Court Opinion

ID: 6784687
Source: CourtListenerOpinion
Date Created: 2022-07-21 01:00:20.080091+00
Date Added: 2024-06-11T16:02:55.612337
License: Public Domain

Lundberg Stratton, J.,
dissenting.
{¶41} I respectfully dissent from the majority’s judgment affirming the decision of the Board of Tax Appeals.
{¶ 42} The General Assembly clearly has the power to classify different kinds of property and designate different tax burdens for each, but such discrimination must not be arbitrary or capricious. MCI Telecommunications Corp. v. Limbach (1994), 68 Ohio St.3d 195, 199, 625 N.E.2d 597, citing Allegheny Pittsburgh Coal Co. v. Webster Cty. Comm. (1989), 488 U.S. 336, 109 S.Ct. 633, 102 L.Ed.2d 688. Because I would hold that GTE (a local exchange telephone company) and its competitors (interexchange telecommunications companies) are similarly situated and that there is no rational basis for their unequal tax treatment, I would hold that R.C. 5727.111 deprives GTE of equal protection.
*16{¶ 43} The Revised Code treats public utility taxpayers as similarly situated in many chapters. R.C. 4905.03(A)(2) provides:
{¶44} “(A) Any person, firm, copartnership, voluntary association, joint-stock association, company, or corporation, wherever organized or incorporated, is:
{¶ 45} “* * *
{¶ 46} “(2) A telephone company, when engaged in the business of transmitting telephone messages to, from, through, or in this state and as such is a common carrier.”
{¶ 47} Further, R.C. 4905.02’s expansive definition of “public utilities” includes local exchange telephone companies and interexchange telecommunications companies. R.C. 4905.04 includes both local exchange telephone companies and interexchange telecommunications companies among those subject to regulation by the Public Utilities Commission. R.C. 4905.10 assesses both local exchange telephone companies and interexchange telecommunications companies in the same manner through tariffs in order to fund the Public Utilities Commission. Finally, R.C. 324.01 defines “telephone company” in a way that includes both local exchange telephone companies and interexchange telecommunications companies. The only place in the Revised Code where local exchange telephone companies and interexchange telecommunications companies were treated differently at the time of the filing of this case is in the tax assessment statute.
{¶ 48} Moreover, I believe that the rationale behind MCI applies to this case. In MCI, this court emphasized that both carriers in that case transmitted telephonic messages as “telephone companies” within the meaning of that term as contained in the tax code in the disputed year. Further, we examined whether the PUCO treated and regulated both carriers the same. In this case, both local exchange telephone companies and interexchange telecommunications companies transmit telephonic messages, and the regulatory structure by the PUCO was primarily the same for both local exchange telephone companies and interexchange telecommunications companies.
{¶ 49} In the name of leveling the playing field and quashing monopolies, the Telecommunications Act of 1996 mandated the unbundling of services by carriers like GTE, requiring them to lease their lines and equipment to competitors. But in my view, taxation at different rates for these similarly situated telephone companies in the name of removing competition violates equal protection.
{¶ 50} Local exchange telephone companies and interexchange telecommunications companies provide the same services, the transmission of telephonic messages. Even though R.C. 5727.01(D)(2) and R.C. 5727.01(H) define the two carriers differently for tax purposes than other parts of the Revised Code, I *17would hold that changing the name does not change the substance of what these carriers are: telephone companies. I respectfully dissent and would reverse the decision of the Board of Tax Appeals and would enter judgment in favor of GTE.
Thompson Hiñe, L.L.P., and John T. Sunderland, for appellant.
Betty D. Montgomery, Attorney General, and James C. Sauer, Assistant Attorney General, for appellee.