Opinion ID: 1325000
Heading Depth: 1
Heading Rank: 4

Heading: carolyn sue sturgeon

Text: Here, the majority fares no better than in the preceding cases in its attempt to articulate why the tax on obtaining a certificate of title, contained in W.Va.Code, 17A-3-4, is valid. It erroneously characterizes the tax as a use tax, which it clearly is not, and concludes that the tax is valid because the taxpayer is not involved in interstate commerce. The tax in question cannot be termed a use tax, since that term is traditionally applied to a tax which is a complement to a sales tax and is designed to tax the use of property brought into a state which was not subject to state sales tax. West Virginia has provisions for sales and use taxes set forth in W.Va.Code, 11-15-1, et seq., and 11-15A-1, et seq. By express legislative statement, the use tax is intended to complement the sales tax. W.Va.Code, 11-15A-1a. [10] Both the sales and use taxes in W.Va.Code, 11-15-9(5), and W.Va.Code, 11-15A-3(2), specifically exempt from their scope motor vehicles which are subject to the title certificate tax. The use tax as a counterpart to a sales tax was found to be constitutional in Henneford v. Silas Mason Co., 300 U.S. 577, 57 S.Ct. 524, 81 L.Ed. 814 (1937), and it is from this case that the taxpayer launches her attack. Henneford left unanswered the question of whether, if an exemption or credit is provided in the use tax for sales tax paid in the taxing state, a similar exemption must be given for sales tax paid out of state. In Henneford, because the use tax statute exempted property on which a sales tax had been paid to the State of Washington and gave the same exemption to property subjected to similar out-of-state taxes, the Supreme Court was not required to decide the issue. [11] Paradoxically, while Henneford appears to hold that a use tax is not a tax on interstate commerce because the product has come to rest within the state and commerce is therefore at an end, [12] its discussion of the exemption issue is cast in terms of the Commerce Clause. [13] If the Commerce Clause had not been implicated in Henneford, it would be difficult to understand Halliburton Oil Well Cementing Co. v. Reily, 373 U.S. 64, 83 S.Ct. 1201, 10 L.Ed.2d 202 (1963), which struck a Louisiana use tax as violating the Commerce Clause, holding: The conclusion is inescapable: equal treatment for in-state and out-of-state taxpayers similarly situated is the condition precedent for a valid use tax on goods imported from out-of-state. [373 U.S. at 70, 83 S.Ct. at 1204, 10 L.Ed.2d at 207]. Halliburton involved a use tax on certain oil well equipment brought into and used within the State of Louisiana. It was shown that the use tax applied to the value of the labor costs and overhead in addition to the value of the material in the product only if the product was manufactured out of state. If manufactured within the state, the tax would only be on the value of the material and not on labor and cost of overhead. Thus, there was a clear discrimination in the application of the two taxes. Halliburton cited Henneford, but conspicuously omitted Henneford's statement that [t]he tax is not upon the operations of interstate commerce, but upon the privilege of use after commerce is at an end. [300 U.S. at 582, 57 S.Ct. at 526, 81 L.Ed. at 818]. Rather, it stated: [T]he [ Henneford ] court concluded: `Equality is the theme that runs through all the sections of the statute.' [373 U.S. at 70, 83 S.Ct. at 1204, 10 L.Ed.2d at 207, quoting 300 U.S. at 583, 57 S.Ct. at 527, 81 L.Ed. at 819]. It would seem, therefore, that a use tax which is a complement to a sales tax remains subject to scrutiny under the Commerce Clause if it operates against commerce in a discriminatory fashion, irrespective of the extent of local contacts the out-of-state taxpayer may have. [14] Here, the taxpayer does not urge that the tax is discriminatory and should thus be struck under the Commerce Clause, but seeks a credit for the amount of New Jersey sales tax imposed on her purchase of an automobile while she was a resident of that state. She bases her argument on the language in Henneford quoted in Note 11, supra. As we have seen, however, the motor vehicle license tax is not the conventional use tax which operates as a counterpart of the sales tax. It is a separate and distinct tax operating on the privilege of obtaining a title certificate. Consequently, I cannot see the relevance of Henneford, nor the use and sales tax cases. [15] The statute in question does not discriminate on its face. The fact that motor vehicles purchased in this State are exempt from both West Virginia sales and use taxes does not mean that a person bringing a motor vehicle into this State who becomes a permanent resident is discriminated against by our title certificate tax. As pointed out in Henneford, no state is required under the Commerce Clause to frame its system of taxation such that its burdens and exemptions must match identically those created by other states, [16] but it cannot create within the same individual tax framework a discriminatory scheme. I recognize that my characterization of the tax in this case as being a non-use tax, in terms of the traditional sales-use concept, differs from the description that can be found in Nuckols v. Athey, 149 W.Va. 40, 138 S.E.2d 344 (1964). [17] I do not doubt, however, that Nuckols was correctly decided under W.Va.Code, 17A-3-4, as it then existed, since that statute contained an impermissible discrimination in favor of local business by providing that if said motor vehicle is purchased in the State of West Virginia, so much of the purchase price. . . as is represented by the exchange of other vehicles . . . shall be deducted from the total actual price on which the tax is levied. The present form of W.Va.Code, 17A-3-4, does not contain the foregoing preferential language in favor of motor vehicles purchased locally, and therefore cannot be said to discriminate against interstate commerce. It is for this reason, and not because commerce is at an end, that the tax is valid. Moreover, since the tax is not a use tax complementing a sales tax, there is no need to consider whether Henneford is applicable and requires that we grant a credit for the sales tax paid in another state. The majority result is right, but is based on the wrong reasons.