Opinion ID: 2536857
Heading Depth: 3
Heading Rank: 2

Heading: The Tax Exemption Budgets

Text: Each year, the Department of Revenue drafts a Tax Exemption Budget pursuant to La.Rev.Stat. § 47:1517 and disseminates it to the governor and Legislature. The purpose of the Tax Exemption Budget is to inform the legislature of the revenue loss to the state caused by each tax exemption for the three preceding years, the estimated revenue loss to the state caused by each tax exemption for the current fiscal year, and the estimated revenue loss to the state caused by each tax exemption for the ensuing fiscal year. La.Rev.Stat. § 47:1517(B)(2). Tax Exemption Budgets have been submitted to the Legislature each year since 1986, and they have consistently shown racetracks pay a 0% sales tax rate and OTB parlors pay a 1% sales tax rate. [11] The Tax Exemption Budgets refer to La.Rev.Stat. §§ 4:168 and 4:227 as exclusions, not exemptions. Harrah's urges we rely on the Tax Exemption Budgets as an administrative construction of the law. Although courts may give due consideration to the administrative construction of a law, we are certainly not bound by them. Jurisich v. Jenkins, 1999-0076, p. 8 (La.10/19/99), 749 So.2d 597, 602. Moreover, La.Rev.Stat. § 47:1517 expressly says Tax Exemption Budgets are prepared for the use of the legislature and governor. They are not intended for use by individual taxpayers as are private letter rulings. However, the Tax Exemption Budgets are relevant to show the Legislature has long been aware of the favorable tax treatment provided to racetracks, but did not repeal those provisions. If the Legislature believed the Tax Exemption Budgets were in error, we assume it would have acted by now. As mentioned earlier, the Legislature's enactment of § 4:227 evidenced an intent to extend the racetracks' favorable tax treatment. [12] The State cites to Traigle v. Fairgrounds Corp., 288 So.2d 409 (La.App. 4 Cir.1974), and Ford New Holland, Inc. v. City of Bossier City, 36,544 (La.App. 2 Cir. 12/11/02), 835 So.2d 862, both of which refer to La.Rev.Stat. § 4:168 as an exemption. These cases are simply not on point, as the issue of whether § 4:168 created an exemption or an exclusion was not raised in either case, and any reference to the statute as an exemption was pure dicta. In Traigle, the court held the Fairgrounds is not required to pay sales taxes on purchases it makes from vendors, but it is required to charge sales tax on goods it sells to its customers. Traigle, 288 So.2d at 410. In Ford New Holland, the court was called on to determine whether a party could avoid paying sales and use tax on its purchase of tractors if those tractors were later leased to Louisiana Downs. Ford New Holland, 835 So.2d at 862. In both cases, the reference to § 4:168 as an exemption was simply irrelevant to the court's holding. The State also relies on this Court's recent decision in World Trade Center Taxing District v. All Taxpayers, 2005-0374 (La.6/29/05), 908 So.2d 623. There, the dispute involved a statute imposing a special hotel occupancy tax specific to the World Trade Center in lieu of the generally applicable Orleans Parish hotel occupancy taxes. Id. at 633, quoting La.Rev. Stat. § 33:9038.21 F(4). The State points out we held the statute created a tax exemption, not a suspension, and reasons that all statutes containing the in lieu of language (including §§ 4:168 and 4:227) must also be exemptions. This argument is flawed. First, in World Trade Center this Court was called upon to decide whether the statute created an exemption or a suspension. Id. at 633-34. It contains no discussion of the distinction between an exemption and an exclusion, as the question was neither briefed nor argued and made no part of the decision. A case does not create precedent for a proposition that was not argued by the parties and did not make part of the court's ratio decidendi. The Constitutional provision at the heart of World Trade Center, La. Const. Art. VI, § 29, refers equally to exemptions or exclusions. [13] For the purposes of this provision, there was no meaningful distinction between an exemption and an exclusion, and there was no need for this Court to decide which term best described La. Rev.Stat. § 33:9038.21 F(4). Moreover, the State's argument that World Trade Center controls because it interpreted a statute containing the same in lieu of language as La.Rev. Stat. §§ 4:168 and 4:227 is simply not convincing. It would be highly inappropriate to focus on a single phrase to determine whether a statute creates an exclusion or an exemption. There are no magic words necessary to create an exemption or an exclusion; the determining factor is the effect of the statute: the words and form used legislatively in granting an exemption are not important if, in their essence, the Legislature creates an exemption. Wooden v. Louisiana Tax Commission, 94-2481 (La.2/20/95), 650 So.2d 1157, 1161, citing Meyers v. Flournoy, 209 La. 812, 25 So.2d 601 (1946). Having found the relevant statutes are exclusionary, we now turn to the reach of the exclusion.