Court Opinion

ID: 9884454
Source: CourtListenerOpinion
Date Created: 2023-10-06 02:57:48.705584+00
Date Added: 2024-06-11T07:48:38.681283
License: Public Domain

Mr. Justice Davis, dissenting: I voice my dissent to what I believe to be an unprecedented opinion by the court. My conclusion is neither predicated on the wisdom or folly of the legislation, nor on what the court describes as its “cumbersome” methods, but rather is based on the conviction that the legislature has failed to enact a valid, uniform privilege tax within the limitations of the revenue article of our constitution. Const., art. IX, secs, i and 2. If I interpret the decision correctly, the court implicitly concedes that the Use Tax Act, if it stood alone, would be unconstitutional for lack of uniformity, but finds justification for this lack of uniformity in the legislature’s purpose to protect the base of the retailers’ tax. Indeed it appears that the court’s decision is based on the assertion that “a protective tax can depend for its justification upon the tax that it supports.” I can find nothing in the revenue article nor in our decisions to indicate that a general protective purpose will render a tax immune to constitutional objections. The court points to the tax on gifts in contemplation of death as one enacted for the purpose of protecting the base of the State inheritance tax. But I know of no case, including those cited by the court, which indicates that such a protective tax could be upheld regardless of its uniformity, or without being a tax upon a privilege. Thus, the court holds that while the legislature could not constitutionally enact the present use tax standing alone, since it first enacted a valid retailers’ tax, with classifications peculiar to that occupation, it may now protect that tax by enacting a use tax without regarding constitutional requirements. Under this pronouncement, if the retailers’ tax were repealed or substantially changed, those who use property in Illinois would be subjected to a clearly non-uniform and discriminatory tax. Such an objection was sufficient to strike down the Motor Vehicle Use Tax Act in People ex rel. Schoon v. Carpentier, 2 Ill.2d 468, at 475-476, where we held: “It is contended that this tax is similar to that in the Cigarette Use Tax Act and that the act is valid as levying a complementary tax to that levied by the Retailers’ Occupation Tax Act. Our decision in Johnson v. Halpin, 413 Ill. 257, is cited in support of this contention. That case can offer no such support as it is evident that there is a salient difference between the Motor Vehicle Use Tax Act and the Cigarette Use Tax Act. A review of the statutes will reveal that the former (by the Secretary’s construction) provides for no general tax upon all users of motor vehicles in this State. If the Retailers’ Occupation Tax Act were repealed or substantially changed those who bought motor vehicles from Illinois dealers would escape the burden of this use tax. However, as pointed out in Johnson v. Halpin, 413 Ill. 257, the cigarette use tax is a tax on the local use of cigarettes and in no way discriminates against purchasers who buy their cigarettes outside of the State, since they pay the same tax as purchasers from Illinois distributors.” Nor can the court find precedent in Johnson v. Halpin, 413 Ill. 257, upholding the Cigarette Use Tax Act. In that case we pointed out that the operation of the act was uniform and nondiscriminatory among all users of cigarettes, and stated at page 270: “Therefore, a taxable privilege may involve lawful rights and conduct enjoyed without previous legal authority, but over which the legislature has some power of control or classification. A tax upon such rights would be valid provided the classification were reasonable, and the statute provided for uniformity among the constituents of the class. Harder’s Storage Co. v. City of Chicago, 235 Ill. 58.” We also stated at page 271: “However, as a privilege tax it must still conform to the constitutional requirement of uniformity as to the class upon which it operates.” That opinion further recited that the cigarette use tax was levied upon the privilege of using cigarettes in this State, a privilege which the State could control or abolish, and I believe that fact, as well as the complementary nature of the act, persuaded the court to sustain the constitutionality of the enactment. Section i of the revenue article requires that a privilege tax must be “uniform as to the class upon which it operates.” (Const., art. IX, sec. i.) The provisions of section 2 of article IX have never been thought to eliminate this requirement. In Ohio Oil Co. v. Wright, 386 Ill. 206, 220, we