Case Title: Northwest Natural Gas Co. v. Dept. of Rev.

Citation: 

Docket Number: S056384

State: oregon

Court: Oregon Supreme Court

Date: 2010-01-28T00:00:00Z

Document:
FILED: January 28, 2010
IN THE SUPREME COURT OF THE STATE OF OREGON
NORTHWEST NATURAL GAS COMPANY,
Respondent.
v.
DEPARTMENT OF REVENUE,
Appellant.
(TC 4751; SC S056384)
En Banc
On review from the
Oregon Tax Court.*
Argued and submitted
November 2, 2009.
Marilyn J. Harbur,
Senior Assistant Attorney General, Salem, argued the cause for appellant.  With
her on the opening brief were Hardy Myers, Attorney General, and Melisse S.
Cunningham, Assistant Attorney General.  With her on the reply brief were John
R. Kroger, Attorney General, and Melisse S. Cunningham, Assistant Attorney
General.
Robert T. Manicke,
Stoel Rives LLP, Portland, argued the cause for respondent.  With him on the
brief were James N. Westwood and Eric J. Kodesch.
LINDER, J.
The judgment of the
Tax Court is affirmed.
*Appeal from the Oregon Tax Court, Henry C. Breithaupt, Judge. 19 OTR 367, 2007 WL 4127669 (2007).
LINDER, J.
The issue in this appeal from a
judgment of the Oregon Tax Court is whether the business inventory of taxpayers
subject to central assessment pursuant to ORS 308.505 to 308.665 is exempt from
ad valorem property taxation under ORS 307.400.  The Tax Court concluded that
the Department of Revenue (department) had incorrectly determined that, because
Northwest Natural Gas Company (taxpayer) is subject to central assessment, its
inventory is not exempt under the business inventory exemption.  Northwest
Natural Gas Co. v. Dept. of Rev., 19 OTR 367, 2007 WL 4127669 (2007) (Northwest
Natural I).  For the reasons discussed below, we hold that the business
inventory exemption applies generally to exempt the "inventory" of
all taxpayers -- including centrally assessed companies.  Accordingly, we
affirm the decision of the Tax Court.
I.  RELEVANT STATUTES
An understanding of the central
assessment statutes and the business inventory exemption statute will provide
helpful context for our discussion of the factual and procedural background below. 
Accordingly, we discuss those statutes at this point. 
Certain property in Oregon is
centrally assessed by the department, rather than locally assessed by
individual counties.  The central assessment statutes, ORS 308.505 to 308.665,(1)
are a subset of the chapter of the tax code pertaining to assessment of
property for taxation, ORS chapter 308.  Some provisions of that chapter
outline the general assessment scheme.  See ORS 308.005 - 308.343
(containing provisions relating to assessment generally).  The bulk of ORS chapter
308, however, consists of sections devoted to the assessment of particular
types of properties, such as, inter alia, homes for the elderly,
industrial plants, various types of residences, and designated utilities and
companies subject to central assessment.  ORS 308.408 - 308.905; see also D.
R. Johnson Lumber Co. v. Dept. of Rev., 318 Or 330, 335-36, 866 P2d 1227
(1994) (describing the particular and general provisions of ORS chapter 308). 
ORS 308.515(1) designates the utilities and companies subject to central
assessment:
"The Department of Revenue shall make an
annual assessment of any property that has a situs in this state and * * * is
used or held for future use by any company in performing or maintaining any of
the following businesses or services or in selling any of [certain] commodities
* * *."
The particular commodities listed in the statute include,
among others, "[r]ailroad transportation," "[a]ir
transportation," "[c]ommunication," "[h]eating" and,
most pertinent here, "[g]as."  ORS 308.515(1)(a) - (n). 
ORS 308.510(1) defines the scope of
"property" subject to central assessment for companies identified in
ORS 308.515(1).  That statute provides, in part:
"'Property,' as used in ORS
308.505 to 308.665, includes all property, real and personal, tangible and
intangible, used or held by a company as owner, occupant, lessee or otherwise,
for or in use in the performance or maintenance of a business or service or in
a sale of any commodity, as set forth in ORS 308.515, * * * and includes but is
not limited to * * * appliances, * * * merchandise, inventories, * * * and all
other goods or chattels."
Any property that is not "centrally assessed" is
"locally assessed" by the county where the property is located.  ORS
308.517(5). 
Finally, we turn to the business
inventory exemption statute at issue in this case, ORS 307.400.  That exemption
is not part of the general assessment provisions or the central assessment statutory
scheme in ORS chapter 308.  Rather, it is found in the statutes outlining more
generally property that is subject to taxation and exemption, ORS chapter 307. 
ORS 307.400 provides:
"Items of tangible personal property
consisting of inventory, including but not limited to materials, supplies,
containers, goods in process, finished goods and other personal property owned
by or in possession of the taxpayer, that are or will become part of the stock
in trade of the taxpayer held for sale in the ordinary course of business, are
exempt from ad valorem property taxation."
Again, the parties dispute whether
taxpayer, as a centrally assessed company, is entitled to the benefit of that
exemption.  Cast against the backdrop of the statutory scheme, the issue, more
precisely, is whether the business inventory exemption found in ORS chapter 307
applies to the centrally assessed property provisions contained in ORS chapter
308.  
II.  FACTUAL AND
PROCEDURAL BACKGROUND
With those statutory provisions in
mind, we turn to the factual and procedural background that gave rise to this
appeal.  Our summary is taken from the stipulated facts submitted to the
Regular Division of the Oregon Tax Court and from the record.  
Taxpayer is an Oregon corporation
"engaged primarily in the distribution and sale of natural gas to customers"
in the Pacific Northwest.  Taxpayer is centrally assessed by the department
pursuant to ORS 308.515(1).  The tax years subject to this appeal are 2002-03
to 2005-06.  During those tax years, taxpayer stored natural gas in two
liquefied natural gas storage facilities in Portland and Newport, and in four
to six underground natural gas storage facilities near Mist (gas reserves).(2) 
Taxpayer also owned and operated a retail store in Portland.(3) 
The store offered an array of appliances -- both gas and electric -- for sale
to the general public (retail appliances).  The parties have stipulated that
taxpayer's gas reserves and retail appliances are "tangible personal
property" and "inventory" or "inventories" within the
common, ordinary meaning of those terms.  The parties further agree that
taxpayer's gas reserves are property subject to central assessment under ORS
308.510(1).  The parties dispute, however, whether taxpayer's retail appliances
are also subject to central assessment.
