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Washington Supreme Court - Taxpayers' Briefing |
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The following are verbatim excerpts from appellate briefs filed in the Supreme Court of Washington. The lawsuit was brought by property owners. The main entities sued were two local Washington State governments. The crux of the case was that these governments were imposing taxes without the necessary statutory authority. The primary legal claim was that a different kind of tax was authorized by the two statutes. In ruling against the property owners, the court failed to even address that legal argument in its opinion: http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=wa&vol=2005_sc/760365MAJ&invol=4 What the court instead did is fabricate specious arguments, and attribute those to the property owners. That gave the court strawman arguments it could knock down, allowing the two governments to keep tax proceeds they never should have collected. Several months after this opinion came out, Justices Owens, Alexander and Chambers received millions of dollars for their reelection campaigns. Much of that came from a handful of entities that benefit financially when local governments' taxing authority is upheld against lawsuits brought by citizens. The "votingforjudges.org" website has a breakdown of the 2006 Supreme Court campaigns showing how the big money came in to these three. The citation to the opinion in the case is: Sheehan v. Central Puget Sound Regional Transit Authority, 155 Wn.2d 790, 123 P.3d 88 (2005)
--------------- BRIEF OF APPELLANTS (FIRST PART)
The taxing authority grant CPSRTA relies on was enacted as Laws 1990 ch 43 sec 42 (CP 229), and codified as (former) RCW 81.104.160(1). App. Ex. A-1. The grant SPMA relies on was enacted as Laws 2002 ch 248 sec 9, and codified as RCW 35.95A.080(1). App. Ex. A-1. Neither statutory grant is self-executing. Both authorize certain junior taxing districts to implement, by ordinance and with voter approval, "excise" taxes. CPSRTA implemented its tax over the course of several months in 1996 and 1997. CPSRTA’s board adopted the implementing ordinance, called Resolution 75, in August, 1996. That ordinance went on the November, 1996 ballot, and the voters in the CPSRTA district approved it. CP 151. CPSRTA then contracted with DOL. In that contract, DOL agreed to require payment of the CPSRTA tax as a vehicle licensing condition. CP 154. DOL is the State agency responsible for issuing vehicle licenses. In exchange for fees it deducts from the tax payments, DOL began in April, 1997 to require payment of the CPSRTA tax from vehicle license applicants. CP 151. SPMA implemented its tax by the same procedures. SPMA’s implementing ordinance appeared on the November 2002 ballot as Citizens’ Petition No. 1. The voters in the SPMA district approved it. CP 148. SPMA then contracted with DOL (that contract is CP 278 – 292). Under its contract with SPMA, DOL began in June, 2003 to require that all Seattle residents who register with the State to relicense their vehicles pay the SPMA tax. CP 148, CP 155.
When reviewing orders entered pursuant to CR 56, an appellate Court engages in the same inquiry as the trial court, and will affirm summary judgment if there is no genuine issue of any material fact and the moving party is entitled to judgment as a matter of law. Wilson Court Ltd. Partnership v. Tony Maroni’s, Inc., 134 Wn.2d 692, 698, 952 P.2d 590 (1998); CR 56(c). Whether local government taxes are constitutional and legal under statutes involves questions of law that are reviewed de novo. Okeson v. City of Seattle, 150 Wn.2d 540, 548-549, 78 P.3d 1279 (2003). B. The True Character of These Taxes 1. The Taxes’ Incidents CPSRTA and SPMA call their taxes motor vehicle excise taxes and MVET’s. What a tax is called is not determinative of its character. "The character of a tax is determined by its incidents, not by its name." Harbour Village Apartments v. City of Mukilteo, 139 Wn.2d 604, 607, 989 P.2d 542 (1999). The incidents of a tax are "who is being taxed, what is being taxed, and how the tax is measured." P. Lorillard Co. v. Seattle, 83 Wn.2d 586, 589, 521 P.2d 208 (1974). The incidents of the CPSRTA and SPMA taxes are: --Who is taxed? The "owner of every motor vehicle" who resides in the two authority areas and registers with the State for a vehicle license is taxed. CP 154, CP 155. --What is taxed? The taxes are imposed "on motor vehicles in the [two taxing districts] that are registered." CP 148, CP 152. --How are the taxes measured? The tax amounts are a percentage of the vehicle manufacturer’s suggested retail price, times a value depreciation factor based on the model year. CP 148, CP 151. 2. These Are Not Statutorily Authorized Vehicle License Taxes All three governments contend, incorrectly, that these taxes are statutorily authorized vehicle licensing conditions. Citing to five statutes, CPSRTA and SPMA assert: "Payment of both the registration fee and the Vehicle Taxes are conditions precedent to the issuance of a valid vehicle license." CP 134, line 14. The State of Washington also claims that statutes require payment of these two taxes in exchange for a vehicle license. DOL Administrator McCurley states that the CPSRTA tax is "one of the fees and taxes imposed by statute" for vehicle licensure. CP 154. That affidavit also states the SPMA tax is "one of the fees and taxes imposed by statute" on vehicle owners in Seattle who apply for license tabs.1 CP 155. The CPSRTA and SPMA taxes are only "masquerading as an excise."2 No statute requires that vehicle license applicants pay either of them to obtain a State vehicle license. DOL has full vehicle licensing authority whether or not they are paid. The contracts DOL signed with CPSRTA and SPMA provide that if an applicant protests aggressively DOL can waive payment but still issue a valid vehicle license: "In compliance with state law, DOL’s SPMA MVET procedures shall require collection of the [SPMA] tax when the registered owner’s residence address is in the Authority Area. Tax overrides shall be allowed: . . . (iv) when the registered owner disputes that the SPMA MVET is due, the dispute cannot be resolved within available means and the registered owner is verbally abusive, hostile, aggressive, and/or is otherwise threatening to DOL or its agent or subagent staff. DOL staff, agents, and subagents shall enter the override reason when SPMA MVET is overridden." CP 288. Statutorily authorized vehicle licensure conditions like the $30 license fee (RCW 46.16.0621) can not be waived by DOL subagent staff if they are faced with an applicant who protests aggressively. That registration fee, and any excise tax the Legislature establishes as a condition of vehicle license issuance, "must" be collected. RCW 46.16.210(2).3 The CPSRTA and SPMA taxes are collected by DOL when it issues license tabs, but paying those taxes is not a legal condition precedent to vehicle licensure. The taxes are only collected because the terms of the contracts between DOL and CPSRTA and SPMA require those collections. C. These Taxes Are Unconstitutional Because The Grants Do Not Authorize Imposing Vehicle License Taxes 1. The Legislature Did Not Expressly Authorize Taxing Vehicle Owners Because They Apply For A Vehicle License CPSRTA and SPMA are taxing the act of registering a vehicle with the State. The affidavit from CPSRTA states: "The Sound Transit MVET is assessed solely on motor vehicles . . . that are registered for use with DOL. . . . Vehicles not registered for use are not taxed." CP 152. The SPMA affiant states: "The [SPMA tax] is only assessed on motor vehicles in the City of Seattle that are registered for use . . .. Vehicles not registered for use are not taxed." CP 148, 149. The tax grants do not authorize taxing the act of registering a vehicle. Local taxing districts must have express authority, either constitutional or legislative, to levy taxes. Arborwood Idaho, L.L.C. v. City of Kennewick, 151 Wn.2d 359, 366, 89 P.3d 217 (2004). CPSRTA and SPMA rely on (former) RCW 81.104.160(1) and RCW 35.95A.080(1), respectively, for their taxing authority. The terms the Legislature used in those statutes do not justify vehicle licensure precondition taxes of the type being imposed: :The court’s fundamental objective in construing a statute is to ascertain and carry out the legislature’s intent. If the statute’s meaning is plain on its face, then the court must give effect to that plain meaning as an expression of legislative intent. A tax statute must be construed as a whole to ascertain the intent of the legislature." (Internal citations omitted). Arborwood Idaho, supra. at 367.
