Court Opinion

ID: 9642438
Source: CourtListenerOpinion
Date Created: 2023-08-22 17:58:06.501847+00
Date Added: 2024-06-11T11:49:03.758475
License: Public Domain

John S. Daily, Special Justice, dissenting in part. The majority of the Court makes a distinction between the cardboard cartons and the bottles which I am unable to draw. Each is a “recognizable, integral part of the manufactured product” (a carton of bottled carbonated soft drinks) — Sec. 84-1904 (i) (Repl. 1960). This total end product is sold by the manufacturer to the retailer, and by the latter to the consumer, incident to which resale the retailer collects from the consumer a Gross Receipts Tax calculated upon the total resale price of the complete package. I see no practical way for the retailer to separate the price of the components of this end product and impose a Gross Receipts Tax upon part of same and exclude other parts. The majority imposes a Compensating Use Tax upon the bottles at their purchase by the manufacturer, but Section 84-3106 (B) exempts these bottles from the Use Tax if they are subjected to a levy of a Gross Receipts Tax. A levy of both taxes upon the same item of tangible personal property is precluded by the statutes and by all prior pronouncements of this Court on this point. Henry v. International Paper Company, 252 Ark. 913 at 915; Henry v. Southern Wooden Box Company, 253 Ark. 290 at 291. This distinction drawn by the majority between the bottles and the cardboard cartons seems to be predicated upon the practice of the Appellant, in company with a great number of its fellow manufacturers in the carbonated bottled drink trade, to require its purchaser, the retailer, (in addition to paying the purchase price) to put up a deposit on each bottle; and the retailer makes a like requirement of his purchaser, the consumer. Each of these deposits is fully refundable in the event that the bottle is returned by the consumer to the retailer, and by the retailer to the manufacturer. This practice, according to the record in this case, is not applied to cardboard cartons. I view this deposit and refund requirement as to the bottles to be wholly irrelevant to the question of the impact of the imposition and exemption provisions of the Gross Receipts and Compensating Use Tax Acts. To me it is clearly a device, and only that, to induce the consumer to return the bottle to a retailer and reclaim his deposit, and for the retailer to return it to the manufacturer and reclaim his deposit, to the end that the bottle may be recycled by the manufacturer. This practice would appear to be laudable and in the interest of conservation benefiting the general economy. Also, according to the uncontradicted evidence in the record, it results in a benefit to the consumer in enabling the manufacturer to make more frequent reuse of each bottle whereby it can profitably include in its sale price the amortized (in the practical sense) cost of the bottle over the bottle’s returnable life, rather than the bottle’s total initial cost being included in the sale price on each sale of the end product. Also, according to the uncontradicted evidence in this record, there is an absolute sale of the completed packaged product, and all of its components, by the manufacturer to the retailer, and by the retailer to the consumer, and each of these latter two is free to do as he will with the product, including the bottles, which he may return for recovery of his deposit or not, as he chooses. If the manufacturer is subjected to a Compensating Use Tax on its cost of the bottles, which I understand the majority to hold, it will necessarily be under economic compulsion to add this additional tax cost to its end product price and thereby pass it on to the consumer. Contrary to the opposite politically inspired pronouncements, producers do not pay taxes. They collect and remit them and pass them on in the price of their products into the hands of the consumer. If they do not they are soon out of business. If this economic law of the free market system prevails, the manufacturer will add the use tax imposed on the bottles to the price of its packaged end product which includes the bottles, and the retailer will impose a Gross Receipts Tax calculated on his total price to the consumer (i.e. his purchase price from the manufacturer, including the use tax imposed on the bottles, plus his retailers profit). There is no suggestion in the record as to how the retailer could eliminate the bottles from the retail price in calculating the sales tax he must collect. Thus the consumer will pay a Gross Receipts Tax upon the final retail price which will include the “passed on” use tax paid by the manufacturer. This results in the double tax, and even a tax on tax, that is proscribed by the Court’s decisions in the cases cited above. I respectfully dissent from the affirmance of the Trial Court’s ruling on the bottles. I am authorized to state that the Chief Justice and Mr. Justice Byrd join in this dissent.