NAB reports (Mar-Dec 1933)

under which the tax on electrical energy after September 1, 1933, must be borne by the power companies. The new provision of the law amends the Revenue Act of 1932 under which the three per cent tax was imposed upon commercial and domestic users of electrical energy. Over the protest of the NAB, the Commissioner of Internal Revenue has ruled that broadcasting companies were commercial users of power and therefore subject to the tax. Under the new law this tax must be borne by the power companies after Sep¬ tember 1, 1933. As enacted the law reads as follows: “Sec. 6. (a) Effective September 1, 1933, section 616 of the Revenue Act of 1932 is amended to read as follows: ‘Sec. 616. Tax on electrical energy for domestic or commercial consumption. ‘(a) There is hereby imposed upon electrical energy sold for domestic or commercial consumption and not for resale a tax equivalent to 3 per cent of the price for which so sold, to be paid by the vendor under such rules and regulations as the Commissioner, with the approval of the Secretary, shall prescribe. The sale of electrical energy to an owner or lessee of a building, who purchases such electrical energy for resale to the tenants therein, shall for the purposes of this section be considered as a sale for consumption and not for resale, but the resale to the tenant shall not be con¬ sidered a sale for consumption. ‘(b) The provisions of sections 619, 622, and 625 shall not be applicable with resDect to the tax imposed by this section. ‘(c) No tax shall be imposed under this section upon electrical energy sold to the United States or to any State or Territory or political subdivision thereof or the District of Columbia. None of the provisions of this section shall apply to publicly owned elec¬ tric and power plants. The right to exemption under this sub¬ section shall be evidenced in such manner as the Commissioner, with the approval of the Secretary, may, by regulation, prescribed’ “(b) Despite the provisions of this section the tax imposed under section 616 of the Revenue Act of 1932 before its amendment by this section on electrical energy furnished before September 1, 1933, shall be imposed, collected, and paid in the same manner and shall be subject to the same provisions of law (including penalties) as if this section had not been enacted.” RADIO OMITTED FROM REORGANIZATION The Federal Radio Commission was not included in the reorgan¬ ization proposals submitted to the Congress during the week by President Roosevelt. The executive orders were confined to the reorganization of certain government services which will result in a saving of $25,000,000. The fact that the Radio Commission was not included in these orders is taken as an indication that no change in the status of that body is contemplated, for the present, at least. Whether further reorganizations will be forthcoming when Congress returns next January is a matter for conjecture at this time. FOOD AND DRUGS REVISION BILLS Identical bills (S. 1944 and H. R. 6110) were introduced in the Senate and House on June 13 by Senator Copeland of New York and Congressman Sirovich of New York, providing for a general revision of the food and drugs law and for the prevention of false labeling and advertising of food, drugs, and cosmetics. The bills were drafted by the Department of Agriculture, and while no action was taken on them during the special session, it is expected that hearings will be held during the regular session begin¬ ning next January. The Senate bill was referred to the Senate Committee on Commerce and the House bill was referred to the House Interstate and Foreign Commerce Committee. Section 9 of the bill provides that an “advertisement of a food, drug, or cosmetic shall be deemed to be false if in any particular it is untrue, or by ambiguity or inference creates a misleading im¬ pression regarding such food, drug or cosmetic.” Section 17 of the bill prohibits “the dissemination of any false advertisement by radio broadcast, United States mails, or in inter¬ state commerce for the purpose of inducing, directly or indirectly, the purchase of food, drugs, or cosmetics ” but another paragraph of the same section exempts any publisher, advertising agency or radio broadcast station from penalties “if on request of an officer or employee duly designated by the Secretary, he furnishes the name and post office address of the person who contracted for or caused him to disseminate such advertisement.” Secretary of Agriculture Wallace made public the following digest of the bill: “(1) The prevention of false advertising. The need for the control of serious abuses in this field is generally recognized. “(2) The inclusion of cosmetics. Serious injuries have occurred through the sale and use of cosmetic products of a character harm¬ ful to the user. The practice of deceptive labeling and advertising of such products should be regulated. “(3) The establishment of tolerances for added poisons in foods. A complete elimination of all poisonous substances from foods may be impossible. Where the presence of poisons is unavoidable, their amounts should be kept so low that by no possibility will the food be harmful to health. The present law contains no provision author¬ izing the establishment of tolerances for poisons, but imposes upon the Government the obligation of showing affirmatively in every case that a food containing poisonous substances may be harmful to health independent of similar adulterations prevailing extensively in other foods. “(4) Authority for the Secretary, after notice and hearing, to promulgate definitions and standards for foods which will have the force and effect of law. Under the present law such authority extends to the field of canned foods only. Legal food standards like those now existing for official drug products are essential for efficient enforcement operations. “(5) Power to require manufacturers to procure in certain cases Federal permits. This method of regulation will be invoked in those instances only where a menace to health is involved and where adequate protection to the public cannot be effected through the other provisions of the bill. “(6) The control of drug products on the basis of therapeutic claims which are contrary to the general agreement of medical opinion. This removes the burden imposed by the present law of proving not only that such statements are false but that they were made with fraudulent intent on the part of the manufacturer. This has seriously handicapped the department in the extension of adequate protection to the public in the purchase of drugs labeled as treatments for various diseases. “(7) Requirement of informative labels. With one or two minor exceptions the present food and drugs act contains no positive label¬ ing requirement. It merely prohibits false or misleading statements and these prohibitions are to some extent minimized by excepting provisos. A disclosure on the label of sufficient facts to enable intelligent and discriminating buying will operate unquestionably to the advantage of the consumer.” NAB PROTESTS UNLICENSED STATIONS Acting upon complaints from members, the NAB on June 13 addressed a letter to the Federal Radio Commission asking that prompt action be taken by the Government against unlicensed broadcasting stations now operating in Texas and other states. The following news item, which appeared in the Brownwood, Texas, Bulletin, May 17, was attached to the letter: “Terms of ‘Illegal,’ ‘Bootleg’ and ‘Unlawful’ that have been used in referring to Texas independent radio stations operating without federal licenses are unfair and misleading, members of the board of directors of the Texas Independent Radio Advertising Association said at a meeting here today. The radio station operators met here in a luncheon conference at Hotel Brownwood. “Members of the board of directors are: E. J. Turner, Denton, and Howard Cox, Temple, North Texas District; Sam Morris, Stamford, and A. W. Stewart, Brownwood, West Texas District; W. A. Needham, Taylor, and Bill Lowry, Austin, South Bend Dis¬ trict. B. W. Downing of Belton is president of the Association. “Thirty-five stations were represented in person or by proxy at today’s meeting. There are 57 stations in Texas eligible for mem¬ bership, most of which have joined the organization. “The board maintains that as long as the stations do only intra¬ state broadcasting they are violaing no laws or regulations and are within their rights. These stations can be regulated only by the State, the operators say. “Gus Rosenburg, President of the Chamber of Commerce, at¬ tended the luncheon and made a talk. Tom Posey of Brownwood also was a guest. “The visitors were entertained by Alton W. Stewart, operator of the Heart of Texas station here.” The Commission indicated that it had collected evidence against a number of the unlicensed stations and was prepared to institute prosecution under the Radio Act of 1927. ° Page 68 •