The tax grant statutes do not expressly state registering with DOL for a vehicle license is the taxing event. Moreover, no statute states that taxes implemented under those grants must be paid in exchange for the State vehicle license. CPSRTA and SPMA are imposing taxes whose incidents exceed what the statutes expressly authorize, so those taxes are unconstitutional under Wash. Const. art. VII, sec. 5.4 See Harbour Village Apartments v. City of Mukilteo, 139 Wn.2d 604, 989 P.2d 542 (1999) at 608 (" because it is a nonstatutorily authorized tax on property, it is also in excess of the statutory, and hence, constitutional taxing authority of the municipality"). CPSRTA and SPMA argue they have "implied" (CP 308, line 24) and "implicit" (CP 373, line 3) statutory authority for their taxes. These arguments are directly contrary to a fundamental principle: "If there is any doubt about a legislative grant of taxing authority to a municipality, it must be denied. (Citation omitted)." Okeson v. City of Seattle, supra. 150 Wn.2d at 558. 2. The References To Motor Vehicles In The Statutes Do Not Comprise Express Authority To Tax The Issuance of Vehicle Licenses The two grants mention motor vehicles, but those references are not express statutory authority to impose vehicle license taxes. For example, both grants refer to percentages of vehicle value as tax caps, and that the valuation schedule in RCW Ch. 82.44 is to be used to calculate those tax caps. The phrase "for the privilege of using a motor vehicle" in SPMA’s grant does not authorize a vehicle license tax. A comparable phrase in a tax grant referring to the privilege of doing business (in Laws 1933 ch 191 sec 2) was held to authorize an excise tax that "is in no sense a license tax." Rainier Nat. Park Co. v. Henneford, 182 Wash. 159, 161, 45 P.2d 617 (1935). CPSRTA’s grant does not refer to the privilege of using vehicles. The tax collection procedure statutes referring to these grants are administrative only; neither supplies any extra express taxing authority. RCW 81.104.190 authorizes interagency contracts for the collection and administration of three taxes enacted in Laws 1990 ch 43.5 It provides no additional tax authority that expands the taxing authority of the three statutes to which it refers. RCW 35.95A.130 provides that DOL is responsible for collecting taxes implemented under the "special excise tax" grant SPMA is relying on at the time of "relicensing" (not at the initial licensing).6 It does not expand the taxing authority the Legislature provided in the three statutes to which it refers. 3. The Legislature Did Not Intend Taxes Implemented Under These Grants Would Be Imposed As Vehicle License Taxes The Legislature intended the grants at issue would not authorize vehicle license taxes, because it specified other taxes in the same enacting statutes would be vehicle license taxes. The grants at issue were enacted in transportation system statutes. Three other tax grant sections in the two enacting statutes specifically authorize local taxes that are triggered by the act of registering a motor vehicle. Those other three grants are: --the $15 county vehicle licensing fee, enacted as Laws 1990 ch 42 sec 206, imposed on "each vehicle that is subject to license fees under RCW 46.16.060 and is determined by [DOL] to be registered within the boundaries of the county" (CP 206); --the 15% county vehicle licensing surcharge, enacted as Laws 1990 ch 43 sec 17, imposed "on the [State licensing tax] on vehicles registered to a person residing within the county" (CP 222); and --the $100 city transportation authority vehicle relicensing fee, enacted as Laws 2002 ch 248 sec 10, imposed on "each vehicle that is subject to relicensing tab fees under RCW 46.16.0621 . . . and that is determined by the department of licensing to be registered within the boundaries of the authority area." RCW 35.95A.090. "A tax statute must be construed as a whole to ascertain the intent of the legislature." Arborwood Idaho, supra. at 367. No terms like those quoted above are in the statutory grants CPSRTA and SPMA rely on. The omission of such terms (stating that the tax is to be triggered by registering with DOL for license tabs) demonstrates contrary legislative intent as to the grants at issue: "Where a statute specifically designates the things to which it refers, there is an inference that all omissions were intended by the legislature . . .. (Citations omitted)." State v. Roadhs, 71 Wn.2d 705, 707, 430 P.2d 586 (1967). 4. CPSRTA And SPMA Designed Their Taxes Using the Wrong Template In the first paragraph of Respondents’ Answer to Statement of Grounds for Direct Review, they acknowledge they modeled their taxes on the former State vehicle license tax. Between 1937 and 2000 the State imposed an annual tax on vehicle license applicants (the "State MVET"). It was enacted as Laws 1937 ch 228 (CP 294-297), and repealed by Laws 2000 1st sp s ch 1 sec 2. If the Legislature had intended for CPSRTA and SPMA to impose a tax with the same incidents as the State vehicle license tax, it would have used language in their tax grants like it used in the State MVET statute. The State MVET statute specifically calls for an annual vehicle license tax. Laws 1937 ch 228 sec 2 provides for "annual" impositions of that tax. CP 295. The word "annual" is not in either of the grants at issue. Laws 1937 ch 228 sec 5 states the State MVET is triggered by the act of applying for a vehicle license, and that no vehicle license shall be issued unless it is paid: Whenever an application is made to the department or its agents for a license for a motor vehicle there shall be collected . . . the amount of the excise tax imposed by this chapter . . . and no license . . . for a motor vehicle shall be issued unless such tax is paid in full. [Laws 1937 ch 228 sec 5, codified as RCW 82.44.060]. CP 296. The grants CPSRTA and SPMA rely on ((former) RCW 81.104.160(1) and RCW 35.95A.080(1)) do not contain any comparable terms linking payment of those taxes to issuance of the State vehicle license. 