clearly visible and readable from each table, counter, or other place where oleomargarine is so sold, supplied, served, or furnished signs bearing the words "Oleomargarine served here" and shall place upon each menu card used in connection with such meals or lunches the same wording so displayed as to be equally as prominent as the wording in the main portions of the menu.' "SEC. 4. Section 2308 (j) of the Internal Revenue Code (26 U. S. C. sec. 2308 (j)) is amended by inserting after the first word 'any' the words 'vendor or'. "SEC. 5. Section 3200 of the Internal Revenue Code (26 U. S. C. sec. 3200) is amended to read as follows: 66 '§ 3200. TAX.-Each manufacturer of, wholesale dealer in, retail dealer in, or vendor of oleomargarine shall pay a special tax of one dollar per year.' "SEC. 6. Section 3201 of the Internal Revenue Code (26 U. S. C. sec. 3201) is amended by adding a new subsection thereto to read as follows: "(d) VENDORS.-Every person who carries on the business of a vendor of oleomargarine without having paid the special tax thereof, as required by law, shall be fined not less than $50 nor more than $1,000.'" PROPOSED AMENDMENT No. 2 To H. R. 2245 H. R. 2245 is amended by adding a new section to read as follows: "SEC. Section 2306 of the Internal Revenue Code (26 U. S. C. sec. 2306), imposing an internal revenue tax of 15 cents per pound on oleomargarine imported from foreign countries, is hereby repealed." PROPOSED AMENDMENT No. 3 To H. R. 2245 H. R. 2245 is amended by adding two new sections to read as follows: "SEC. Section 2470 (a) (1) of the Internal Revenue Code (26 U. S. C. sec. 2470 (a) (1)) imposing a tax of 3 cents per pound upon the first domestic processing of coconut cil, palm oil, palm kernel oil, and certain fatty acids and salts, is hereby repealed. "SEC. - Section 2470 (a) (2) of the Internal Revenue Code (26 U. S. C. sec. 2470 (a) (2)) is renumbered section 2470 (a) and amended by striking out in the first sentence thereof the following parenthetical phrase '(in addition to the tax imposed by the preceding paragraph)"." Item TABLE 1.-The competitive fats and oils situation in the United States, 1920-47 1 Minus sign denotes decrease and plus sign an increase in stocks during each year. Source: Compiled from reports of Bureau of the Census, Office of Domestic Commerce; and Bureau of Agricultural Economics, U. S. Department of Agriculture. TABLE 3.-Oleomargarine production, by types, United States, by calendar years 1917-47-Continued 2 This is also reported to have included small quantities of oleomargarine made "exclusively from animal oil" from 1917 through 1925. This total represents the sum of the quantities shown for each type and is the total as reported by the Bureau of Agricultural Economics of the U. S. Department of Agriculture. The total reported by the Bureau of Internal Revenue is considered to be more accurate, but it is not broken down by types. * Preliminary. Source: Bureau of Agricultural Economics, U. S. Department of Agriculture. TABLE 4.—Materials used in the manufacture of oleomargarine, United States, by calendar years, 1927-47 Total domestic vege table.. Babassu oil. Coconut oil. Palm oil.. Other vegetable 2. 82 45 སཙྩ སྶ 11 54 341 159 51 4, 598 2,511 2, 635 4 32 1,238 54, 778 99, 504 108, 106 2, 744 4,369 4, 140 622 3 7 24 1, 740 14, 261 28 37 37 29, 430 33, 309 36, 519 35, 686 21, 336 17, 666 20,980 57, 551 105, 685 127, 745 1, 838 16, 114 122, 576 159, 852 185, 507 177, 990 133, 118 123, 219 150, 096 123, 678 174, 315 150, 465 Total foreign vegetable. 123, 296 161, 112 187, 031 178, 906 135, 799 123, 480 150, 640 123, 744 176, 758 170, 894 Total all fats and oils... 237, 208 274, 663 304, 724 277, 405 191, 615 215, 596 308, 678 324, 648 Milk (mostly skim)... 76, 235 93, 493 98, 840 90, 201 61, 519 49, 044 58, 417 61, 903 83, 307 76, 386 Vitamin concentrate, salt and other "conditioning" ingredients 17, 549 12, 991 14, 806 16, 619 22, 520 21,386 79, 068 62, 035 73, 223 78, 522 105, 827 97, 772 337, 080 394, 760 432, 884 395, 246 270, 683 229, 242 272, 853 294, 118 414, 505 422, 420 See footnotes at end of table. |