Opinion ID: 1335898
Heading Depth: 1
Heading Rank: 4

Heading: duty of tonnage

Text: Appellants argue that the special fuel use tax violates the Duty of Tonnage Clause which provides that: No state shall, without the Consent of Congress, lay any Duty of Tonnage.... U.S. Const. art. I, § 10, cl. 3. Appellee concurs that a charge or duty for the privilege of entering, trading in or lying in a port, harbor or waterway is forbidden by the Duty of Tonnage Clause. Clyde Mallory Lines v. Alabama ex rel. State Docks Comm'n, 296 U.S. 261, 266, 56 S.Ct. 194, 196, 80 L.Ed. 215 (1935). Appellee argues, however, that the use tax at issue is not a duty or charge on the entry into or right of navigation on West Virginia waters, but merely an excise tax on the use of special fuel. See id. at 264-65, 56 S.Ct. at 195-96 (discussing historical basis for prohibition against duties of tonnage). To support his position, Appellee cites the decision in American Commercial Barge Line Co. v. Marcum, 360 S.W.2d 134 (Ky. 1962), in which the court upheld the Kentucky net income tax against Duty of Tonnage charges. In that case, the taxpayer raised the same argument as Appellants that the tax amounted to an impairment of its free right of navigation on the Ohio River. The Kentucky Supreme Court firmly rejected this contention, finding that the tax was not a prohibited duty of tonnage, but merely a tax on profits gained from business activity within the state. Id. at 135. Additional insight on this issue is provided by the decision in In re Los Angeles Lumber Products Co., 45 F.Supp. 77 (S.D.Cal.1942), in which the court upheld a use tax assessed against a barge purchased outside the state and then brought into the state for use upon navigable waters. Rejecting the taxpayer's argument that the use tax constituted a charge for entering, trading, or lying in port in violation of the Duty of Tonnage Clause, the court reasoned: The use or compensating tax was devised to equalize taxes in order that those who sold articles manufactured within a state to buyers therein would not be placed at a disadvantage in competition with goods manufactured in other states and sold to buyers within the state. The prohibition in the federal constitution against the imposition of duties of tonnage was a part of the scheme to give Congress control over the interstate and foreign commerce of the nation.... .... ... It is a tax upon something which occurs after the ship has entered the port, viz., the use, storage or consumption of the property within the state. Id. at 81-82 (citations omitted and emphasis supplied). Appellants urge this Court to view the use tax at issue as a charge for navigation of the rivers in violation of the Duty of Tonnage Clause. If this use tax were solely imposed for fuel consumption on the waters of this state, Appellants' arguments would be more convincing. The use tax at issue, however, is not a prohibited toll on the use of this state's navigable waterways, but an excise tax on the use of fuel which is imposed on all motor carriers operating within this state, including, buses, trucks, trains, and aircraft. See W. Va. Code §§ 11-15A-13(d), 11-15-18(c)(6). Consistent with the objectives of all use taxes, it is implemented for the purpose of equalizing the effect of purchases from out-of-state suppliers for the benefit of in-state sellers. See In re Los Angeles Lumber Products, 45 F.Supp. at 81; Henneford v. Silas Mason Co., 300 U.S. 577, 581, 57 S.Ct. 524, 526, 81 L.Ed. 814 (1937). Accordingly, we find no prohibited charge within the purview of the Duty of Tonnage Clause.