Coin Machine Review (& Pacific ...)

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Reported by R. S. RAMSEY
Federal Excise Tax
For the first time in many years, there'
an outside chance for repeal of the coin
machine tax in 1950. The idea is to abolish
all excise taxes except those on liquor and
tobacco, and mak e up for the lost revenue
by a general tax at a uniform rate on eve ry
manufactured article except food product.
Several Congressmen will introduce bills
to that effect ea rly in th e new ses ion. The
powerful National Association of Manu·
facturers has endorsed the proposal and
the group's support may force hearing
by the House Ways and Means Com mittee.
In ordinary times, the proposal would
have the chance of the proverbial snowball.
AM support of any measure in the era
of the ew Deal and th e Fair Deal usually
provides the kiss of dea tho In addition, the
Democratic platform for 1948 flatly de·
clared, "We are oppo ed to the imposition
of a general federal sales tax."
However, Uncle Sam has run up deficits
in 17 out of the last 19 years, with the
current fiscal year slated to run about five
billions in the red. A number of excises-
not including the coin machine levy-are
slated for cuts anyway. Finally, sales taxes,
though sworn at, have become prevalent
in many cities and states in the last few
years, and the idea has a reluctant public
acceptance. Only once in history has any
sales tax been before Congress and th at
was during th e past sessio n when the legis·
lators impo ed the D.C. levy by a narrow
margin.
Here's how the proposed federal sale
tax would affect the Industry if enacted:
The ten-buck amusement machine fee and
the 100 gaming device tax would be
lifted. A tax yet unspecified but probably
2 per cent would be placed on all coin
machines at the manufacturers' level. This
would inevitably be passed down through
the distributor and on to the operator. Thus,
on a machine with a plant value of 300,
the co t to the operator would be increased
by six dollars. His total tax cost on that
machine would be the six dollars instead
of the present ten or a hundred every year.
That sounds wonderful, but it must be
remembered that the operator, along with
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everybody else, would be paying a small
additional amount for clothe, a ca r, a can
opener and eve ry manufactured product
that can' t be eaten.
Regardless of what stand, if any, the
Industry takes with regard to swapplllg
excises for a nation al sales tax, there is
one factor that operators and th eir asso-
ciations should look out for in the event
the proposal gets out of its present talking
stage and into a hearing status. That factol'
is whether or not sales tax bills include
the coin machine levy among those excises
to be abolished. It would be a sorry note
if operators had to pay a tax on everything
th ey buy a nd still got stuck with the same
excise tax on their busi ness.
Be On Guard
It is already generally agreed among p ro·
ponents of the legislation that liquor and
tobacco excises will be kept. The Industry
must be on guard to make sure that the
coin machine levy isn't put in the same
cla with hootch and smokes. This column
will report all development, but since it
on ly appears monthly, it would be well for
trad e associations to reque t their individual
Congre smen to mail them copies of any
bills proposing a federal sales tax.
At the close {)f th e year, the proposed
legislation was till nebulous and the odds
were against much action. ongress, how·
ever, is highly unpredictable.
De pite a lender upturn in October, col-
lections from the coin machine tax during
the 1950 fiscal year have been running
behind th e 1949 fi cal year. According to
the Bureau of Internal Revenue, receipts
totaled 15,711,557 in the first four months
of the current fiscal year as compared with
$16,153,771 for the July-October period last
year. October collections amounted to
660,449, while October, 1948, brought in
43,925 less.
Retail business around tbe nation picked
up a scant 2% in October over the previous
month, but still left 1949 trailing behind
1948, according to a Commerce Depart-
ment busin ss survey. Nationally, business
was down 6% from October, 1948, with
the cumulative totals for the first ten months
of 1949 off 2% from the comparable 1948
period. Some coin machine locations were
better off than the retail average; other
were worse off. Comparing the past October
with October 1948, department stores were
off 12%' dr~g stores, 4%; filling stations,
1 %; ba~s, 10%; and eating place, 8%.
Very few type of retail places sh?wed .an
in crease over the 1948 month, the lIst bew!!
restricted to furniture stores, radio-TV
stores, and auto retailers.
Cand y Developments
After It recent meeting between a com-
mittee of candy maker and the Federal
Trade Commission, it appeared that the
proposed candy code for the industry would
be adopted without change. The dr!l~t of
fair trade practices rules was made ]Ollltly
by FTC and the National Confection ers
Assn.
Commerce Department's annual report
on confectionery ales for 1948 shows that
not only did candy sales hit an all-time
record of slightly more than a billion dollars
but that 1948 sales directly from manufac·
turer to vender reached a new peak of
3.2% of th e total candy market. In 1947,
the percentage of direct sales to vending
machine operators was 2.9%.
Though dollar value of candy _ales at
the manufacturing level was hitting a new
top, poundage sales of 2.6 billion pounds
were some 131 million pounds short of th e
record se t in 1944. According to Commerce,
1948 marked the end of the days when an
individual confectioner with an established
product could ride a tide of genera lly in-
creasing business such as that of 19~7
when th e industry's sale went up 39% III
a s in gle year. Despite record dollar al~
during 1948 more than half of the natIOn f;
candy mak~rs reported Ie. business than
in the previous year-indicating that a
few producers with enormous gains pulled
the whole industry to a new level.
As a barometer of the publi c taste in
candy, it is interesting to note .that bar
goods were the most popular, while pack-
age candy nosed out bulk goods as the
next in volume. A general acceptance 01
higher priced bars was al 0 indicated in
the survey. While the poundage of bars
retailing at a nickel dropped 14% from
1947 the amount of dime bars bought
climbed 53%. Top candy market continued
to be
ew York with Pennsylvania hang ·
ing on in second place .. Califo~~ia, how-
ever, pa sed Illinois for thll'd pOSItIOn. T!le
four leaders, together with fifth place OhIO,
accounted for 38% of the total sales JIl
the nation.
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