Opinion ID: 1265656
Heading Depth: 2
Heading Rank: 1

Heading: Application of the Tax to Wilderness World

Text: We review de novo the tax court's ruling on the motion for summary judgment. No material issue of fact appears in the record. The tax court's ruling was a conclusion of law, which does not bind the supreme court. Gary Outdoor Advertising Co. v. Sun Lodge, Inc., 133 Ariz. 240, 242, 650 P.2d 1222, 1224 (1982).
Former A.R.S. § 42-1314(A)(1) [1] , the statute at issue, stated: A. The tax imposed by § 42-1309, subsection A shall be levied and collected at an amount equal to two per cent of the gross proceeds of sales or gross income from the business upon every person engaging or continuing within this state in the following businesses: 1. Operating or conducting theaters, movies, operas, shows of any type or nature, exhibitions, concerts, carnivals, circuses, amusement parks, menageries, fairs, races, contests, games, billiard and pool parlors and bowling alleys, public dances, dance halls, boxing and wrestling matches and any business charging admission fees for exhibition, amusement or instruction, other than projects of bona fide religious or educational institutions. (Emphasis added.) The Department imposed the tax on Wilderness World pursuant to the portion of the statute encompassing any business charging admission fees for ... amusement, and alleges that river rafting is an amusement that falls within the purview of this statute. Wilderness World argues that under the plain language of the statute, the tax does not apply to it because Wilderness World does not charge an admission fee. When construing a tax statute, words must be given their plain and ordinary meaning. Board of Equalization v. Jackson Hole Ski Corp., 737 P.2d 350, 354 (Wyo. 1987). Admission is defined as [t]he price required or paid for entering; an entrance fee. The American Heritage Dictionary at 23 (3d ed. 1992). The NPS prohibits Wilderness World from charging an admission fee to the Grand Canyon National Park, where the river trips take place. We reject the Department's argument that Wilderness World is charging an admission fee to sit in the raft. A river trip encompasses much more than just a raft ride. The fee charged its customers is for the skill, direction, and service provided by the guide, the food and equipment for the trip, and the transportation to and from the river. See Jackson Hole, 737 P.2d at 354-55. Therefore, we conclude that Wilderness World is not charging an admission fee, and, consequently, river trips are not taxable under the plain language of the statute. See Op. Arizona Atty. Gen. No. 50-279 (Dec. 20, 1950) (construing meaning of admission in amusement tax statute).
The statute also does not apply because river rafting trips are not an amusement under the statute. Tax statutes are interpreted strictly against the state, and any ambiguities are resolved in favor of the taxpayer. Ebasco Servs. Inc. v. Tax Comm'n, 105 Ariz. 94, 97, 459 P.2d 719, 722 (1969) (stating that words will be read to gain their fair meaning, but not to gather new objects of taxation by strained construction or implication), quoting Tax Comm'n v. Staggs Realty Corp., 85 Ariz. 294, 297, 337 P.2d 281, 283 (1959); see also RDB Thomas Road Partnership v. City of Phoenix, 180 Ariz. 194, 196, 883 P.2d 431, 433 (App. 1994). River trips could be an amusement under this statute if they were of the same kind or nature of activity as those specifically enumerated in the statute. The statute does not specifically list river trips as a taxable activity. Under the doctrine of ejusdem generis, where general words follow the enumeration of particular classes of persons or things, the general words should be construed as applicable only to persons or things of the same general nature or class of those enumerated. White v. Moore, 46 Ariz. 48, 53-54, 46 P.2d 1077, 1079 (1935), quoting 59 C.J. Statutes § 581 (1932); see also Alvord v. Tax Comm'n, 69 Ariz. 287, 291, 213 P.2d 363, 366 (1950). The doctrine of ejusdem generis is a device for construing statutes when they are unclear, as in this case. See Fitzpatrick v. BOMEX, 96 Ariz. 309, 314, 394 P.2d 423, 427 (1964). The issue in this case, then, is whether river rafting is of the same kind or nature as the activities specifically listed in the statute: theaters, movies, operas, shows, exhibitions, concerts, carnivals, circuses, amusement parks, menageries, fairs, races, contests, games, pool parlors, bowling alleys, dances, and boxing and wrestling matches. These activities are mainly spectator events of short duration or participatory activities requiring no supervision. None of these activities resembles a river trip, which can be best characterized as a journey or expedition of extended duration covering hundreds of miles. The Department argues that the doctrine of ejusdem generis does not apply because the statute's general clause (any business charging admission fees for exhibition, amusement or instruction) does not include the word other. Both White and Alvord, which we find controlling, involved a statute with a general clause that reads or any other business or occupation charging storage fees or rents. Alvord, 69 Ariz. at 289, 213 P.2d at 365; White, 46 Ariz. at 56, 46 P.2d at 1080 (emphasis added). In those cases, the court noted the word other merely as additional evidence that the legislature intended the clause to be restrictive rather than all-encompassing in its application. This doctrine applies, regardless of whether the word other is included in the general clause. See, e.g., Davis v. Hidden, 124 Ariz. 546, 549, 606 P.2d 36, 39 (App. 1979). Finally, the Department argues that Rowe International, Inc. v. DOR, 165 Ariz. 122, 796 P.2d 924 (App. 1990), precludes the application of ejusdem generis to this statute. In Rowe, the court of appeals, construing the same statute at issue here, held that the specifically enumerated activity of games included video games, even though video games did not involve an admission fee as described in the general clause. 165 Ariz. at 126, 796 P.2d at 928. The Department argues that this means that the general clause cannot be restricted by the specific list of activities preceding it  i.e., ejusdem generis does not apply. But Rowe does not mention, let alone purport to repudiate, this doctrine. Nor is this interpretation necessary to the analysis of Rowe, which found that the activity in question was included in the specifically listed activities. We conclude that the doctrine of ejusdem generis applies and that river rafting trips like those conducted by Wilderness World are not of the same kind or nature as the specifically listed activities in former A.R.S. § 42-1314(A)(1). Therefore, river rafting is not an amusement under this statute. The legislature could have amended the statute to include river trips but has not, which is further evidence that the legislature did not intend to include river trips as a taxable amusement activity under this statute.
