Court Opinion

ID: 6362559
Source: CourtListenerOpinion
Date Created: 2022-06-24 23:37:22.838964+00
Date Added: 2024-06-11T15:49:44.137707
License: Public Domain

Dissenting Opinion by
Judge Kramer :
I respectfully dissent. My dissent is based upon my conclusion that regulation 104(a) (2) of the Income Tax Regulations of Philadelphia is inconsistent with section 19-1501 (8) (a) of the Philadelphia Code (Code), and, hence, invalid.
The majority has recognized the principle that administrative regulations are invalid when they contravene the legislative intent of the statutory provisions they purport to implement. Tyger & Karl Complete Water Systems Co., Inc. v. Commonwealth, 5 Pa. Commonwealth Ct. 154 (1972). After acknowledging this principle, 'the *472majority acquiesces, however, in the Revenue Commissioner’s attempt, through regulation 104(a) (2), to limit the availability of the sickness benefit exclusion, which was granted in broad terms by the drafters of section 19-1501(8) (a). This section excludes, without qualification, “periodical payments for sick or disability benefits . . . . ” The City Council did not limit this exclusion to benefits paid by a “sickness or disability plan.” Neither did Council express any intention that an employe who receives “the full amount of his regular salary from his employer, during a period of sickness or disability, by virtue of his contract of employment” should be taxed. These qualifications are the product of the Revenue Commissioner, who, in promulgating regulation 104 (a) (2)., has encroached upon the legislative prerogatives of City Council. The Commissioner has no power to tax. Through this regulation he extends his grasp into an area which the Council has chosen not to reach for additional revenue.
I refer to the Council as having chosen not to tax sick and disability benefits because that is precisely the nature of a tax exclusion, which the majority concedes is present in this case. The majority opinion, however, after noting than an exclusionary provision is at issue, only mentions that “ [a] ppellant’s burden of bringing himself within the exclusion is less difficult than were he establishing exempt status.” I believe that the exclusion at issue is entitled to more significance than the majority opinion allows. This Court recently discussed the effect of exclusionary language in taxing statutes in Equitable Gas Company v. Commonwealth of Pennsylvania, 18 Pa. Commonwealth Ct. 418, 422, 335 A.2d 892, 894 (1975), where we said:
“The legal consequences of the distinction between a tax exclusion and a tax exemption were set forth by our Supreme Court in Commonwealth v. Sitkin’s Junk Co., 412 Pa. 132, 194 A.2d 199 (1963), wherein it was pointed out that only exemptions are to be *473strictly construed against the taxpayer. Exclusions are items which are not intended to be taxed in the first place, and to the extent there is doubt about the meaning of the statutory language, such exclusionary provisions are to be construed against the taxing body.” (Emphasis in original.)
See also Alan Wood Steel Company v. Philadelphia School District, 425 Pa. 455, 229 A.2d 881 (1967) and Tyger, supra.
Considering the broad, unqualified language of section 19-1501 (8)i(a) of the Code, the principle repeated in Equitable Gas means that the courts will not permit an administrative officer to extend the taxing power of the government by bureaucratic fiat, when an exclusion has been specifically granted by the taxing body. If the plain meaning of section 19-1501 (8)i(a) standing alone is not sufficient (which I believe it is), certainly the rule of construction noted above removes any serious doubt about the original intentions of the City Council.
These intentions, incidentally, were apparently clear enough in 1951 when section 19-1501 (8) (a) was enacted. The ordinance was enacted on July 3, 1951, and, on July 12, 1951, the Commissioner issued new regulations which recited that “ [p] eriodic payments received by an individual for sick or disability benefits are not taxable.” In 1954, the regulation was revised to include the qualifications which are at issue in the instant case. Neither the record nor research discloses any intervening legislative events which would justify an interpretation of the ordinance consistent with the Revenue Commissioner’s later view. Consequently, I would hold that the City Council meant what it said when it enacted section 19-1501 (8) (a) of the Code. I would reverse.