stated: “We have held that these two provisions do not prevent the legislature from placing a tax on some other business or occupation than that specifically enumerated in section 1. (Winter v. Barrett, 352 Ill. 441; Bachrach v. Nelson, 349 Ill. 579; Bessette v. People, 193 Ill. 334.) However, such tax must be uniform as to the class upon which it operates, as is expressly provided by the constitution. A tax upon the occupation of producing oil is just as logical and valid a classification as is the occupation of engaging in the retail sale of tangible personal property for use or consumption, but like that tax it must operate uniformly upon a class. The designation of the persons composing a class may not be arbitrary or capricious, and uniformity may be violated by including those in fact not within the class, (Banghart v. Walsh, 339 Ill. 132; Wedesweiler v. Brundage, 297 Ill. 228; Scully v. Hallihan, 365 Ill. 185; Svithiod Singing Club v. McKibbin, 381 Ill. 194,) as well as by excluding those properly within it. Lippman v. People, 175 Ill. 101; Winter v. Barrett, 352 Ill. 441; City of Chicago v. Ames, 365 Ill. 529.” But the court has now announced that the legislature may disregard uniformity and all other constitutional limitations provided the tax has the purpose of protecting another tax. The scope of this newly declared legislative taxing power is far beyond the constitutional proscriptions heretofore recognized. The court announced a further dangerous doctrine in sloughing off plaintiff’s objection to the subclassification of the sale of personal property in connection with sales of real estate or building contracts. It stated that “If there is vice in the provision as it appears in the Retailers’ Occupation Tax Act, the attack should be directed at that act, and not at the statute designed to complement it.” Thus, a taxpayer is denied the right to constitutionally attack a void requirement of a complementary act, when the principal statute contains a similar invalid provision. This is, to the best of my knowledge, the first pronouncement by this court of this novel legal principle, which I regard as violative of the constitutional rights of the plaintiff. While sustaining the use tax because of its complementary character, the court permits that tax to actually raise the base of the retailers’ tax. The retailers’ tax base is on “gross receipts” which excludes credit given for property taken in trade. The use-tax base is the selling price which disregards the value of such “trade-ins.” Under the court’s interpretation, the use tax increases the tax on all “trade-in” transactions, while not affecting the retailers’ tax on “non-trade-in” transactions. This result obtains since the retailer is excused from remitting the use tax that he collects only to the extent that he remits the retailers’ tax with respect to the same transaction. Thus, retailers will be required to pay a tax based on the full value of the article sold, without excluding therefrom the value of any merchandise “traded in.” The court ignores the fact that, with respect to the tax increase on these transactions, the tax is not complementary but is entirely new. The effect of the court’s decision seems to be that once a tax is enacted for the general purpose of protecting a prior tax the subsequent tax (i) need not meet constitutional limitations, (2) cannot be constitutionally attacked if it complements similar provisions of the prior act, and (3) can go further than protection and create an entirely new tax. While the purpose of the use tax may be desirable, it can be justified only as a tax on a privilege; and it must therefore be uniform as to the class on which it operates. I am convinced that the classifications and exemptions of the Use Tax Act do not comply with the requirement of uniformity (City of Chicago v. Willett Co. 1 Ill.2d 311; Johnson v. Halpin, 413 Ill. 257; Winter v. Barrett, 352 Ill. 441;) and that it must stand or fall on its own merits. People ex rel. Schoon v. Carpentier, 2 Ill.2d 468. I am mindful of the limitations of our revenue article, and the ever increasing monetary needs of government, but the exigencies of the situation offer no reason for this court to approve this legislation. While, with some misgivings, I concede that this is a tax upon a privilege within the meaning of the revenue article, I must dissent from the doctrine that a complementary or protective tax is exempt from the provisions of our basic charter. The court’s decision has effectively removed many of the basic constitutional limitations on the taxing power. If this is to be done, it should be by a well considered constitutional amendment and not by fiat of this court.