5. Hansen Does Not Validate These Taxes CPSRTA and SPMA rely heavily on State ex rel. Hansen v. Salter, 190 Wash. 703, 70 P.2d 1056 (1937). In Hansen, the Thurston County commissioners challenged the State MVET on several grounds, including a claim that it was a property tax. The Court held the State MVET had a different "character" than the county property tax it supplanted. Hansen, supra. at 706. The reason the State MVET had a different character than a property tax is because the Legislature expressly established it as a licensing precondition tax. See, Laws 1937 ch 228 sec 5 (CP 296), quoted above. The tax grants CPSRTA and SPMA rely on contain no such provisions expressly authorizing a vehicle license tax. Hansen’s holding regarding what kind of character the State MVET had could not validate taxes imposed under the grants at issue here, which do not authorize license taxes. ----------footnotes-------- 1 The tabs show DOL has issued the annual State vehicle license. 2 Power Inc. v. Huntley, 39 Wn.2d 191, 196, 235 P.2d 173 (1951). 3 RCW 46.16.210(2) states that vehicle license applications "must be accompanied by the payment of such license fees and excise tax as may be required by law." 4 Article VII, section 5 of the Constitution states: "No tax shall be levied except in pursuance of law; and every law imposing a tax shall state distinctly the object of the same to which only it shall be applied." 5 It provides that "regional transit systems may contract with . . . appropriate entities for administration and collection of any tax authorized by RCW 81.104.150 [a per-employee employer tax], 81.104.160 [the operative excise tax grant], and 81.104.170 [a sales and use tax]." 6 It states the "special excise tax imposed under RCW 35.95A.080(1) will be collected at the same time and in the same manner as relicensing tab fees under RCW 46.16.0621 and 35.95A.090."
BRIEF OF APPELLANTS (SECOND PART) D. These Taxes Are Unconstitutional Because They Are Not Valid Excise Taxes 1. Excise Tax Has A Plain Meaning A second reason these taxes exceed what the statutory grants authorize is they are not valid excise taxes. (Former) RCW 81.104.160(1) authorizes an "excise tax," and RCW 35.95A.080(1) authorizes a "special excise tax." Two very similar excise tax grants to local taxing districts (albeit without the voter-approval requirement) are RCW 35.21.768 and RCW 36.58.140. App. Ex. A-1. Those two statutes are analyzed and applied in cases. A local tax implemented under RCW 35.21.768 is deemed unconstitutional in Arborwood Idaho, L.L.C. v. City of Kennewick, 151 Wn.2d 359, 89 P.3d 217 (2004), and an excise tax imposed under RCW 36.58.140 is upheld in Whatcom County v. Taxpayers, 66 Wn. App. 284, 831 P.2d 1140 (1992). An excise tax is defined by the kind of taxing event that triggers it: "Our cases establish that an assessment is a valid excise tax if (1) the obligation to pay an excise tax is based upon the voluntary action of the person taxed in performing the act, enjoying the privilege, or engaging in the occupation which is the subject of the excise tax, and (2) the element of absolute and unavoidable demand is lacking." Arborwood Idaho, L.L.C. v. City of Kennewick, supra, at 367. The CPSRTA and SPMA taxes are not valid excise taxes because they are not measured or triggered by a proper taxing event, and registering a vehicle with DOL is not a "voluntary action of the person taxed." Id. 2. These Taxes Are Not Measured Or Triggered Like Excise Taxes No proper taxing event comparable to transferring trash7 or purchasing commercial food fish8 either triggers liability for these taxes or determines their amounts. Justifying taxing events are: --The State’s sales tax is triggered by [b]purchases[/b]. The tax amount is a function of the purchase price, and the taxpayer can adjust the tax amount by choosing different purchases. Morrow v. Henneford.9 --The State’s leasehold sales tax is triggered when the taxpayer [b]transfers a leasehold[/b]. The amount of the tax is function of the price the taxpayer chooses to accept in that voluntary transaction. Black v. State.10 --The State’s Business and Occupations tax is triggered on [b]receipt of business revenue[/b]. Its amount varies depending on how the taxpayer has structured the revenue stream of the business. Clifford v. State.11 --The commercial food fish tax is triggered on the [b]transfer of fish[/b]. The tax amount depends on the price the purchaser agreed to pay for the fish. High Tide Seafoods.12 --The wine distribution sales tax is triggered when a wine distributor [b]sells wine[/b] to wholesalers. The tax is measured as a function of voluntary sales contract prices. Cosro, Inc. v. Liquor Control Bd.13 --A solid waste haulage tax is triggered upon the [b]transfer of trash[/b] from the taxpayer to a waste hauler. The amount of the tax is a function of the contract price. Whatcom County v. Taxpayers.14 --The State’s tax on the [b]use and occupancy of a leasehold[/b] between a public port and a private lessee is triggered when the public port fails to collect that tax from its private lessee (in the event the tax is not paid directly by the lessee). The tax amount is determined by the agreed-upon lease price. Wash. Pub. Ports Ass’n.15 The amounts of each of those seven validated excise taxes are measured by the size of some transaction in which property is transferred. The CPSRTA and SPMA taxes are imposed annually, and measured as a percentage of assessed property value. In contrast, excise taxes are measured by the magnitude of taxing events whose size the taxpayer controls: "The distinction between a property tax and an excise tax is set forth in detail in Black v. State, supra. As we said there, if a tax is imposed directly by the legislature without assessment, and its sum is measured by the amount of business done or the extent to which the conferred privileges have been enjoyed or exercised by the taxpayer, irrespective of the nature or value of the taxpayer's assets, it is regarded as an excise." Clifford v. State, supra; 78 Wn.2d at 8. The reason the CPSRTA and SPMA taxes are measured like property taxes and license taxes,16 but not like excise taxes, is that they were "modeled" on a license tax (the State MVET). Respondents’ Answer to Statement of Grounds for Direct Review, page 