The D.C. City Council's finance and revenue committee voted yesterday to repeal the city's year-old tax on candy, chewing gum and "junk" food. The action came after committee chairman John Wilson (D-Ward 2) got a letter suggesting the repeal from House Speaker Thomas P. (Tip) O'Neill.

O'Neill, whose constituency includes several candy manufacturing firms in his Massachusetts district, wrote a letter April 14 asking Wilson to propose that the 8 percent tax on "junk" food be repealed "to protect the economy of his area," according to O'Neill's press aide, Gary Hymen.

On April 18, Wilson introduced a bill to repeal the tax, which was estimated to be the source of about $500,000 to the cash-strapped city. Yesterday, Wilson's committee voted 3 to 1 for the repeal, with only council member David A. Clarke (D-Ward 1) voting no.

Clarke accused his colleagues of bowing to congressional pressure in lifting the tax.

"I'm glad we got power somewhere," said Hymen. "It's sure not in the House floor."

Hymen said that "Tip's got a lot of confectionaries in his district." He said the speaker was contacted by some of those firms, and by the candy makers' national lobbying group here in Washington, the National Confectioners' Association of the United States, Inc.

Yesterday, those candy manufacturers expressed pleasure about the committee's action, which must still be voted on by the full 13-member council. c

"If you want to tax some foods and not others, we think you should start with cocktail party foods, like nuts and caviar," said James E. Mack, general counsel of the National Confectioners' Association. "We just want fair treatment. Most foods aren't taxed at all and we're taxed 8 percent."

The so-called "junk" food tax, passed as part of the mayor's package of new and increased taxes and user fees, became effective last September. Retail store owners and the candy lobby immediately began complaining that it was discriminatory and almost impossible to collect.

"The [the council members] were panic-stricken for revenue," said Mack, "and a desperate person sometimes does foolish things."

The industry representives said the tax is unfair since some desserts are taxed while other are not, although many are made from the same ingredients. For instance, hard candy, chocolates, jelly beans and candy cereals were taxable, while bakery goods, cocoa, cookies and breakfast cereals were not.

In asking for the repeal, Wilson said that these discrepancies made the tax difficult to collect and enforce. He said that "junk" food sold from vending machines still would be subject to the 2 percent vending machine tax, and some of the other foods would be taxable under the city's 8 percent restaurant tax.

Wilson said he would seek to recoup the lost revenue be designing a new tax on Home Box Office (HBO) television systems.