The department issued taxpayer
notices of proposed assessment for taxpayer's centrally assessable property for
the subject years.  The proposed assessment included values for both taxpayer's
gas reserves and retail appliances.(4)
In 2004, taxpayer petitioned the
department for the 2002-03, 2003-04, and 2004-05 tax years to exercise its
supervisory authority to correct the tax rolls pursuant to ORS 306.115.(5) 
Taxpayer sought a reduction in its assessed value, arguing that its gas
reserves were exempt from ad valorem property taxation pursuant to the business
inventory exemption, ORS 307.400.  The petition did not include taxpayer's
retail appliances.  The department denied supervisory relief, reasoning that
taxpayer's gas reserves were not exempt from taxation under the business
inventory exemption, because taxpayer is subject to the central assessment
provisions, ORS 308.505 - 308.665, which expressly include
"inventories" as part of the definition of "property" that
is assessable.
In 2005, taxpayer also appealed to
the department for the 2005-06 tax year.  Taxpayer sought a reduction in its
assessed value, again arguing that its inventory was exempt from taxation. 
Taxpayer's appeal included both its gas reserves and retail appliances for the
2005-06 tax year.(6) 
The department denied the appeal on the same grounds.
Taxpayer appealed both cases to the
Magistrate Division of the Tax Court.  The Magistrate Division consolidated the
two cases, which were then specially designated to the Regular Division of the
Tax Court on petition of both parties.  Before the Regular Division of
the Tax Court, the parties filed cross-motions for summary judgment on the
legal issue of whether the subject properties (taxpayer's gas reserves and
retail appliances) are tax exempt under the business inventory exemption, ORS
307.400.  Taxpayer argued, based on the text and context of the business
inventory exemption, that the legislature intended the exemption to apply to
centrally assessed and locally assessed property alike.  Alternatively,
taxpayer contended that, if the business inventory exemption statute did not
apply to centrally assessed property, taxpayer's retail appliances were not
subject to central assessment and, thus, were exempt nonetheless.
The department responded that
taxpayer's "inventories" were taxable, because all property subject
to central assessment is taxable, except as specifically provided by the
central assessment statutes.  The department further asserted that taxpayer's
retail appliances were subject to central assessment, and thus not exempt for
the same reason.
The Tax Court granted taxpayer's
motion in part and granted the department's cross-motion in part.  Northwest
Natural I, 19 OTR at 380-81.  The court agreed with taxpayer that the
business inventory exemption applied to centrally assessed property and, thus,
to taxpayer's inventory.  Accordingly, the court held that taxpayer's gas
reserves were exempt from taxation.  As to the retail appliances, the court
held that, because taxpayer's retail appliances were not included in its
petition for the 2002-03 to 2004-05 tax years, the department did not exercise
discretion that could be reviewed by the Tax Court for those tax years.  Id.
at 380.  The court ordered supplemental briefing as to whether the 2005-06
appeal to the department included the retail appliances.  Id. at 381. 
The department moved for
reconsideration and stipulated that taxpayer's  retail appliances were included
in taxpayer's appeal for the 2005-06 tax year.  The Tax Court denied
reconsideration and determined that, based on the department's stipulation, taxpayer's
retail appliances for the 2005-06 tax year were subject to the court's original
decision and, thus, exempt from taxation.  Northwest Natural Gas Co. v. Dept.
of Rev., 19 OTR 481, 482, 487, 2008 WL 2727238 (2008) (Northwest Natural
II).  The department appealed.  ORS 305.445.
III.  ANALYSIS
On appeal to this court, the
department challenges the Tax Court's determination that taxpayer's gas
reserves and retail appliances are exempt from ad valorem property taxation
pursuant to the business inventory exemption statute, ORS 307.400.  We review
decisions of the Tax Court for "errors or questions of law or lack of
substantial evidence in the record to support the tax court's decision or
order."  ORS 305.445.
As we have described, this dispute
involves two types of property owned by taxpayer:  gas reserves and retail
appliances.  The parties agree that each property is "inventory"
under the plain, natural, and ordinary meaning of that term.  The parties also
agree that taxpayer's gas reserves are "property" subject to central
assessment pursuant to ORS 308.510(1).  Thus, the sole issues on appeal are
whether ORS 307.400, the business inventory exemption statute, applies to the
property of centrally assessed taxpayers, and if not, whether taxpayer's retail
appliances are subject to local, not central assessment, and therefore exempt
nonetheless.
We begin with the pivotal issue on
which the Tax Court's decision turned -- whether the business inventory
exemption applies to the property of centrally assessed taxpayers.  To analyze
that issue, we must interpret the business inventory statute -- a task that
involves examining the text and context of the statute and any pertinent
legislative history that the parties have proffered, giving that history such
weight, if any, as it appears to merit.  State v. Gaines, 346 Or 160,
171-72, 206 P3d 1042 (2009).  
We turn to the text of the tax
exemption statute at issue in this case -- the business inventory exemption
statute, ORS 307.400.  As noted, that statute provides an exemption from ad
valorem property tax for 
"[i]tems of tangible personal property consisting
of inventory, including but not limited to materials, supplies, containers,
goods in process, finished goods and other personal property owned by or in
possession of the taxpayer, that are or will become part of the stock in
trade of the taxpayer held for sale in the ordinary course of business
* * *."  
ORS 307.400 (emphases added).  
On its face, the statute's text
contains no limiting terms that operate to remove centrally assessed taxpayers
or their centrally assessed property from the benefits of the exemption. 
Rather, the statute exempts inventory that is or will become part of the
"stock in trade of the taxpayer held for sale in the ordinary
course of business."  (Emphasis added.)  That generic reference to
"the taxpayer" does not differentiate between taxpayers whose
property is locally or centrally assessed.  Thus, the plain text of the statute
supports taxpayer's contention that the business inventory exemption applies
equally to locally and centrally assessed taxpayers.
The department, for its part, does
not contend otherwise.  Rather than rely on the text of the statute, the
department's arguments are twofold.  First, the department asserts that, for
purposes of the business inventory exemption, the definitions in ORS 307.020
control, and those definitions remove centrally assessed taxpayers from their
scope.  Second, the department urges, based on the taxation scheme more
generally, that the legislature never intended the business inventory exemption
to apply to taxpayers or property subject to central assessment.
A.  The relationship between ORS 307.020 and ORS 307.400.
We begin with the department's
reliance on the definitions contained in ORS 307.020.  The business inventory
exemption statute exempts "[i]tems of tangible personal property
consisting of inventory[.]"  (Emphasis added.)  The term "tangible
personal property" is defined in ORS 307.020(1)(c) as follows:
"As used in the property tax laws of this
state, unless otherwise specifically provided:
"* * * * *
"(c) 'Tangible personal property' includes
but is not limited to all chattels and movables, such as boats and vessels,
merchandise and stock in trade, furniture and personal effects, goods,
livestock, vehicles, farming implements, movable machinery, movable tools and
movable equipment."
