‘Head’ Tax Possible To Check Dollar Outflow

Press, Volume CVIII, Issue 31568, 4 January 1968, Page 9

‘Head’ Tax Possible To Check Dollar Outflow

(N.Z.P. A.-Reuter —Copyright) WASHINGTON, Jan. 3. If President Johnson’s plan to reduce the dollar outflow by Americans abroad is approved by Congress, spending by United States tourists in Europe is likely to be reduced by more than one-third.

There has been no immediate indication how the President plans to go about restricting tourist expenditure abroad, but informed sources say he is likely to ask Congress to impose a special tax on foreign travel. A “head tax” on tourist travel figures prominently in present speculation because it seems easier to enforce and more productive than other potential methods. An elimination of duty-free tourist imports is unlikely to result in the large amount of saving President Johnson wants to achieve.

And limiting the amount of money tourists can take with them would be difficult to enforce. Many tourists would probably try to evade such a regulation, and this might require strict police methods, including searches. The fundamental objection against a tourist tax is that

it would discriminate against those who have little money to spend. The public is likely to remain in the dark about the President’s proposals at least until his special committee on tourism submits its interim report in mid-February. Early United States newspaper editorial comment on the President’s emergency programme to strengthen the dollar was generally critical of the timing, but recognised the need for such measures. The proposals drew a pledge of full support, and some thinly-veiled criticism, from the American Bankers’ Association, which said in a telegram to the President, that in spite of deep misgivings about resort to even temporary direct controls to re-

duce international payments deficit, “we will, as in the past, co-operate fully.” The bankers’ group, whose members include practically all the banks in the country, said it was sending telegrams to the 50 largest banks in the United States, urging them to continue to co-operate with the President’s restraint programme, which is still voluntary so far as banks and other financial institutions are concerned.