1. The CPSRTA and SPMA taxes are measured completely differently than valid excise taxes. Their sums are not "measured by the amount of business done or the extent to which the conferred privileges have been enjoyed or exercised by the taxpayer." Clifford v. State, supra, at 8. The tax amounts that come due do not depend on how much the taxpayer is "enjoying the privilege" of using a vehicle. Arborwood Idaho, supra, at 367. Moreover, the tax due is not a function of how much of some service the taxpayer obtained from CPSRTA or SPMA. See Covell v. City of Seattle, 127 Wn.2d 874, 890, 905 P.2d 324 (1995). The CPSRTA and SPMA taxes come due annually, because the State vehicle license expires after twelve months. No valid excise tax is triggered on a regular periodic schedule due to the operation of a statute. Valid excise taxes instead are triggered by taxing events whose magnitude and timing the taxpayer controls, such as those highlighted above. 3. These Are Not Voluntary Excise Taxes All seven of the proper taxing events highlighted above are voluntary undertakings. Applying to DOL to obtain a RCW Title 46 State vehicle license is not voluntary like those taxing events. A vehicle owner can not let license tabs expire or it becomes illegal to drive the vehicle. RCW 46.16.010. Because DOL is treating these taxes as vehicle licensure preconditions, vehicle owners are forced to pay them or they lose the ability to use their vehicles. CPSRTA and SPMA argue their taxes are voluntary because they are "easily avoided by simply not [registering with DOL for next year’s tabs]." CP 311, line 16. The existence of a way to avoid a tax does not validate a tax as a voluntary excise tax. Four cases in this area establish that a tax is not a constitutionally-valid excise tax if avoiding it requires relinquishing the beneficial use of property. In Covell v. City of Seattle, supra, Seattle’s tax grant was enacted as a section of the same 1990 statute as was CPSRTA’s tax grant. CP 207. The illegal periodic tax Seattle began imposing under its grant is strikingly similar to the taxes CPSRTA and SPMA are imposing. The tax subjects are basically the same: property owners are taxed for the availability of public roads. All three taxes are periodic class-wide levies, whose amounts are not measured based on the size of any transaction. Seattle claimed it was imposing a voluntary excise tax because there was a way to avoid its tax (residing outside the city limits). The Court addressed this argument, and rejected it. Covell v. City of Seattle, supra, 127 Wn.2d at 890. Seattle’s purported excise tax was held to be "absolute and unavoidable" even though it could have been avoided by property owners relinquishing one of the beneficial uses of their properties. Id. Arborwood Idaho, supra, at 367, defines valid excise taxes as being "voluntary," and as being "not absolute and unavoidable." The illegal tax at issue in that case could have been avoided. If the property owners gave up Kennewick’s sewer/water service they would not have been subject to the tax. Even though that taxing district levy was avoidable, it was not a voluntary excise tax. Two additional opinions show that if avoiding a tax requires relinquishing the beneficial use of property it is not a valid excise tax. In Harbour Village Apartments, supra, the unconstitutional class-wide periodic tax could have been avoided if the owners ceased renting their units and did not offer them for future rent. In Okeson, supra, the illegal class-wide periodic tax could have been avoided if the owners had chosen to use their properties without City Light service. These four opinions demonstrate that even though the CPSRTA and SPMA taxes can be avoided (by a vehicle owner relinquishing the availability of the vehicle for driving on Washington’s roads) those taxes are not "voluntary" as that term is used in the cases. 4. Valid Excise Taxes Could Have Been Implemented The tax grant statutes here are the same kind of excise tax grants that are at issue in both Arborwood Idaho, supra, and Whatcom County v. Taxpayers, supra. All four grants authorize local taxing districts to implement by ordinance an excise tax (and none of the grants authorizes a license tax). App. Ex. A–1. RCW 36.58.140 (the grant at issue in Whatcom County v. Taxpayers, supra) even contains "privilege" terms similar to the "privilege" phrase in SPMA’s grant. The Whatcom County v. Taxpayers, supra opinion describes a constitutional local excise tax. The implementing ordinance adopted by the Whatcom County Council calls for a ten per-cent contract price surcharge. That is a valid excise tax because it is triggered by, and measured as a function of, a discretionary taxpayer act (transferring solid waste). The taxing event is voluntary (one can avoid the tax by hauling one’s own trash), and the tax amount can be modified by the taxpayer adjusting behavior (one can pay for less hauling services). These characteristics are shared by all seven of the validated excise taxes referenced above. In contrast, the annual CPSRTA and SPMA taxes can not be reduced by taxpayers behaving differently. In Arborwood Idaho, the tax Kennewick imposed under its excise tax grant was struck down because it differed materially from valid excise taxes; it was a class-wide periodic levy that was not triggered or measured by a justifying taxing event. The CPSRTA and SPMA taxes differ from valid excise taxes in those same ways. An example of an excise tax that would have been legal in all respects under both (former) RCW 81.104.160(1) and RCW 35.95A.080(1) is an odometer-based tax that DOL would collect. If the tax amounts were a function of miles driven, vehicle owners could lower their taxes by driving less. The voters should have been presented with ordinances calling for taxes that would be triggered and measured by that type of voluntary taxing event. E. These Taxes Are Unconstitutional Because The Tax Caps Were Not Applied Narrowly Enough The third reason the CPSRTA and SPMA taxes unconstitutionally exceed the taxing authority the grants confer is because neither is capped narrowly enough. In both grants the taxing authority is capped at specified