As that statute provides, the
definitions provided in ORS 307.020(1) apply to the entirety of the Oregon tax
code, unless the legislature expressly provides otherwise.  ORS 307.020(2)
embodies just such an express exception, and specifically provides that the definitions
contained in ORS 307.020(1), including the definition of "tangible
personal property," do not apply to "any person, company, corporation
or association covered by [the central assessment statutes,] ORS 308.505 to
308.665."(7)
The department essentially urges this
court to conclude that, because the statutory definition of "tangible
personal property" does not apply to centrally assessed taxpayers, their
property is not within the scope of property subject to the business inventory
exemption statute, ORS 307.400.  That argument is predicated on the
department's view that ORS 307.400 exempts only "tangible personal
property" as it is defined in ORS 307.020.
The department's argument has two
flaws in its logic.  First, ORS 307.020 is a definitional provision only.  It
merely defines what is encompassed in various types of personal property,
including "tangible personal property," for one class of taxpayer  --
i.e., locally assessed taxpayers.  The fact that the definitions in that
statute do not apply to centrally assessed taxpayers does not mean that no
other definition applies.  Neither does it mean that centrally assessed
taxpayers do not own the types of property that ORS 307.020 defines, including
tangible personal property, for tax purposes.(8) 
Rather, it means only that what qualifies as "tangible personal
property" for centrally assessed taxpayers is determined by some other
source of law.  That source of law is ORS 308.510(1), which, as earlier quoted,
provides that the "property" of centrally assessed taxpayers, for tax
purposes, includes "all property, real and personal, tangible or
intangible * * *."  See also ORS 307.030 (intangible personal
property held by centrally assessed taxpayers is subject to assessment and
taxation).  Although the legislature did not set forth an express definition of
"tangible personal property" in ORS 308.510(1) as it applies to
centrally assessed taxpayers, that fact means only that we look to the common,
ordinary meaning of the term to determine what property, when held by a centrally
assessed taxpayer, qualifies as "tangible personal property."  See
Friends of Parrett Mountain v. Northwest Natural Gas Co., 336 Or 93, 114,
79 P3d 869 (2003) (we give terms that do not have special statutory definitions
or any well-understood legal meaning their plain, natural, and ordinary
meanings).  
The second flaw in the department's
argument is its assumption that the business inventory exemption, as set forth
in ORS 307.400, extends only to "tangible personal property" as
defined in ORS 307.020.  By its terms, the business inventory exemption is not
so limited.  As we have described, it does not distinguish between types of
taxpayers or otherwise differentiate between locally assessed and centrally
assessed taxpayers.  Neither does it incorporate only a single definition of
"tangible personal property."  Nothing precludes the legislature from
defining that term differently for different taxpayers, while still providing
those different taxpayers with a common exemption for their tangible personal
property, however defined, if it otherwise qualifies as business inventory.  As
a matter of plain text, that is what the legislature appears to have done.
In arguing to the contrary, the
department places significant reliance on this court's decision in Saunders
v. Dept. of Rev., 300 Or 384, 711 P2d 961 (1985).  In Saunders, a
locally assessed taxpayer sought a determination that certain farm structures
qualified for the business inventory exemption under ORS 307.400.  Id.
at 386.  This court explained that, to qualify for that exemption, the property
must meet two requirements:  (1) the "movable" requirement contained
in ORS 307.020 ("tangible personal property" includes all chattels
and "movables"); and (2) the "use" requirement contained in
ORS 307.400 (property that is or will become part of the stock in trade of the
taxpayer held for sale in the ordinary course of business).  The parties in Saunders
agreed that the subject property satisfied the "use" requirement, but
disputed whether it was "movable" for purposes of ORS 307.020.  Id.
at 387.
This court held that the subject
property was not "movable" as ORS 307.020 requires, because it was
real property, not tangible personal property.  Id. at 387, 391.  In
reaching that conclusion, this court relied on 1977 legislative amendments to
the predecessor business inventory exemption statute, former ORS 310.608
(1975), renumbered as ORS 307.400 (1981).  Id. at 388-89.  Those
amendments had come after the Tax Court's decision in Eastern Ore. Farming
Co. et al v. Dept. of Rev., 7 OTR 74, 79, 1977 WL 1599 (1977), in which the
Tax Court had held that "[t]he distinction between real and personal
property is irrelevant" in determining whether property is
"inventory" subject to exemption under former ORS 310.608. 
Rather, the Tax Court determined, it was sufficient if the subject property
came within the "special definition" of "inventory"
contained in the business inventory exemption itself (former ORS
310.608).  7 OTR at 79-80.
Following the decision in Eastern
Ore. Farming Co. et al, the legislature retroactively amended the business
inventory exemption statute to effectively overrule that case by limiting the
exemption to tangible personal property.  See Or Laws 1977, ch 819, §
1(3).(9) 
Based on that amendment, this court concluded:
"It is clear from the statute and the
legislative history that the legislature intended that the exemption from ad
valorem taxes now codified in ORS 307.400 apply only to a category of tangible
personal property defined in ORS 307.020(3).  Because only tangible personal
property qualifies for the exemption under ORS 307.400, we must determine if
[the subject property is] real or personal property under ORS chapter 307.  For
purposes of taxation the definitions in ORS 307.010(1) and ORS 307.020(3)
control."
Saunders, 300 Or at 389.  The court determined that
the subject property did not qualify as "tangible personal property"
under ORS 307.020 and, accordingly, held that it was not subject to the
business inventory exemption under ORS 307.400.  Id. at 391.
The department asserts that
taxpayer's property is not subject to the business inventory exemption because,
under Saunders, that exemption applies only to the "tangible
personal property" defined in ORS 307.020 -- a term that does not apply to
taxpayer as a centrally assessed company.  We do not read Saunders
so broadly.  Certainly, Saunders stands for the proposition that
property must be "tangible personal property" held for sale to
qualify as "inventory" under ORS 307.400.  But the holding in Saunders
has to be understood in the context of the particular issue that the case
presented.  Because the taxpayer in Saunders was a locally assessed
taxpayer, this court appropriately required the subject property in that case
to satisfy the definition of "tangible personal property" under ORS
307.020 -- the definition that applies to locally assessed taxpayers.  This
court was not presented with an issue entailing how the provisions of ORS
307.020, ORS 307.400, and the central assessment statutes are to be read
together, and its holding properly cannot be understood to resolve that
question.  Accordingly, Saunders does not affect our understanding of
the plain text of ORS 307.400 and its interrelationship with ORS 307.020.
We have, however, examined the
legislative history of ORS 307.020 to determine whether it reveals a contrary
intent -- that is, whether the legislature, in excluding centrally assessed
taxpayers from the definitions in ORS 307.020(1), intended to remove centrally
assessed property from the scope of property subject to the business inventory
exemption statute.  See Gaines, 346 Or at 172 (court will consult
legislative history even if the court does not perceive an ambiguity in the
statute's text).  We find nothing in the pertinent history to support that
conclusion.
