Source: https://law.justia.com/cases/california/supreme-court/3d/6/132.html
Timestamp: 2019-12-14 19:30:55
Document Index: 766254630

Matched Legal Cases: ['§ 5', '§ 6', '§ 1', '§ 1', '§ 37101', '§ 22']

Rivera v. City of Fresno :: :: Supreme Court of California Decisions :: California Case Law :: California Law :: US Law :: Justia
Justia › US Law › Case Law › California Case Law › Cal. 3d › Volume 6 › Rivera v. City of Fresno
In Bank. (Opinion by Burke, J., expressing the unanimous view of the court.) [6 Cal. 3d 133]
Plaintiffs, who are utility users in defendant City of Fresno, appeal from a judgment sustaining the validity of a utility users' tax levied by the city. We are informed that a similar tax has been imposed by some [6 Cal. 3d 135] 40 or more cities in this state. As will appear, we have concluded that plaintiffs err in their contention that the city lacked authority to impose the tax. The judgment will therefore be affirmed.
[1] The City of Fresno operates under a charter which contains "home rule" provisions authorized by the Constitution. (Cal. Const., art. XI, § 5; formerly §§ 6, 8, subd. (j).) Accordingly, the city is empowered to exercise full control over its municipal affairs, unaffected by general laws on the same subject matters and subject only to limitations found in the Constitution and the city charter. (Professional Fire Fighters, Inc. v. City of Los Angeles (1963) 60 Cal. 2d 276, 291 [32 Cal. Rptr. 830, 384 P.2d 158]; Los Angeles Ry. Corp. v. Los Angeles (1940) 16 Cal. 2d 779, 783 [108 P.2d 430]; The City of Oakland v. Williams (1940) 15 Cal. 2d 542, 549-550 [103 P.2d 168]; West Coast Adver. Co. v. San Francisco (1939) 14 Cal. 2d 516, 521-522 [95 P.2d 138]; Butterworth v. Boyd (1938) 12 Cal. 2d 140, 146-147 [82 P.2d 434, 126 A.L.R. 838].)
Plaintiffs contend, however, that the Legislature has enacted a uniform statewide system of sales and use taxation and has declared its intent to preempt that field, that such a system is a matter of statewide concern rather than a local municipal affair, and that therefore the Fresno utility users' tax must yield to the Legislature's enactment under principles recently reviewed and expounded in Bishop v. City of San Jose (1969) 1 Cal. 3d 56, 61-63 [81 Cal. Rptr. 465, 460 P.2d 137]. (See also City of Santa Clara v. Von Raesfeld (1970) 3 Cal. 3d 239, 245-246 [90 Cal. Rptr. 8, 474 P.2d 976].)
The state entered the field of sales and use taxes more than 35 years ago with the enactment of the Retail Sales Tax Act of 1933 (Stats. 1933, ch. 1020, § 1, p. 2599), and the Use Tax Act of 1935. (Stats. 1935, ch. 361, § 1, p. 1297.) Certain cities in the state subsequently began imposing similar taxes, at varying rates, with express approval of the Legislature. [6 Cal. 3d 136] (See Gov. Code, § 37101; City of Commerce v. State Board of Equalization (1962) 205 Cal. App. 2d 387, 390 [23 Cal. Rptr. 143] [3, 4].)
The Bradley-Burns Act "contemplates an integrated, uniform system of city and county sales and use taxation. The counties are given authority to impose sales and use taxes as a means of raising additional revenue, and the cities are furnished with a plan of state administration which will relieve them from operating collection systems of their own. The taxpayers will receive the benefit of a scheme which will free them from the burden of complying with differing regulations of state and local taxes, avoid the necessity of making payments and reports to several governmental bodies, and permit all auditing to be done by a single agency." (Geiger v. Board of Supervisors (1957) 48 Cal. 2d 832, 837 [313 P.2d 545].)
Also in 1968, the Legislature added a further provision to the Bradley-Burns Act in the form of section 7203.5 of the Revenue and Taxation Code. fn. 2 So far as here material, section 7203.5 (in its second par.) prohibits [6 Cal. 3d 137] the State Board of Equalization from administering any sales or use tax ordinance of any city or county which imposes a sales or use tax in addition to those conforming to the Bradley-Burns Act, but the section further specifies (in its third and final par.) that nothing therein prohibits a city or county from levying "any other substantially different tax" authorized by the California Constitution or by statute or city charter.