percentages of vehicle value. The taxes being imposed are annual levies. Because the word "annual" is not in the grants, these taxes exceed what the statutes authorize. Tax caps must be construed and applied in favor of taxpayers. Okeson, supra, and Department of Revenue v. Hoppe, 82 Wn.2d 549, 512 P.2d 1094 (1973). Applying the statutory capping percentages as per-vehicle limits, instead of as annual value-tax percentages, would have been considerably more favorable. *** G. These Taxes Violate Three Statutes 1. RCW 46.08.010 Preempts These Taxes These taxes function as vehicle license conditions due to the operation of the interagency contracts DOL signed with CPSRTA and SPMA. Under those contracts, DOL requires these taxes be paid as "conditions precedent to the issuance of a valid vehicle license." CP 134, line 14. The CPSRTA and SPMA taxes are preempted by RCW 46.08.010 because they are imposed as vehicle license conditions. That statute provides in part: "RCW 46.08.010. State preempts licensing field. The provisions of this title relating to the . . . vehicle license . . . shall be exclusive . . . ." Among the "provisions" of Title 46 "relating to the vehicle license" are the conditions of vehicle license issuance. Conditions on the issuance of a vehicle license are enumerated in RCW 46.16.210. The preemption in favor of the State of the field of vehicle licensing that RCW 46.08.010 provides includes vehicle license condition taxes. RCW 46.16.210. The CPSRTA and SPMA taxes operate as vehicle licensure conditions, so they violate this statutory boundary. Vinup v. Seattle, 11 Wn.2d 630, 634, 120 P.2d 464 (1941) presents an analogous situation. In Vinup, a municipal excise tax on gas stations was struck down as illegal under a statute that preempted for the State taxation of that subject. The Legislature intended that taxes implemented under the operative grants would not be exceptions to this statutory preemption. CPSRTA’s tax grant was enacted in Laws 1990 ch 43 sec 42. A different grant in that enacting statute (section 206, codified as RCW 82.80.020 (see CP 206)) provides for a $15 county vehicle licensing fee. The Legislature amended the preemption statute (RCW 46.08.010) by specifically referring to that new county licensing tax. CP 206, 207. A second tax grant section in CPSRTA’s enacting statute (providing for a 15% county vehicle licensing surcharge (section 17, codified as RCW 81.100.060)) was excepted from the RCW 46.08.010 preemption by the terms the Legislature used in that grant (liability for that surcharge is triggered by the act of registering a vehicle with DOL). CP 222. The Legislature did not similarly specify that CPSRTA’s excise tax grant was to be excepted from RCW 46.08.010’s preemption. SPMA’s tax authority grant was enacted as Laws 2002 ch 248 sec 9. A different tax grant section in that statute authorizes a $100 city transportation authority vehicle relicensing fee (it was codified as RCW 35.95A.090). That annual relicensing fee was excepted from the preemption RCW 46.08.010 affords because that grant specifies the act of registering a vehicle for relicense tabs is the triggering event. No such exception was provided as to SPMA’s grant. By excepting these three vehicle license taxes from the statutory preemption RCW 46.08.010 provides, the Legislature evidenced its intent that the other taxes it was enacting in the two enacting statutes were not to be such exceptions. Expressio unius est exclusio alterius.17 Applying this maxim precludes the claims by CPSRTA and SPMA that they obtained implied or implicit authority to impose vehicle license condition taxes under the grants they rely on. 2. Motor Vehicles Are Exempt From Property Taxes Like These The CPSRTA and SPMA taxes are imposed on property owners. Contrary to the claims of the three governments in this lawsuit, neither tax serves any statutorily authorized licensing function. Accordingly, the character of these taxes can not be distinguished from that of the ad valorem county property tax discussed in Hansen, supra. Liability for these taxes is not triggered or measured by justifying taxing events of the type that cause all validated excise taxes to come due. Payments are required periodically, and relinquishing the availability of use of a vehicle is the only way to avoid them. Such taxes best fit the definition of an unavoidable property tax, so they are property taxes. Covell v. City of Seattle, supra; 127 Wn.2d at 890. The periodic levies with characteristics such as these that Mukilteo imposed also were deemed to be property taxes. Harbour Village Apartments v. City of Mukilteo, supra, at 607-8. The property tax label fits the CPSRTA and SPMA taxes even better than it does the taxes in Covell and Harbor Village Apartments because the taxes at issue here are measured as a percentage of assessed property value. Two statutes prohibit taxes with incidents like these. Motor vehicles are exempt from ad valorem (value-based) property taxes under RCW 82.44.130. Also, motor vehicles are exempt from property taxes under RCW 84.36.595(2). These two tax exemption statutes must be construed against Appellants,18 but even with narrow constructions each prohibits the kind of taxes CPSRTA and SPMA are imposing.
------------footnotes-------------
7. Whatcom County v. Taxpayers, 66 Wn. App. 284, 831 P.2d 1140 (1992). 8. High Tide Seafoods v. State, 106 Wn.2d 695, 725 P.2d 411 (1986), appeal dismissed, 479 U.S. 1073 (1987). 9. Morrow v. Henneford, 182 Wash. 625, 47 P.2d 1016 (1935). 10. Black v. State, 67 Wn.2d 97, 406 P.2d 761 (1965). 11. Clifford v. State, 78 Wn.2d 4, 469 P.2d 549 (1970). 12. High Tide Seafoods v. State, supra. 13. Cosro, Inc. v. Liquor Control Bd., 107 Wn.2d 754, 761, 733 P.2d 539 (1987). 14. Whatcom County v. Taxpayers, 66 Wn. App. 284, 831 P.2d 1140 (1992). 15. Wash. Pub. Ports Ass’n v. Dep’t of Revenue, 148 Wn.2d 637, 62 P.3d 462 (2003). 16. Like the State MVET, the annual watercraft registration tax is a license tax that is measured as a percentage of property value. See RCW 82.49.010(1). 17. State v. Sommerville, 111 Wn.2d 524, 535, 760 P.2d 932 (1988). 18. Simpson Inv. Co. v. Dep’t of Revenue; 141 Wn.2d at 149-50.