What is now subsection (2) of ORS
307.020 was added to the statute in 1977 as part of Senate Bill (SB) 113.  Or
Laws 1977, ch 602, § 1(4).  SB 113 made three distinct amendments to the tax
code:  (1) it expanded the definition of "intangible personal
property" in ORS 307.020(1) to include information-storage media; (2) it excluded
certain "intangible property" from the definition of
"property" subject to central assessment under ORS 308.510(1); and
(3) it clarified that the property of centrally assessed companies was not
subject to the definitions contained in ORS 307.020 -- at that time,
"intangible personal property," and "tangible personal
property."  Or Laws 1977, ch 602, §§ 1, 2.  
The main purpose of SB 113 was the
first that we identified, to expand the definition of "intangible personal
property" to include certain information-storage media.  Tape Recording,
Senate Revenue and School Finance Committee, SB 113, Jan 24, 1977, Tape 3, Side
1 (statement of Richard A. Munn, Legislative Revenue Officer).  The
primary concern behind the bill was that counties were treating the property of
title companies inconsistently -- some counties were assessing and taxing
information-storage media; others were not.  Id. (statement of Don
Fisher, Department of Revenue).
In hearings on the bill, the
department clarified that the bill amended only the definition of
"intangible personal property" and did not alter what property was
taxable or exempt.  See Tape Recording, Senate Revenue and School
Finance Committee, SB 113, Mar 21, 1977, Tape 17, Side 1 (statement of Ted De
Looze, Department of Revenue) ("This only defines this type of property. 
It does not say what is taxable or what is not taxable.  You have to go to the
other provisions of the law. * * * [W]e did not intend this as the rule as to
whether it is taxable or not.").  However, the 1977 amendments indirectly
exempted more personal property for locally assessed taxpayers, because those
amendments broadened the definition of "intangible personal property";
locally assessed taxpayers are exempt from being taxed on such property.  See
ORS 307.030(2) ("Except as provided in [the central assessment statutes,]
ORS 308.505 to 308.665, intangible personal property is not subject to
assessment and taxation."); Tape Recording, Senate Revenue and School
Finance Committee, SB 113, Mar 21, 1977, Tape 17, Side 1 (statement of Ted De
Looze) (admitting that SB 113 "maybe indirectly" affects the personal
property subject to exemption).  Consequently, the department recommended
expanding the definition of "intangible personal property" to include
information-storage media, because that property was difficult for assessors to
value and, thus, should come within the exemption for intangible personal
property for locally assessed taxpayers.  Tape Recording, Senate Revenue and
School Finance Committee, SB 113, Jan 24, 1977, Tape 3, Side 1 (statement of
Don Fisher).      
Unlike that of locally
assessed taxpayers, the "intangible property" of centrally assessed
taxpayers is taxed.  ORS 307.030(2); ORS 308.510(1).  Utilities
requested that the amended definition of "intangible personal
property" not apply to them, because they did not want to be burdened with
the difficulty of identifying the values of information-storage media on their
annual statements to the department.  See Tape Recording, Senate Revenue
and School Finance Committee, SB 113, May 6, 1977, Tape 24, Side 1 (statement
of Sen Victor Atiyeh) (opining that separating intangible property in central
assessment appraisal process would create more problems for centrally assessed
companies in recordkeeping than it would change in value for the utility).  The
utilities also did not want to disturb prior court cases classifying their property
as either tangible or intangible property.  See Tape Recording, House
Revenue and School Finance Committee, SB 113, June 28, 1977, Tape 37, Side 1
(statement of Assistant Attorney General Ira Jones).  The legislature responded
to the requests of the utilities and added what is now subsection (2) of ORS
307.020 to exclude centrally assessed taxpayers from the amended and expanded
definition of "intangible personal property" so that the
"intangible personal property" defined under that statute was not
included in the "property" of centrally assessed corporations.  Or
Laws 1977, ch 602, § 1(4); Southern Pacific Trans. Co. v. Dept. of Rev.,
295 Or 47, 62 n 17, 664 P2d 401 (1983) (SB 113 excluded centrally assessed
taxpayers from the expanded definition of intangible personal property). 
Also as part of SB 113, the
legislature simultaneously amended ORS 308.510(1) to exclude certain
"intangible property" from the definition of "property" subject
to central assessment.  Or Laws 1977, ch 602, § 2.  In doing so, the
legislature was codifying the department's practice of not taxing specific
intangible property for centrally assessed companies.  See Tape
Recording, House Revenue and School Finance Committee, SB 113, Jun 28, 1977,
Tape 37, Side 1 (statement of Ira Jones) (explaining that bill codified
department's policy of not valuing certain types of intangible property of
centrally assessed companies, such as money at interest, bonds, notes, etc.).  
If we glean anything from the
legislative history, it is that the legislature did not consider the effect of SB
113 on the exemption for tangible personal property consisting of
inventory.  Rather, the legislature's purpose in enacting SB 113 was to define
the intangible personal property of locally assessed and centrally assessed
taxpayers differently -- in effect, to expand the scope of exempted intangible
personal property for locally assessed taxpayers and to narrow the scope of taxed
intangible property for centrally assessed taxpayers.  True, the 1977
amendments to ORS 307.020 removed centrally assessed taxpayers not only from
the statutory definition of intangible personal property, but also from
the statutory definition of tangible personal property.  See Or
Laws 1977, ch 602, § 1(4).  However, considering the bill's focus on intangible
personal property, we decline to conclude that the legislature, in doing so,
intended that provisions in the tax code applying to "tangible personal
property" -- including ORS 307.400 -- would no longer apply to centrally
assessed taxpayers.
Accordingly, we agree with the Tax
Court that, although the definition of "tangible personal property"
in ORS 307.020 does not apply to centrally assessed companies, it does not
follow that the business inventory exemption statute, ORS 307.400, does not
apply to those taxpayers.  Rather, it means only that, for centrally assessed
taxpayers, the term "tangible personal property" in ORS 307.400 is
not statutorily defined.  That, in turn, means that we will look to the plain,
natural, and ordinary meaning of the term to determine its meaning.  If the property
is "tangible personal property" under the plain and ordinary meaning
of that term (and also meets the use requirement under ORS 307.400, viz.,
that the property is or will be stock in trade held for sale in the ordinary
course of business), then the property is entitled to the business inventory
exemption.
B.  The department's alternative contentions.
We next address the department's
alternative arguments that, even if ORS 307.020 does not render the business
inventory exemption inapplicable to centrally assessed taxpayers, the statutory
scheme as a whole demonstrates that the legislature did not intend the business
inventory exemption to apply to centrally assessed taxpayers.  The department
relies on the following in support of that contention:  (1) contextual
provisions in ORS chapter 307 and the central assessment statutory scheme; (2)
the legislative history of ORS 307.400; and (3) the method of valuation for
centrally assessed property.  We consider each in turn.         
