Opinion ID: 6534258
Heading Depth: 2
Heading Rank: 3

Heading: Whether the Section 90 Tax is Subject to Article IX, Section 3a

Text: Having concluded that, for the purposes of Article IX, section 3a, taxes on the ownership  of motor vehicles are limited to those based on the status of motor vehicle ownership, we conclude that the Section 90 tax at issue in this case is not subject to Article IX, section 3a, because it is not based on the status of motor vehicle ownership. By its own terms, the Section 90 tax is a tax on the activity of engaging in the business of selling certain motor vehicles at retail, and, although the legislature's identification of the taxed activity is not dispositive, it is an important factor in determining the nature of the tax. See Sproul v. State Tax Com. , 234 Or. 579 , 581, 383 P.2d 754 (1963) (the legislature's label of a levy is an important, but not conclusive, factor in determining into what category to place the levy). In addition, the tax is not triggered by ownership of a motor vehicle. A person can own a vehicle without ever being liable for the tax; only vehicle dealers are liable for the tax. And, a vehicle dealer may own, operate, and use a motor vehicle (on its lot or on public highways) without having to pay the tax; the tax is not triggered until the dealer sells the vehicle. As amicus curiae points out, a vehicle dealer that owns motor vehicles but does not sell any during a reporting period does not incur any [Section 90] tax liability for that period. Thus, the tax is not defined as, and does not function as, a tax based on the status of ownership. In addition, the Section 90 tax is unlike the taxes to which Article IX, section 3a, was intended to apply. As discussed above, the principle underlying Article IX, section 3a, is that special taxes paid only by highway users should  be used only for highway purposes. Thus, Article IX, section 3a, was intended to apply to taxes that are attributable to the use of the public highways for motor vehicle transportation, and the Section 90 privilege tax is not such a tax. The fact that the legislature also enacted the Section 91 use tax, based on the storage, use or other consumption in this state of taxable motor vehicles purchased at retail from any seller, and provided that the Section 91 use tax would be offset by any privilege tax imposed on the purchase does not compel a different conclusion. It appears that, as amicus curiae explains, the purpose of the Section 91 use tax is to protect Oregon vehicle dealers from losing business to non-Oregon vehicle dealers, who are not subject to the Section 90 tax. Thus, it appears that the Section 90 and Section 91 taxes work together, so that the Section 90 privilege tax can be imposed on in-state vehicle dealers without placing them at a competitive disadvantage to out-of-state vehicle dealers, which supports the conclusion that the Section 90 tax is a business privilege tax. Therefore, exercising the jurisdiction that the legislature has given us to resolve the question, we hold that the Section 90 tax is not a tax on the ownership, operation or use of motor vehicles, as that phrase is used in Article IX, section 3a. The tax imposed by Oregon Laws 2017, chapter 750, section 90, is not subject to Article IX, section 3a, of the Oregon Constitution.