Court Opinion

ID: 9741838
Source: CourtListenerOpinion
Date Created: 2023-08-26 21:02:53.702578+00
Date Added: 2024-06-11T07:24:26.651302
License: Public Domain

JUSTICE RYAN, specially concurring: I concur with the court that this amendment, which places a tax on membership in a racquetball or health club, constitutes an occupation tax which has not been authorized by the General Assembly. However, I believe the opinion is not clear in its analysis for determining whether a tax is an occupation tax within the meaning of article VII, section 6(e), of our Constitution of 1970. According to the majority opinion, the tax on membership in a racquetball or health club constitutes an occupation tax because “[t]he clubs are not only responsible for collecting and remitting the tax to the city, but are also responsible for paying the tax to the city regardless of whether their patrons fail or refuse to remit the tax. Additionally, the health clubs are subject to some very substantial penalties for any delays in submitting the tax payments.” (Emphasis in original.) (124 Ill. 2d at 10.) The fact that the clubs have to collect the tax and that there is a penalty for the delay is not the dis-positive factor in determining whether the tax is an occupation tax. If such were the case, other home rule taxes upheld by this court would have constituted occupation taxes. See, e.g., Illinois Gasoline Dealers Association v. City of Chicago (1988), 119 Ill. 2d 391 (gasoline fuel tax); Mulligan v. Dunne (1975), 61 Ill. 2d 544 (liquor tax); S. Bloom, Inc. v. Korshak (1972), 52 Ill. 2d 56 (cigarette tax). Recently, this court held that an ordinance which imposed a tax on vehicle fuel, which the dealers were required to collect and which imposed penalties on the dealers for failure to collect the tax, did not constitute an occupation tax. (Illinois Gasoline Dealers, 119 Ill. 2d 391.) In that case, we stated that the practical effect of a tax analysis was not relevant because the tax was one which the constitutional convention expressly indicated was permissible. 119 Ill. 2d at 400. The first step in determining whether the tax is constitutional is to look at the relevant constitutional provision. The 1970 Illinois Constitution provides: “(e) A home rule unit shall have only the power that the General Assembly may provide by law *** [to] impose taxes *** upon occupations.” (Ill. Const. 1970, art. VII, §6(e).) This court has considered transcripts from the constitutional convention in order to interpret language of the Constitution. (See People ex rel. City of Canton v. Crouch (1980), 79 Ill. 2d 356, 366-67.) The Record of Proceedings from the constitutional convention further clarifies what are permissible home rule taxes that do not constitute occupation taxes. (Illinois Gasoline Dealers Association v. City of Chicago, 119 Ill. 2d at 400, citing 7 Record of Proceedings, Sixth Illinois Constitutional Convention 1655-56.) The transcripts from the constitutional convention reveal that under a city’s home rule power, it can tax liquor, food, hotel rooms, gasoline, etc. During the constitutional debates, these taxes, which a home rule unit can levy, were imprecisely referred to as excise taxes or sales taxes. However, it was clearly indicated in the debates that a sales tax measured on the sale of services is to be considered as an occupation tax, which a home rule unit may not levy. Thus, determining whether the tax imposes all legal responsibilities and obligations on the person engaged in providing the service (Commercial National Bank v. City of Chicago (1982), 89 Ill. 2d 45, 68) becomes significant only after a determination that the tax is not similar to the examples set forth by the local government committee of the constitutional convention as permissible home rule taxes. We discussed this distinction in our recent decision in Illinois Gasoline Dealers Association v. City of Chicago (1988), 119 Ill. 2d 391, 400-01, and noted that the shifting of the incidence of the tax was not, in that case, an attempt to evade the intent of the constitutional convention to prohibit a tax on the sale of services. As indicated in the opinion in our case, a tax on membership fees or dues of health and racquetball clubs is not such a tax as the delegates to the constitutional convention intended home rule units to levy. This tax cannot be classified as what the delegates understood to be an excise tax or a tax on the sale of tangible personal property. These clubs perform services, and the tax is measured not by participation in or admissions to individual events, but on membership dues collected by the clubs. It is in the nature of a service tax and, as such, is similar to those taxes held invalid in Commercial National Bank v. City of Chicago. As indicated in the constitutional debates, there was concern by the delegates that a proliferation of such taxes, as are involved in this case and in Commercial National Bank, would, in effect, nullify the intention that taxes levied on or measured by income not be levied by home rule units, absent the grant of authority from the General Assembly. These debates were discussed at length by this court in Commercial National Bank v. City of Chicago and further discussed in our recent holding in Illinois Gasoline Dealers Association v. City of Chicago. I specially concur in the case now before us because I feel that the majority did not clearly set forth the holding of Commercial National Bank v. City of Chicago, which we analyzed in Illinois Gasoline Dealers Association v. City of Chicago.