1.  ORS chapter 307's relationship to the
central assessment scheme
The department's first theory is that
certain contextual clues in the statutory scheme reveal that the legislature
did not intend the business inventory exemption to apply to centrally assessed
property:  (1) "inventories" of centrally assessed taxpayers are
expressly assessable; and (2) the business inventory exemption statute neither expressly
references the central assessment statutes, nor is it part of the central
assessment scheme.  As we explain below, none of the department's propositions is
convincing. 
According to the department, the fact
that the legislature expressly included "inventories" as
"property" that is assessable under ORS 308.510(1) demonstrates that
the legislature did not intend to exempt that property from taxation.  The
department's contention on that point is necessarily premised on its view that
"assessment" is synonymous with "taxation."  That is, the
department urges that "[a]ll property listed in ORS 308.510(1) is taxable
under the central assessment statutes, if used or held by a company in a
business designated as centrally assessed under ORS 308.515."  Because the
term "inventories" is included in the scope of centrally assessed
"property," the department contends inventories are, in turn, taxable. 
Taxpayer, on the other hand, argues that it is irrelevant whether "inventories"
[are] included in the scope of property that is centrally assessed, because
that merely determines how the property is to be assessed (i.e.,
centrally or locally), not whether it is taxed.
We decline to engage in the
complicated and nuanced analysis of whether and when "assessment" is
"taxation."  That is so, because, even if we were to agree with the
department that, as a general rule, property that is assessed is ultimately
taxed, the legislature has clearly demonstrated that there are express
exceptions.  That is, some "property" expressly assessable under ORS
308.510(1) ("all property" used or held by a company under ORS
308.515(1) required to be centrally assessed) is exempt from taxation.  See,
e.g., ORS 308.558(5) (exempting aircraft of foreign-owned carriers); ORS
308.559(2)(a) (exempting aircraft undergoing major work); ORS 308.665(1)
(exempting private railroad cars undergoing major work).  Accordingly, the
department's contention is refuted by the statutory scheme itself.(10)
The department next asserts that when
the legislature provides a tax exemption for centrally assessed property, it
does so only by either codifying the exemption within the central assessment
scheme (i.e., ORS 308.505 to 308.665) or by expressly referencing the
central assessment statutes.  According to the department, because the business
exemption statute meets neither criterion, it does not apply to centrally
assessed taxpayers.
We disagree with the department's
premises and, therefore, with its conclusions.  We first disagree with the
department's contention that, when the legislature has provided a tax exemption
for centrally assessed taxpayers, it has done so only within the central
assessment statutory scheme.  True, the central assessment statutes do contain
provisions that exempt centrally assessed property from taxation, as well as
provisions that designate certain property as not centrally assessable.  See,
e.g., ORS 308.558(5) (exempting aircraft of foreign-owned carriers); ORS
308.559(2)(a) (exempting aircraft undergoing major work); ORS 308.665(1)
(exempting private railroad cars undergoing major work); ORS 308.510(1)
(excluding certain intangible property from central assessment); ORS 308.515(3)
(excluding specific property from central assessment -- e.g., property
of interstate ferries).  However, those provisions, by their terms, apply only to
centrally assessed property, and not to locally assessed property.  See
ORS 308.510(1) ("intangible personal property" subject to central
assessment); ORS 308.515(1) (property of air transportation, water
transportation, and private railcar transportation companies subject to central
assessment).  It makes particular sense for the legislature to include them in
the central assessment scheme because, as a practical matter, they apply to
nothing else.  The fact that the legislature has included tax exemptions for
centrally assessed property in the central assessment scheme thus does not
foreclose the possibility that it has and also would do so through the
exemption and taxation provisions in ORS chapter 307.  Rather, an exemption
that applies more generally to both locally and centrally assessed property
would more appropriately be located in ORS chapter 307 -- a chapter of general
applicability.  
To the extent that the department
suggests that ORS chapter 307 and the central assessment statutes are two
separate schemes of taxation -- in addition to separate schemes for assessment
-- we further disagree.  The legislature has expressly differentiated the assessment
processes for centrally assessed and locally assessed property.  See ORS
308.005 - 308.343 (general assessment scheme); ORS 308.505 - 308.665 (central
assessment scheme); D. R. Johnson Lumber Co., 318 Or at 335-36
(explaining the provisions of general applicability and the particular
assessment schemes in ORS chapter 308).  ORS chapter 307, on the other hand, is
not about assessment at all.  It is a chapter pertaining to taxation and
exemption, and contains no provision limiting its application to locally
assessed taxpayers.  Thus, ORS chapter 307 is a chapter of general
applicability.  At the very least, if the legislature intended to create a
separate system of taxation and exemption for centrally and locally assessed
taxpayers, it has neither declared as much nor structured the statutes in that
way. 
We acknowledge that, in certain
circumstances, the legislature has expressly treated the taxation and exemption
of the two categories of taxpayers differently.  See, e.g., ORS 307.030(2)
(taxing intangible personal property of centrally assessed taxpayers and
exempting it for all others).(11) 
But that fact is further evidence that the taxation and exemption provisions in
ORS chapter 307 generally encompass centrally assessed taxpayers, because the
legislature has demonstrated that it knows how to expressly exclude centrally
assessed taxpayers from those provisions when it opts to do so.  Because ORS
307.400 does not expressly remove centrally assessed property from its reach, the
most natural conclusion to draw is, as we have described, that the legislature
intended that the exemption apply to centrally assessed and locally assessed
taxpayers alike.
The department disagrees and asserts
that any provisions that expressly remove centrally assessed property from the
scope of a statute's exemption are merely "redundant."  Citing Thomas
Creek Lumber and Log Co. v. Dept. of Rev., 344 Or 131, 138, 178 P3d 217
(2008), the department argues that the legislature is not prohibited from
"saying the same thing twice."  According to the department, the fact
that ORS 307.400 does not contain such a "redundant reference" does
not mean that its exemption must be applied to centrally assessed property.  
Again, we disagree.  In Thomas
Creek Lumber and Log Co., this court adopted the department's proposed
interpretation of a tax code statute over the taxpayer's:   "although the
department's interpretation * * * does lead to a redundancy in [one subsection
of the statute], taxpayer's interpretation [was] more problematic," because
it impermissibly omitted words from and rendered entirely without effect a subsection
of another statute.  Id. at 137.  The court reasoned that, although the
department's interpretation made some words in another statute redundant,
"nothing prohibits the legislature from saying the same thing
twice."  Id. at 138.  The court further reasoned that the
department's interpretation was preferable, because it would "'give effect
to' more of the 'provisions or particulars' of both statutes than [the]
taxpayer's proposed interpretation."  Id. (citing ORS 174.010).