The tax court ruled in favor of the Department based on Moki Mac, in which the court of appeals construed the statute at issue. In that case, the court held that the statute applied to river trips because river trips were an amusement, and the cost of the trip was an admission fee. Moki Mac, 160 Ariz. at 373, 773 P.2d at 478. The focus of Moki Mac was a constitutional challenge by Moki Mac to the amusement tax under the commerce and due process clauses. The court concluded that Moki Mac was engaging in business in Arizona, and therefore the tax applied to Moki Mac. Before deciding the constitutional issues, the court resolved whether Moki Mac's activities fell within the purview of the statute. Moki Mac, 160 Ariz. at 372-74, 773 P.2d at 477-79. The court of appeals' analysis of the constitutional issues in Moki Mac is detailed and thoughtful, whereas the discussion regarding the applicability of the statute to river trips cites no authority and offers no analysis. At the court of appeals, Moki Mac did not present the arguments presented in this case based on the principles of strict construction and ejusdem generis. The Department argues that stare decisis applies and that this court should follow Moki Mac. However, the doctrine of stare decisis does not apply here because we, as the court of last resort on this issue, are not bound by a court of appeals opinion. See, e.g., Scappaticci v. Southwest Sav. & Loan Ass'n, 135 Ariz. 456, 461, 662 P.2d 131, 136 (1983) (noting that, [a]bsent a decision by the Arizona Supreme Court, a decision by one division of the court of appeals was persuasive with the other division). The court of appeals' holding in Moki Mac that river rafting trips were an amusement that charged an admission fee was clearly erroneous, and therefore this court will not follow it. Wilderness World argues that art. 9, § 3 of the Arizona Constitution, which was not cited to the court in Moki Mac, supports its argument that the tax statute should not be applied to it because the statute does not list river rafting as an object of the tax. Art. 9, § 3 states, in part: No tax shall be levied except in pursuance of law, and every law imposing a tax shall state distinctly the object of the tax, to which object only it shall be applied. However, the word object in art. 9, § 3 does not refer to the item being taxed, but instead refers to the objective or purpose of the tax. For example, Tillotson v. Frohmiller found a law unconstitutional because it did not state nor select the object to be promoted or carried out.... [I]t is for the legislature to state what it [the objective or purpose of the tax] shall be, and provide the funds to carry it out. This is necessary, under [art. 9, § 3], in order that the `object' for which taxes are levied may be known to the taxpayer. 34 Ariz. 394, 404-405, 271 P. 867, 871 (1928). [T]he failure of the act to specify the purpose for which the tax is levied is fatal. Id. at 405, 271 P. at 871, quoting Meyer v. Lynde-Bowman-Darby Co., 35 Okla. 480, 130 P. 548, 549 (1913) [2] ; see also Glendale Union High Sch. Dist. v. Peoria Sch. Dist., 55 Ariz. 151, 158, 99 P.2d 482, 484 (1940) (citing art. 9, § 3, and stating that legislature could not divert funds if object for which the money was collected still existed); Tax Comm'n v. Shattuck, 44 Ariz. 379, 385-88, 38 P.2d 631, 634-35 (1934) (citing Tillotson ); Bone v. Bowen, 20 Ariz. 592, 598, 186 P. 133, 136 (1919) (citing art. 9, § 3 as authority for statement that [p]ublic money can only be raised and used for specific purposes, and those purposes must be pointed out by law). Art. 9, § 3 does not apply to this case and neither supports nor detracts from Wilderness World's arguments based on strict construction and ejusdem generis.