EXHIBIT A-1
Sound Transit’s Tax Grant (Former) RCW 81.104.160(1) Cities that operate transit systems, county transportation authorities, metropolitan municipal corporations, public transportation benefit areas, and regional transit authorities may submit an authorizing proposition to the voters, and if approved, may levy and collect an excise tax, at a rate approved by the voters, but not exceeding eighty one-hundredths of one percent on the value, under chapter 82.44 RCW, of every motor vehicle owned by a resident of the taxing district, solely for the purpose of providing high capacity transportation service. In any county imposing a motor vehicle excise tax surcharge pursuant to RCW 81.100.060, the maximum tax rate under this section shall be reduced to a rate equal to eighty one-hundredths of one percent on the value less the equivalent motor vehicle excise tax rate of the surcharge imposed pursuant to RCW 81.100.060. This rate shall not apply to vehicles licensed under RCW 46.16.070 except vehicles with an unladen weight of six thousand pounds or less, RCW 46.16.079, 46.16.080, 46.16.085, or 46.16.090. (Former) RCW 81.104.160(1) (Laws 1992 ch. 194 sec. 13; 1992 ch. 101 sec. 27; 1991 ch. 318 sec. 12; 1990 ch. 43 sec. 42).
Seattle Monorail Authority’s Tax Grant RCW 35.95A.080(1) Every authority has the power to levy and collect a special excise tax not exceeding two and one-half percent on the value of every motor vehicle owned by a resident of the authority area for the privilege of using a motor vehicle. Before utilization of any excise tax money collected under this section for acquisition of right of way or construction of a public monorail transportation facility on a separate right of way, the authority must adopt rules affording the public an opportunity for corridor public hearings and design public hearings, which provide in detail the procedures necessary for public participation in the following instances: (a) Prior to adoption of location and design plans having a substantial social, economic, or environmental effect upon the locality upon which they are to be constructed; or (b) on the public transportation facilities operating on a separate right of way whenever a substantial change is proposed relating to location or design in the adopted plan. In adopting rules the authority must adhere to the provisions of the administrative procedure act. RCW 35.95A.080(1) (Laws 2002 ch 248 sec 9).
Tax Grant at Issue in Whatcom County v. Taxpayers, 66 Wn. App. 284, 831 P.2d 1140 (1992). RCW 36.58.140 A solid waste disposal district may levy and collect an excise tax on the privilege of living in or operating a business in a solid waste disposal taxing district sufficient to fund its solid waste disposal activities: PROVIDED, That any property which is producing commercial garbage shall be exempt if the owner is providing regular collection and disposal. The excise tax shall be billed and collected at times and in the manner fixed and determined by the solid waste disposal district. Penalties for failure to pay the tax on time may be provided for. A solid waste disposal district shall have a lien for delinquent taxes and penalties, plus an interest rate equal to the interest rate for delinquent property taxes. The lien shall be attached to each parcel of property in the district that is occupied by the person so taxed and shall be superior to all other liens and encumbrances except liens for property taxes. The solid waste disposal district shall periodically certify the delinquencies to the county treasurer at which time the lien shall be attached. The lien shall be foreclosed in the same manner as the foreclosure of real property taxes. RCW 36.58.140 (Laws 1982 ch 175 sec 5).
Tax Grant at Issue in Arborwood Idaho, L.L.C. v. City of Kennewick, 151 Wn.2d 359, 89 P.3d 217 (2004). RCW 35.21.768 The legislative authority of any city or town is authorized to adopt ordinances for the levy and collection of excise taxes and/or for the imposition of an additional tax for the act or privilege of engaging in the ambulance business. Such business and occupation tax shall be imposed in such amounts as fixed and determined by the legislative authority. The excise taxes other than the business and occupation tax authorized by this section shall be levied and collected from all persons, businesses, and industries who are served and billed for said ambulance service owned and operated or contracted for by the city or town in such amounts as shall be fixed and determined by the legislative authority of the city or town. All taxes authorized pursuant to this section shall be construed to be taxes other than a retail sales tax defined in chapter 82.08 RCW and a use tax defined in chapter 82.12 RCW, and the city or town shall appropriate and use the proceeds derived from all taxes authorized by this section only for the operation, maintenance and capital needs of its municipally owned, operated, leased or contracted for ambulance service. RCW 35.21.768 (Laws 1975 1st ex.s. ch 24 sec 2).
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REPLY BRIEF OF APPELLANTS The Tax Grants Do Not Authorize "Motor Vehicle Excise Taxes." Respondents repeat the phrase "motor vehicle excise taxes" throughout their Brief. They place it inside quotation marks three times on page 20. One of those instances is: "The Legislature’s intent also is evident from its decision to specifically authorize ‘motor vehicle excise taxes’. . .." The Legislature did not specifically authorize motor vehicle excise taxes. That noun phrase is not in SPMA’s enabling statutes (RCW Ch. 35.95A). Those four words are in the 1990 legislation in which the tax grant CPSRTA relies on was enacted, but they are not used to designate particular tax characteristics allowed under CPSRTA’s grant.1
The Taxing Event Is Vehicle Licensing, Not Vehicle Use. CPSRTA and SPMA state the taxing event of their taxes is "the decision to use a motor vehicle on the roadways of the state." Brief of Respondents, p. 22. A decision is not taxed, nor is road use. The act that is taxed is registering a motor vehicle for the State vehicle license. Vehicle licensing is the taxing event.