Contrary to the department's
position, Thomas Creek Lumber and Log Co. does not stand for the broad
principle that an interpretation rendering provisions of a statute redundant is
generally permissible.  The general rule is that this court interprets statutes
to give effect to all provisions.  See ORS 174.010 ("where there
are several provisions or particulars such construction is, if possible, to be
adopted as will give effect to all"); Union Pac. R. R. Co. v. Bean,
167 Or 535, 549, 119 P2d 575 (1941) (a construction of a statute that renders
certain provisions unnecessary will not be adopted by the court, and "it
should not be presumed that any provision is redundant or useless").  Thomas
Creek Lumber and Log Co. does not conflict with that general rule.  Rather,
it stands for the more modest proposition that an interpretation rendering a
provision redundant is preferable when it gives effect to more
provisions or particulars of the applicable statutes than would some other
interpretation.  
The department suggests that
that would be the case here, arguing that taxpayer's proposed interpretation
"omits and renders ineffective the substantive definition of assessable
property in the form of 'inventories,' 'appliances,' 'merchandise,' and 'all
other goods' in ORS 308.510(1)."  As already noted, however, ___ Or at ___
(slip op at 20-21), property may be both centrally assessed and exempt
from taxation.  Thus, taxpayer's proposed construction would not render those
provisions inoperable.  Moreover, even were we to assume, arguendo, that
taxpayer's proposed interpretation would render ineffective the provision in
ORS 308.510(1) requiring assessment of "inventories," the
department's proposed interpretation would render several more provisions --
the multiple provisions in ORS chapter 307 removing centrally assessed
taxpayers from the statutes' effect -- useless.  Accordingly, the department's
proposed construction is not preferable under the circumstances. 
We also disagree with the department
that, when the legislature provides a tax exemption for centrally assessed
property outside the central assessment scheme, the legislature uniformly does
so by expressly cross-referencing the central assessment statutes.  That
contention is foreclosed by the existence of exemption statutes in ORS chapter
307 that are silent as to central assessment, but that necessarily apply to
centrally assessed property.  For example, as the department concedes, ORS
307.126 (exempting Federal Communications Commission licenses) applies to the
property of centrally assessed taxpayers, even though the statute does not
refer expressly to those taxpayers or otherwise reference the central
assessment statutes.  See ORS 308.515(1)(n) ("[c]ommunication"
companies subject to central assessment).  See also ORS 307.205
(exempting real property owned by a railroad that is temporarily being put to a
public alternate transportation use).(12)
Based on the foregoing analysis of
the text and context, we conclude that the legislature did not intend to limit
the business inventory exemption statute, ORS 307.400, to locally assessed
taxpayers.
2.  The legislative history of ORS 307.400
The department next asserts that the historical
context and legislative history of ORS 307.400 reveal that the legislature
intended to provide relief from the personal property tax only as to locally
assessed, not centrally assessed, business inventory.  The legislature first
provided a partial tax exemption for business inventory in 1965, under the
Inventory Tax Relief Act, codified at former ORS 310.605 to 310.625
(1965), repealed by Or Laws 1969, ch 612, § 5.  See Or Laws 1965,
ch 604, §§ 1-12 (HB 1498).  The Inventory Relief Act reduced the personal
property tax on inventory based on a percentage calculation.  Former ORS
310.605.  The major purposes of phasing out the taxation of inventory were to
create new businesses in Oregon, prevent employee cutbacks, and reduce the
seasonal aspect of Oregon's economy.(13) 
Tape Recording, House Committee on Taxation, HB 1498, Mar 16, 1965, Tape 16,
Side 1 (statement of Sen Victor Atiyeh).  The legislature was also concerned
with how the personal property tax on inventory affected Oregon businesses'
ability to compete in the market, because other states had a relatively small
tax on inventory.  See Minutes, Senate Committee on Taxation, Apr 26,
1965, 3, 7.  
In 1969, the legislature repealed the
1965 Inventory Tax Relief Act, Or Laws 1969, ch 612, § 5, and enacted a
permanent tax reduction program for the personal property tax imposed on
inventory, codified at former ORS 310.608 (1969), renumbered as
ORS 307.400 (1981).  Or Laws 1969, ch 612, § 1, 2 (HB 1214).  Former ORS
310.608(1) provided an exemption for the taxpayer's inventory, one that
increased at a rate of five percent per year for four years, and ten percent
per year thereafter.  A complete exemption was enacted in 1979.  Or Laws 1979,
ch 692, § 5.  The statute was renumbered as ORS 307.400 in 1981.  During
hearings on the 1969 bill, the legislature again heard concerns from industry
regarding Oregon's seasonal economy.  Minutes, Senate Taxation Committee, May
13, 1969, 2 (statement of Douglas Heider, Retail Council Director of Associated
Oregon Industries).  The legislature expressed concern that Oregon was falling
behind other western states in inventory tax relief and was continuing to lack
competitiveness in the market.  Id. (statement of  Rep Jason Boe).        The
department cites portions of the 1965 Inventory Tax Relief Act, as well as
several statutes that predated that act, in support of its contention that the
legislature never intended for the business inventory exemption to benefit
centrally assessed taxpayers.(14) 
The department's basic theory is that centrally assessed property "was not
subject to the locally assessed ad valorem tax on inventory"
(emphasis in original) and, thus, was not intended to benefit from the
exemption.
We find nothing in either the 1965
Inventory Tax Relief Act or the statutes predating that act that leads us to
conclude either that a separate "tax on inventory" existed or that it
applied only to locally assessed taxpayers.  The property tax imposed on
inventory was the property tax on "tangible personal property" -- and
that tax applied generally.  See ORS 307.030(1) (1965) ("[a]ll * *
* tangible personal property * * * shall be subject to assessment and
taxation"). Further, the main purpose behind the 1965 Inventory Tax
Relief Act convinces us that the legislature wanted to reduce -- and ultimately
exempt -- the personal property tax on inventory for all Oregon businesses that
held inventory for sale.  As noted, the legislature was concerned with the
seasonal aspect of Oregon businesses holding inventory for sale, which affected
their ability to compete in the market because other states were not taxing
inventory.  Considering the purpose behind the legislation, we see no reason
why a centrally assessed company holding inventory for sale -- and thus,
suffering from similar seasonal hardships -- would not have been an equal
target of the 1965 and 1969 legislation.(15) 
Accordingly, the legislative history provides no basis to conclude that the
legislature intended to exclude centrally assessed taxpayers either from the
phasing out of personal property tax imposed on inventory, or from its ultimate
exemption.(16)
3.  Method of valuation for centrally assessed
property 
Under its third theory, the
department asserts that the method of valuation prescribed by the legislature
for centrally assessed property is not conducive to identifying, valuing, or
exempting inventory.  In assessing property subject to central assessment, the
department's assessors engage in "unit valuation" based on
information provided by the company in its annual statement.  ORS 308.520; ORS
308.555.  The unit valuation includes property both within and without the
State of Oregon.  ORS 308.555.  Once the department ascertains the assessable
property in Oregon, it apportions the assessed values to each of the counties. 
Id.; ORS 308.565.