[3] As stated in Bank of America v. State Bd. of Equal. (1962) 209 [6 Cal. 3d 138] Cal.App.2d 780, 791 [26 Cal. Rptr. 348], one of the chief purposes of the use tax is to help retailers, who are subject to sales tax, to compete on an equal footing with their competitors outside of the taxing jurisdiction who are exempt from the sales tax. Thus it is intended to reach property purchased for use and storage in the taxing jurisdiction from retailers who, being outside such jurisdiction, are not subject to its laws. "It also seeks to reach such property where the taxable event of a sales tax, i.e., the sale, occurs outside of this state or where such property is immune from the sales tax because of the commerce clause. [Citations.] The use tax is complemental to the sales tax, and as such is intended to supplement the latter by imposing upon those subject to it a tax burden equivalent to the sales tax in order that tangible personal property sold or utilized in this state would be taxable once for the support of the state [or local] government. ..." (Bank of America v. State Bd. of Equal., supra, pp. 791-792 of 209 Cal.App.2d)
This conclusion finds further support in the legislative history of the bill, originally known as Senate Bill 58, which became Statutes 1968, chapter 1265. When Senate Bill 58 was considered by the Legislature in 1968 business license taxes were being imposed by certain cities which were measured in part by the gross receipts from the sales of merchandise; also, at least one chartered city (Los Angeles) had levied a utility users' tax as well as a general sales and use tax which was in nonconformance to Bradley-Burns in that the rate imposed was higher than that approved by Bradley-Burns. As amended on July 9, 1968, Senate Bill 58 undertook in section 1 thereof to prohibit local sales or use taxes not in conformity with Bradley-Burns, but also specified that "Nothing in this section shall be construed as prohibiting the levy or collection of any otherwise authorized [6 Cal. 3d 139] license tax upon a business measured by, or according to, gross receipts."
[4] It has been suggested on behalf of plaintiffs that the Fresno utility users' tax invades the field of regulation of public utilities which has been clearly preempted by the state under applicable provisions of the California Constitution. (Cal. Const., art. XII, §§ 22, 23.) However, whether or not the state has occupied the field of regulation, cities may levy fees or taxes solely for revenue purposes, as was done by the Fresno utility users' tax. (In re Groves (1960) 54 Cal. 2d 154, 156-158 [4 Cal. Rptr. 844, 351 P.2d 1028], and citations.) Further, the requirement that the utility company supplying a particular utility service collect the utility users' tax and remit to the city does not constitute forbidden or conflicting regulation of the utility. (See Ainsworth v. Bryant, 34 Cal. 2d 465, 476-477 [211 P.2d 564].)
Century Plaza Hotel Co. v. City of Los Angeles (1970) 7 Cal.App.3d [6 Cal. 3d 140] 616 [87 Cal. Rptr. 166], is not helpful to plaintiffs. In that case, which held invalid a so-called "tipplers' tax" imposed by the City of Los Angeles upon the purchase price of alcoholic beverages sold by a retailer for consumption on the premises where sold, the court relied upon the interrelationship of certain constitutional and statutory provisions not present in the instant case, and further specifically noted (p. 626 of 7 Cal.App.3d) that "Taxation and regulation of alcoholic beverages are intertwined."
[2c] It is also appropriate to point out that the State Board of Equalization has continued to administer the local sales and use tax ordinances of the numerous cities which have also imposed utility users' taxes. The contemporaneous administrative construction of a statute by an administrative agency charged with its enforcement and interpretation is entitled to great weight unless it is clearly erroneous or unauthorized. (Cannon v. Industrial Acc. Comm. (1959) 53 Cal. 2d 17, 22 [346 P.2d 1]; Coca-Cola Co. v. State Bd. of Equalization (1945) 25 Cal. 2d 918, 921 [156 P.2d 1].)
FN 1. Section references hereinafter are to the Revenue and Taxation Code unless otherwise indicated.
FN 2. Section 7203.5 in pertinent part: "[2d par.] Except as herein provided, the State Board of Equalization shall not administer any sales or use tax ordinance of a city, county or city and county, if such [ordinance] imposes a sales or use tax in addition to the sales and use taxes imposed under an ordinance conforming to (the state sales and use tax acts).
FN 3. The full text of the Legislature's findings appears as a historical note following section 7203.5 in West's Annotated California Codes, as well as in the official statutes.
FN 4. See Bishop v. City of San Jose, 1 Cal. 3d 56, 63 [81 Cal. Rptr. 465, 460 P.2d 137].