CPSRTA and SPMA Implemented the Wrong Kind of Tax. The tax granting language CPSRTA and SPMA rely on comes from (former) RCW 81.104.160(1) and RCW 35.95A.080(1). Implementing a tax under those two excise tax grants requires voter approval. When the proposed ordinances that would go on the ballots were being drafted, the State’s former vehicle licensing tax was used as the model. The tax incidents of the CPSRTA and SPMA taxes were designed to closely resemble those of that State tax. The implementing processes utilized by both CPSRTA and SPMA were flawed. The State’s vehicle licensing tax was an inappropriate template. A tax of a different type should have been employed as the model. The Legislature has named distinct types of taxes excise taxes. One type is comprised of the State’s own personal property licensing levies. In addition to the former motor vehicle licensing tax, two others are the watercraft registration levy (from RCW Ch. 82.49), and the former camper registration levy (from RCW Ch. 82.50). The State retains basically all its plenary authority over conditioning the use of its roads and waterways. It requires the annual registration of motor vehicles and watercraft for legal operation of those kinds of personal property. These three taxes are specified by statutes as annual charges that are measured by property value. Each must be paid in exchange for the future availability of public ways. RCW 82.49.030(1) provides: "The excise tax imposed under this chapter is due and payable to the department of licensing or its agents at the time of registration of a vessel. The department of licensing shall not issue or renew a registration for a vessel until the tax is paid in full." This statute establishes the legal nature of the RCW Ch. 82.49 levy as a licensing tax: paying it is a condition precedent to licensure by the State. The State tax CPSRTA and SPMA used as their model also is that type of licensing tax. A statute expressly establishes registering a motor vehicle as the taxing event, and payment of that tax is specified as a condition precedent to licensure. RCW 82.44.060 (enacted as Laws 1937 ch 228 sec 5 (CP 296)). A completely different type of tax than those three is the excise tax defined in Arborwood Idaho, L.L.C. v. City of Kennewick, 151 Wn.2d 359, 89 P.3d 217 (2004) at 367. Seven examples of this type of tax are validated in the cases identified in the Brief of Appellants, on pages 17-18. The taxing events triggering these are voluntary underlying transactions. This type of tax comes due in an amount that depends on the size of some undertaking the taxpayer actually engaged in. For example, using less utility service or selecting a lower-priced item to purchase at retail would result in a lower tax bill. Avoiding this type of tax does not result in property use becoming illegal in short order. These two types of taxes can be distinguished in material respects, so they have different legal natures and characters. P. Lorillard Co. v. Seattle, 83 Wn.2d 586, 521 P.2d 208 (1974). CPSRTA and SPMA claim their tax grants authorize a tax with characteristics like those of the State’s former vehicle licensing tax.2 If that interpretation of excise tax in the two grants is deemed reasonable, an ambiguity would exist because excise taxes of the type defined in the Arborwood Idaho case could have been implemented under both of those statutes.3 An ambiguity arises when a term is fairly susceptible to two or more reasonable interpretations. Budget Rent A Car Corp. v. Dep't of Licensing, 144 Wn.2d 889, 900, 31 P.3d 1174 (2001). Any ambiguity about which type of excise tax the Legislature intended to authorize must be strictly construed in the taxpayer’s favor. Budget Rent A Car Corp., supra. at 901; Arborwood Idaho, supra. at 367. Implementation of an excise tax of the type defined in the Arborwood Idaho case would have been considerably more favorable to vehicle owners. If the taxing event was driving a mile (for example), the tax amount could be reduced by driving the vehicle less. In addition, the capping language in the statutes would have been applied in a more favorable manner. The percentage figures specified would have been applied as aggregate per-vehicle tax payment limits. Affidavits from CPSRTA and SPMA explain that their revenue projections would be significantly lower if the capping percentages were applied as limits on how much tax an owner pays in total for a vehicle. CP 341, para. 5 and CP 339, para. 5. Such a voluntary tax also would be more favorable to vehicle owners because avoiding it would not result in driving becoming illegal.
Related Statutes Evidence an Excise Tax of the Type Defined in Arborwood Idaho Was Intended. CPSRTA and SPMA cite terms from related statutes. The plain meaning of statutory terms is to be ascertained from all that the Legislature has said in the statute, and related statutes, which disclose legislative intent about the provision in question. Rest. Dev., Inc. v. Canawill, Inc., 150 Wn.2d 674, 681, 80 P.3d 598 (2003). The related statutes Respondents cite provide that vehicles are to be valued by the RCW Ch. 82.44 assessment method, and that tax administrations and collections by DOL can occur at the time and in the manner that the $30 registration fee is collected. Brief of Respondents, pp. 10, 11, 21, and 31-33 (citing RCW 81.104.190, RCW 35.95A.130, and (former) RCW 81.104.160(1)). These statutory terms limit the frequency with which the taxes are to be collected, provide how the vehicle value percentages for the tax caps are to be determined, and establish that DOL may collect the taxes in the manner it collects the registration fee. The manner in which DOL collects the $30 registration fee includes credit cards over the internet and licensing sub-agent collections. Relevant statutory context demonstrates (former) RCW 81.104.160(1) and RCW 35.95A.080(1) do not authorize annual vehicle licensing taxes like CPSRTA and SPMA impose: -- A statue preempts this field of taxation. RCW 46.08.010 preempts all matters relating to vehicle licensing addressed in RCW Title 46. Taxes and other charges that must be paid in exchange for the State vehicle license are specifically addressed in RCW 46.16.210. CPSRTA and SPMA acknowledge their taxes are imposed as vehicle licensing conditions.4 Their taxes are preempted because the Legislature did not provide either of them with an express statutory exception to the preemption afforded the State by RCW 46.08.010. -- Other tax grants enacted in the same two statutes specify vehicle licensing is the taxing event. Such terms were omitted from the tax grant sections CPSRTA and SPMA rely on, evidencing legislative intent that some other taxing event would trigger taxes implemented under those sections. -- Respondents quote three words from a RCW Title 46 statute that enumerates taxes and other charges vehicle license applicants must pay: "The Vehicle Taxes are both excise taxes ‘required by law.’" Brief of Respondents, p. 38 (quoting from RCW 46.16.210). No law requires payment of the taxes at issue for a vehicle license. The payment requirement is only due to the interagency contracts DOL signed. None of the five statutes CPSRTA and SPMA cited below in support of the proposition that the Legislature authorized them to impose vehicle licensing condition taxes support that claim.5 In contrast, statutes expressly provide the State’s vehicle licensing tax was to be "annual," and that vehicle license applicants were required to pay it. Laws 1937 ch 228 secs 2, 5 (CP 295-296) and RCW 82.44.060. A statute relating to the watercraft tax granting terms likewise expressly establishes watercraft registration as the taxing event, and states payment of that tax is required by law as part of the registration process. RCW 82.49.030. -- The statutory tax cap terms could have been applied more favorably for vehicle owners. Both grants limit the tax by percentages of vehicle value (.8 and 2.5). CPSRTA and SPMA applied those percentages as annual caps, even though the word annual is not in either grant. The appropriate narrow application of these cap terms would be that as long as a citizen owned a vehicle the aggregate of the tax payments would not exceed the specified percentage of assessed value. -- The word "rate" in CPSRTA’s grant does not refer to a percentage of property value that would be imposed annually. Words have uniform meanings throughout a statute. Simpson Inv. Co. v. Dep’t of Revenue, 141 Wn.2d 139, 160, 3 P3d 741 (2000). Throughout that 1990 enacting statute rate means a tax amount (in dollars).6 For example, the immediately preceding section is another local option tax grant, where rate means a monthly tax amount less than two dollars. Laws 1990 ch 43 sec 41 (CP 228-229).
