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© scanned from Billboard ~ edition August 8th 1964
American Excise Tax
Industry Urges Reform In Product Excise Tax
WASHINGTON—Spokesmen for the record industry, for home entertainment equipment in radio, TV and phonographs and musical instruments, made strong pleas for reduction or an end to the high, discriminatory 10 per cent manufacturers excise on these items before the House Ways and Means Committee last week.
Representing Goddard Lieberson, president of Record Industry Association, who could not be at the hearing, was association secretary Henry Brief. Brief urged the committee to let the sound-recordings of music, drama, literature, languages and history come into the same tax-free status as their printed counterparts.~
Supporting the record industry plea were spokesmen for the Music Educators National Conference, and the Music Division of the New York Public Library. They urged the congressmen to relieve this valuable cultural source for educators, historians, musicians and dramatists of the unfair emergency wartime tax which has held since 1941. Records are now an international source of communication, it was pointed out.
The extensive and eloquent statement, by Lieberson said in part: “Today’s phonograph records can entertain or instruct, soothe or stimulate, amuse or enrapture. Records are made because works are created that cry out for performance; because talented artists, musicians, singers, comics, lecturers need a medium of free expression; because a civilized society hungers for easy access to symphonies and sonatas, pop songs and jazz, folk and dance music, poetry and drama, comedy and documentary. You can turn your home into a concert hall, a classroom, a theater, an opera house or a church—simply by putting a record on a phonograph.”
From the business standpoint, Lieberson said the tax is discriminatory against a product “largely cultural and educational in character.” It is a product in competition for the consumer’s dollar with books, sheet music and other art forms on which there is no tax.
The tax return to the government is itself comparatively negligible, amounting to less than 2 10 of 1 per cent of the total. excise take for fiscal 1963. The burden first hits the manufacturers in collection and accounts that cost them almost the same total amount as the tax collected. The tax invariably must be passed on to the consumer, whether records are for home, school, church, or library. Excise History
Lieberson went over past excise history to show the illogical and discriminatory approach Treasury has taken toward taxing phonograph records. They were first taxed in 1917, when records were as big in borne entertainment as the TV and radio are now. Repealed in 1921, the tax was slapped back on again during, the depression of the 30’s, although manufacturers’ sales of $42 million in 1922 had shrunk to $5 million in 1932— and down to $2.5 million in 1933.
Congress belatedly corrected its unfairness in 1938, but Treasury once again pounced on records in 1941, ignoring the far-from-luxury status of this item, and the small segment of the amusement market it represented.
Lieberson’s statement and Henry Brief’s oral presentation both went down the line on the integral role of records in American culture. The Bible is on records, too—and taxed, Brief pointed out, but you can read the Holy Book tax-free. America’s own jazz is mainly on records, and America dances, sings and works to recorded music.
Tax Should Be Eliminated
Earlier in the week, Delbert L. Mills, vice-president of RCA Victor Home Instruments Division, speaking for the Electronic Industries Association, said the high 10 per cent excise on phonographs, radios and TV sets should be eliminated as a deterrent. The tax cannot be classed as luxury when these items have become a necessity in the American home. It was also urged that the now compulsory all-channeled TV set, which costs more than the previous VHF-only (12 channels) set should be given immediate tax relief of at least 5 per cent, or a maximum deduction of $8 per set—or American TV set sales are going to take a bad beating in the fall as consumers balk at a tax for a UHF receiver, when it may be some years before the Ultra High programming is being aired.
Gard Makes Plea
William R. Gard, executive vice-president of the National Association of Music Merchants (NAMM), spoke for some 20 organizations, including the AFM, ASCAP and the National Music Council in a plea for an end to excise on musical instruments. He said the tax was an unfair penalty to the tools of musical culture, while the artist or sculptor faces no such tax. Students suffer when they buy instruments individually, with most tax-free school instruments confined to the few members of school bands.
Mort Farr, director of the National Appliance & Radio-TV Dealers Association (NARDA), said dealers in home entertainment items - were “on the firing line and will have to bear the brunt of customer complaints” over the higher costs of the all-channel TV sets. Farr urged ultimate repeal of excise on all home entertainment items, when the committee on Ways and Means gets into its long-range revision of the whole excise structure.
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