As the department explains, unit
valuation, as a method of assessment, does not separate "real" from
"personal" property, or "tangible" from
"intangible" property.  Neither does unit valuation identify a
separate value for "inventory."  The department thus urges that unit
valuation does not provide a means by which business inventory can be
separately valued and exempted from the value of the unit.  The department,
however, again ignores the fact that several statutes exempt from taxation certain
property that is subject to central assessment -- and, thus, unit valuation.  See,
e.g., ORS 308.665 (exempting railroad cars owned by private car companies
undergoing major work).  Those statutes foreclose the department's contention
that unit valuation precludes, or is otherwise impossible to reconcile with,
the valuation and exemption of individual types of centrally assessed property. 

Furthermore, Oregon has adopted the
Western States Association of Tax Administrators, Appraisal Handbook: 
Valuation of Utility & Railroad Property (1989) (WSATA Handbook) as the
official valuation guide for centrally assessed property in this state.  OAR
150-308.205-(B).  Included in the WSATA Handbook is a prescribed uniform
procedure for separating tax exempt property from the unit valuation.  The
WSATA Handbook explains that, although generally "no attempt is made to
assign values in a unit appraisal to individual items of property," such
value must be assigned if "it is a legal requirement."  WSATA
Handbook at 8.  The WSATA handbook thus aims to provide "consistent
application of allocation techniques for removing nontaxable property from the
unit valuation."  Id. at 10.  The WSATA Handbook further specifies
that, under any of several methods of unit valuation, the appraiser must
specifically identify and account for exempt property to be excluded from the
valuation.  See, e.g., id. at 22-23, 38 (appraisers engaged in
"cost method" are required to exclude property exempt from property
taxation; common exclusions include "inventory"); id. at 70,
76 (adjustments to "income approach" are required to account for
assets not taxable); id. at 98 (value contribution of nontaxable assets
must be removed from the stock and debt indicator under the "stock and
debt approach"). 
The department has also acknowledged,
via promulgation of its own administrative rule, that assessors are required to
value, and remove from the unit, exempt property.  The department mandates that
the unit value for gas distribution companies be adjusted to exclude
"nontaxable" property included in the unit.  OAR
150-308.205-(B)(2)(b).  That rule forecloses the department's contention that
identifying exempt property and removing it from the unit valuation is
impossible or unreasonable.  
Finally, we observe that, in this
case, the department had before it the information necessary to exempt the disputed
property.  Specifically, taxpayer's annual report expressly identified the property
at issue in such a way that the assessed value of that property could be
removed from the unit valuation of taxpayer's property.  See also ORS
308.525(9) (annual statement must contain a detailed statement of personal
property located in Oregon owned by the centrally assessed company); WSATA
Handbook at 13 ("[m]andatory reporting usually requires a detailed listing
of all items of taxable property with descriptions and original cost"). 
Thus, the practicality argument that the department makes finds no support in
the statutory scheme or in the record in this case.
Accordingly, the method of valuation
prescribed by the legislature for centrally assessed property does not convince
us that it is impossible to value and exempt inventory subject to central
assessment.  We therefore decline to read into ORS 307.400 a limitation -- i.e.,
an exemption for locally assessed property only -- that the statute does not
contain and that the broader statutory scheme does not compel.
IV.  CONCLUSION
In sum, an analysis of the text and
context of the business inventory exemption statute, ORS 307.400, as well as
its legislative history, leads us to conclude that the exemption is not limited
to locally assessed taxpayers.  We therefore hold that the business inventory
exemption prescribed in ORS 307.400 applies generally to exempt the
"inventory" of all "taxpayers," including taxpayers whose
property is subject to central assessment pursuant to ORS 308.505 to 308.665.(17) 
Accordingly, in determining whether centrally assessed property qualifies as
"inventory," we look not to the definition of "tangible personal
property" in ORS 307.020; rather, we must determine:  (1) whether the
property is "tangible personal property" under the plain and ordinary
meaning of that term; and (2) whether the property meets the use requirement
under ORS 307.400, viz., whether the property is or will be stock in
trade held for sale in the ordinary course of business.  It follows that, because
the parties stipulated that taxpayer's gas reserves and retail appliances are
"tangible personal property," and the parties do not otherwise
dispute that the property meets the "use" requirement under ORS
307.400, taxpayer is entitled to a property tax exemption under ORS 307.400 for
the subject property.  
The judgment of the Tax Court is
affirmed.
1. The
tax years at issue in this case are 2002-03 to 2005-06.  The applicable tax
code statutes during those years did not substantively change.  Thus, all
references to the Oregon Revised Statutes are to the 2005 version.  We also
note that the parties relied on the 2005 version of the statutes in their
briefs before this court.  
Certain legislative amendments to the
central assessment statutes went into effect January 2, 2009.  Those amendments
are intended to "modernize and clarify the central assessment statutory
law, while continuing the central assessment system as it currently
operates."  Or Laws 2009, ch 128, § 1(3).  The changes "do not
constitute a change in the policies of the State of Oregon with respect to the
central assessment system[.]" Id. § 1(4).  Those most recent
amendments, whatever their effects, do not apply to this case.
2. Two
of the underground natural gas storage facilities became available during the
2005-06 tax year and are not under appeal for the remainder of the tax years at
issue.
3. In
addition to the Portland store, taxpayer owned and operated stores in Salem,
Albany, and Eugene.  The Salem store was in operation during the 2002-03 and
2003-04 tax years, the Albany and Eugene stores were in operation during the
2002-03 to 2004-05 tax years, and the Portland store was in operation during
all the subject tax years.  As explained below,  ___ Or at ___ n 6 (slip
op at 6 n 6), only the appliances assessed during the 2005-06 tax year -- those
sold at the Portland retail store -- are at issue on appeal.  
4. The
proposed assessment values for taxpayer's gas reserves for each tax year were
$38,204,470, $46,233,603, $38,883,344, and $50,190,503, respectively.  The
respective values of taxpayer's retail appliances were $809,018, $595,480,
$604,359, and $441,066.
5. ORS
306.115 provides, in part, that under its supervisory powers, "the
department may order the correction of clerical errors, errors in valuation or
the correction of any other kind of error or omission in an assessment or tax
roll" as provided under the statute.
6. Because
taxpayer included its retail appliances only in its 2005-06 appeal, only the
2005-06 assessment of taxpayer's retail appliances at issue in this appeal.
7. ORS
307.020(1) contains definitions for "intangible personal property"
and "personal property," as well as "tangible personal
property."  Pursuant to ORS 307.020(2), none of those definitions applies
to centrally assessed companies.
8. To
some degree, the department's argument proves too much.  That is, a literal
application of the department's proposed interpretation of ORS 307.020(2) would
result in removing centrally assessed taxpayers not only from the business
inventory exemption statute, but also from any other statutes in the tax code
that apply to "tangible personal property," "intangible personal
property" and "personal property" -- including the provisions
that subject such taxpayer's property to assessment and taxation.  See, e.g.,
ORS 307.030(1) ("All real property within this state and all tangible
personal property situated within this state, except as otherwise provided
by law, shall be subject to assessment and taxation in equal and ratable
proportion." (Emphasis added.)).
