Court Opinion

ID: 9419114
Source: CourtListenerOpinion
Date Created: 2023-08-02 22:46:11.178109+00
Date Added: 2024-06-11T17:22:15.306660
License: Public Domain

Me. Justice Reed,
dissenting.
This judgment should be reversed on the authority of McGoldrick v. Gulf Oil Corp., 309 U. S. 414. That case has just established the superiority of a federal statute, for the protection of commerce over a state’s right to levy a sales tax. In it we pointed out that it was inconsistent with the plenary power of Congress over commerce •to permit local exactions to cut into the competitive advantages provided through the remission of customs duties to- suppliers and exporters by the ship stores and fuel oil provisibnsvof § 309 of the Tariff Act of 1930 and § 601 (b) and §, 630 of the Revenue Act of 1932. Congress authorized these advantages to give our ship chan*30dlers opportunity to compete for this trade on an even basis with nonresidents. The Gulf Oil case held that imported fuel oil carried in New York bonded warehouses for export might be sold, under Treasury oversight, to noncoastwise shipping without payment of the city sales tax. The opinion demonstrated that the purpose of. Congress would be thwarted if local taxation were permitted to interfere. The same holding in my opinion is required here.
Fuel oil imports into Puerto Rico are governed by the same tariff provisions, regulations for bonded warehouses and deliveries in bond to purchasers for use in. overseas voyages ás are those into the continental United States. The language of the Butler Act is held by thé Court to require different treatment in New York or Puerto Rico of the same situation, despite the tax inequality produced between the respective taxing units. One would expect that Puerto Rico would have no more authority than a state to levy a sales tax bn bonded fuel oil; but this Court’s ruling permits it to tax where New York failed.
The authority is said to lie in the grant by Congress to Puerto Rico of the right to tax “as soon as the same [articles subject to tax] are manufactured, sold, used, or brought into the Island.” As the fuel oil is brought into the. Island, this Court’s opinion' concludes, it is taxable. The report upon the Butler Act points- out the reason for its enactment.1 It was to enable Puerto Rico to tax *31in the original package. It should take more than a general tax authorization to destroy the symmetry of the federal control oyer imports bonded for export and to permit local taxation in Puerto Rico of what is free from local taxation in New York; “Brought” should be construed to mean when goods pass from the customs control to private control, or the authority to tax of the Butler Act should be held to be subject to the federal power of tax exemption exercised generally in favor of fuel oil by § 309 of the Tariff Act of 1930 and § 601 (b) and § 630 of the Revenue Act of 1932. Since the right to tax imports in the original package, granted Puerto Rico by the Butler Act, merely makes goods in the origi- . nal package in Puerto Rico taxable as other goods in the' common mass of taxable property, the Butler Act gives to Puerto Rico no broader power to tax oil sales than was *32ppssessed. by New York, by virtue of its sovereign power, in the Gulf Oil case. McGoldrick v. Berwind-White Co., 309 U. S. 33. Nothing requires us to frustrate the legislative policy of free competition in world markets.
The decree below should be reversed.
Mr. Justice Roberts joins in this opinion.

 “In making use of the authority granted by section 3 to levy and collect internal-revenue taxes the government of Porto Rico has found itself unable to collect said taxes on articles purchased in and sent from the United States to Porto Rico by mail, or sometimes when said articles are sent by vessel, as the courts have held that the post-office or customs officials have no authority to withhold [the] delivery of such articles subject to the internal-revenue .tax until the tax is paid, as such tax collected in this manner is in effect a customs duty. In other words, the courts have held that the internal-revenue tax can *31not be collected while the article subject to the tax is in the original package. •
. “This condition of affairs has practically nullified the power of the insular government to levy internal-revenue taxes, and therefore the efficacy of this source of revenue has been seriously impaired.
“For the purpose of righting this situation, a new provision is added to section 3, which states as follows:
“And it is further 'provided, That the internal-revenue taxes levied by the Legislature of Porto Rico in pursuance of the authority granted by this act on articles, goods, wares, or merchandise may be levied and collected as such legislature may direct, on the articles subject to said tax, as soon as the same are manufactured, sold, used, or brought into the island: Provided, That no discrimination in rates be made between the articles imported from the United States or foreign countries and similar articles produced or manufactured in Porto Rico. ■ The officials of the Customs and Postal Services of the United States are hereby directed to-assist the appropriate officials of the Porto Rican government in the collection of these taxes.
“It is expected that the government of Porto Rico will so make use. of this power as not to unnecessarily place any barriers in the way of the free-trade conditions now existing between [Porto Rico] and the mainland, which is the principal factor in the progress and prosperity of Porto Rico.” (Senate Rep. No. 1011, 69th Cong., 1st Sess., p. 2.)