Anti-boycott Provisions of Tax Reform Act Adopted by the House

The House today overwhelmingly adopted, without opposition, the anti-boycott provisions of the Tax Reform Act aimed at American firms complying with the Arab boycott of Israel. The only discussion related to a minor technical point dealing with the effective date of the provisions. House sources indicated that the entire bill will be sent to the Senate this afternoon for its approval.

The anti-boycott provisions were contained in the Senate-House conference report on the omnibus tax legislation which was adopted by a 383-26 vote in the House and had the approval of the leadership of both major parties. The anti boycott provisions, authored by Sen. Abraham Ribicoff (D.Coun,) would deny federal tax benefits to American companies that comply with the boycott directed against Israel and against American firms that are Jewish-owned or adminis- tered. These benefits include deferral of taxes and certain tax credits allowed companies engaged in foreign trade.

It was pointed out that the provisions are not as sweeping as opponents of the bill contend they are. They affect only that part of the business in which a company engages in the boycott relationship. It was noted that a corporation as a whole may not be affected if a subsidiary is engaged in boycott compliance. Only the subsidiary would be affected.

The Senate may take up the bill late today or tomorrow. Proponents expect sweeping approval of the measure and, despite White House opposition, the President is expected to sign it into law. Earlier, some Administration sources had indicated the bill might be vetoed.

OTHER ACTION EXPECTED

The House is also expected to take action, possibly tomorrow, on the Export Administration Act which contains other measures to combat the Arab boycott. These include mandatory public disclosure by American corporations as to whether they are complying with the boycott demands and requires that American companies refuse to abide by demands not to trade with Israel. Another provision allows American companies to take court action for damages against other American firms found to discriminate against them because of the Arab boycott.

Opponents of the anti-boycott legislative measures are focussing now on the House Ways and Means Committee’s provisions that are stiffer than those in the Senate version of the Export Administration Act. The Senate version does not include the right of private law suits or the ban against an American company’s compliance with Arab demands not to trade with Israel. Those provisions have been opposed by the Exxon, Mobil and other oil companies, by organizations representing overseas contractors and by the Administration. (See related story.)

The focussing of opposition against those measures followed the Senate-House conference’s adoption of the Ribicoff amendment and the Senate’s adoption of anti-boycott provisions introduced by Sens. Adlai Stevenson (D.I11.) and Harrison Williams (D.NJ), which call for public disclosure of Arab boycott demands. At present, companies are not required to reveal boycott compliance except in confidential reports to the Secretary of Commerce.