9. The
legislature amended subsection (3) of the statute to read:
"As used in subsection (1) of this section,
'inventory' means the following tangible personal property: * * *."
Or Laws 1977, ch 819, § 1(3)
(emphasis added).
10. Neither does the legislative history of ORS 308.510(1) provide support for the
department's contention. The legislature added the term "inventories"
to ORS 308.510(1) in 1957, years before the personal property tax imposed on
"inventory" was phased out under the predecessor statutes to ORS
307.400 in 1965.  See Or Laws 1957, ch 711, § 2.  Accordingly, the
legislature did not consider how adding "inventories" to centrally
assessed property would be affected by the later-enacted business inventory
exemption.  Rather, the legislature added the term "inventories," as
well as other terms, to clarify that certain utility property was to be
assessed by the department (then the State Tax Commission), rather than county
assessors.  Minutes, Senate Taxation Committee, Apr 30, 1957, 4.  
11. See
also ORS 307.220 (exemption for certain property of nonprofit mutuals or
cooperative telephone associations "shall not apply to any parcel of land
or building owned by any such association, which land or building shall be
assessed and apportioned by the [department] in accordance with existing
law"); ORS 307.330(1) ("[e]xcept for property centrally assessed by
the [department]," certain commercial facilities under construction are
exempt from taxation); ORS 307.090(1) ("[e]xcept as provided by law,"
certain public property is exempt from taxation); Pacificorp Power Marketing
v. Dept. of Rev., 340 Or 204, 211, 131 P3d 725 (2006) (central assessment
statutes provide for  taxation of property otherwise exempt under ORS
307.090(1), the public property tax exemption, because that exemption statute
contains an "except as provided by law" clause).  
12. We acknowledge that the legislature, in at least one provision in ORS
chapter 307, has used express language to bring centrally assessed taxpayers or
properties within the statute's exemption.  See ORS 307.090(3)(a)
("[n]otwithstanding ORS 308.505 to 308.665," certain out-of-state
publicly owned property is exempt from taxation).  That
"notwithstanding" clause operates to override any provisions in the
central assessment statutes that conflict with ORS 307.090(3)(a).  The clause
comes after an "except as provided by law" clause in ORS 307.090(1)
that operates to remove centrally assessed property from the exemption.  See
Pacificorp Power Marketing, 340 Or at 211 ("except as provided by
law" clause means that the exemption does not apply to centrally assessed
property).  Thus, the "notwithstanding" clause is necessary to
clarify that the exemption under subsection (3) of that statute applies to
centrally assessed taxpayers, even though the exemption in subsection (1) does
not.  Accordingly, that "notwithstanding" clause does not support the
contention that exemption statutes in ORS chapter 307 do not apply to centrally
assessed taxpayers unless the statutes expressly reference the central
assessment statutes.
13. Near
the end of the calendar year, due to the personal property tax on inventory, it
was common for Oregon businesses to "bottom out" their inventory by
ceasing to buy additional inventory, cutting down on their fabricating crews,
laying off employees, discontinuing purchases of tools or equipment, and
curtailing certain production.  Minutes, Senate Committee on Taxation, Apr 26,
1965, 7 (statement of Charles Wright, Mercer Steel).  The seasonal aspect of
Oregon's economy, which caused a "major force" in "temporary
unemployment," made up a significant portion of the testimony before the
legislature both in 1965 and again in 1969.  See, e.g., id. at
2-6; Tape Recording, House Committee on Taxation, HB 1498, Mar 16, 1965, Tape
16, Side 1 (statement of Sen. Victor Atiyeh); Minutes, Senate Committee on
Taxation, Apr 26, 1965, 4 (statement of James Sommers, Container Corporation);
Minutes, Senate Committee on Taxation, May 13, 1969, 2.
14. See,
e.g., former ORS 317.074 (1955), repealed by Or Laws 1969, ch
520, § 49 (providing centrally assessed companies a corporate excise tax offset
for personal property taxes paid); former ORS 317.085 (1955), repealed
by Or Laws 1957, ch 607, § 10 (general corporate excise tax offset for
personal property taxes paid); Or Laws 1965, ch 604, § 5 (1965 Inventory Tax
Relief Act required counties to calculate and report to  State Tax Commission
the "dollar amount of locally assessed inventory taxes levied"
(emphasis added) for the fiscal year).  
15. Certainly,
the legislature recognized that the "small merchant" would especially
benefit from the permanent inventory reduction program.  Minutes, House
Committee on Taxation, Mar 24, 1969, 1.  However, legislative recognition that
a sector of Oregon businesses (small merchants) would especially benefit from
the legislation more than others (large merchants and utilities) does not
foreclose legislative intent that those large entities -- if also holding
inventory for sale and, thus, coming within the target of the legislation --
also receive some benefit from the legislation, even if that benefit would be
less obvious or common.  See Minutes, Joint Ways and Means Committee,
May 5, 1965, 275 (statement of Sen Victor Atiyeh) (stating that helping
merchants is one thing, but the most important approach is to help the economy
of Oregon).  At the very least, there is simply nothing in the legislative
history to suggest that the legislature considered large utilities and other
centrally assessed companies and, in turn, intended to exclude them from the
ambit of the statute.
16. One
version of the 1965 Inventory Tax Relief Act -- a version that the legislature
ultimately rejected -- provided for a "net business tax" to replace
revenue lost from the phase-out of property tax on inventory.  See
Minutes, Senate Committee on Taxation, Apr 26, 1965, 1, 2 (statement of Sen
Victor Atiyeh) (explaining net business tax proposed by the House).  The
department relies on testimony from Douglas Heider, Retail Council Director of
Associated Oregon Industries, at an August 8, 1964, meeting of the Interim
Committee on Taxation, in which Heider proposed that centrally assessed
companies should be exempt from the "net business tax."  See Minutes,
Interim Committee on Taxation, Aug 8, 1964, 6 (explaining that, because there
is no effective way of segregating inventory to give relief from the tax,
centrally assessed companies gain no benefit and pay no additional tax).  His
comments were made to a 1964 interim committee in support of a potential
tax that was ultimately rejected by the legislature.  Or Laws 1965, ch 604, §§
8, 8a.  Moreover, as explained post, ___ Or at ___ (slip op at 31-34),
Heider's reasoning was incorrect -- that is, he based his conclusion on the
incorrect premise that there was no effective way of segregating assessed
inventory from the unit value.  We therefore decline to place any weight on
Heider's comments in determining the legislature's ultimate intent.  
17. Because
we hold that the business inventory exemption applies to the
"inventory" of centrally assessed taxpayers, we do not reach
taxpayer's alternative argument, viz., that its retail appliances were
not subject to central assessment and, thus, exempt nonetheless.