RCW 46.08.010 Preempts Local Taxes on Vehicle Licensing. Respondents state the preemption statute RCW 46.08.010 "does not address motor vehicle excise taxes." Brief of Respondents, p. 39. The CPSRTA and SPMA taxes operate as "conditions precedent to the issuance of a valid vehicle license." CP 134. The field RCW 46.08.010 preempts is coextensive with all aspects of vehicle licensing addressed in RCW Title 46. Taxes and other charges that are conditions precedent to the issuance of a valid vehicle license are enumerated in RCW 46.16.210, so the taxes at issue fall within the field preempted. CPSRTA and SPMA also argue they have police powers under Const. art. XI, sec.11 sufficient to overcome the State’s statutory preemption of the vehicle licensing field. Brief of Respondents, p. 37. The police powers granted to local governments by Const. art. XI, sec. 11 do not include the power to tax. Arborwood Idaho, supra. at 366.
The "Beyond a Reasonable Doubt" Standard Applies To Only One of the Issues. The "beyond a reasonable doubt" standard Respondents cite on page 14 applies only to Issue No. 4 of Assignment of Error No. 1. That Issue is a claim that both implementing ordinances were insufficient under Const. art. VII, sec. 5 (which requires that legislation imposing taxes distinctly state the object of the tax). The other Issues comprising Assignment of Error No. 1 involve the more lenient "any doubt" standard. Okeson v. City of Seattle, 150 Wn.2d 540, 78 P.3d 1279 (2003) at 558. That standard applies because those three constitutional claims involve determining whether taxes like CPSRTA and SPMA impose were intended by the Legislature when it prescribed implementing excise taxes in the particular statutes at issue here. In light of the statutory context described above, there is far more than "any" doubt about whether CPSRTA and SPMA implemented the right kind of tax under those grants.
The Tax "Object" is Not Just Where The Revenues Are Directed. Respondents argue the ordinances are sufficient under Const. art. VII, sec. 5. They interpret "object" as meaning where the tax revenues are directed. They contend that section ensures "that tax revenue approved for a specific purpose is applied to that purpose, instead of being diverted to the general fund." Brief of Respondents, p. 16. Const. art. VII, sec. 5 is interpreted and applied to protect against taxation based on vague legislation. In Okeson v. City of Seattle, supra., a city ordinance and the 2002 amendment to RCW 35.92.050 each were held unlawful under that section. The ordinance passed streetlight costs on to City Light utility ratepayers. RCW 35.92.050 governs a municipality’s authority to operate an electric utility. The amendment added terms authorizing utilities to include "streetlights as an integral utility service incorporated within general rates." The problem with the ordinance and the amendment was not that they failed to adequately state where the revenues would be applied.7 Nor were the revenues later diverted somewhere else. Both legislative acts were insufficient under Const. art. VII, sec. 5 because they failed to distinctly state they imposed additional tax on the taxing event of receiving utility service. Resolution 75 and Citizens Petition No. 1 are similarly deficient. They state "excise tax." CP 236; CP 247. Neither ordinance distinctly states the tax will be on the act of registering a vehicle with the State. -------------footnotes--------
1. The "motor vehicle excise tax surcharge" referenced in Laws 1990 ch 43 sec 42 is a tax grant to certain counties, enacted as Laws 1990 ch 43 sec 17. CP 229, CP 222. Laws 1990 ch. 43 sec 35 includes the term "special motor vehicle excise tax," which is a reference to CPSRTA’s grant as a revenue source. CP 228. The State’s former vehicle licensing tax is referred to as the "state motor vehicle excise tax paid under RCW 82.44.020(1)." Laws 1990 ch 43 sec 17. CP 222. Laws 1990 ch 42 sec 302 (the State vehicle license tax grant) refers to "Washington motor vehicle excise taxes." CP 210. Those four words also are part of the heading for the section containing CPSRTA’s tax grant, but Laws 1990 ch 43 sec 55 provides "Section headings, part headings, and the index as used in this act do not constitute any part of the law." CP 231. 2. The State also interprets these grants as authorizing taxes that are licensing conditions to the same extent that paying the $30 registration fee required by RCW 46.16.0621 is a licensing prerequisite. CP 154, CP 155. 3. An excise tax of this type could be measured as some fraction of a dollar per mile driven. DOL could have collected the tax when the $30 license fee was remitted. DOL could have administered such taxes by reading the odometer, or by using mileage affidavits as it does for vehicle title transfers. If the owner drove little, several years could pass before the tax cap was reached. 4. The CR 56 motion from CPSRTA and SPMA states: "Payment of both the registration fee and the Vehicle Taxes are conditions precedent to the issuance of a valid vehicle license." CP 134. 5. The statutes CPSRTA and SPMA cite on this point are: RCW 35.95A.080, RCW 81.104.160, RCW 46.16.010, RCW 46.16.045, and RCW 46.16.210. CP 134. 6. Rate is used in a number of the tax grant sections of Laws 1990 chs 42 & 43: secs 201(1), 208(2)(e), 210, 41 and 42. CP 205, CP 207, and CP 229.
7. The statute amendment said the "general rates" would increase, and those higher rates went to the segregated Light Fund, which in turn paid for streetlight costs (under the ordinance that allocated those costs to City Light). 8. See, Culliton v. Chase, 174 Wash. 363, 25 P.2d 81 (1933) at 374.
REPLY BRIEF OF APPELLANTS (SECOND PART)
Voter Approval Of The Implementing Ordinances Did Not Expand the Taxing Authority The Granting Terms Confer. Voters approved the ordinances Resolution 75 and Citizens Petition No. 1. No ordinance (whether or not it is approved by voters8 ) can expand the taxing authority of a local government beyond what the statutory tax granting terms expressly provide. See, Wilson v. City of Seattle, 122 Wn.2d 814, 863 P.2d 1336 (1993). For example, SPMA’s statutory grant does not expressly authorize an annual tax. Respondents state the voters "approved the annual levy" of the SPMA tax. Brief of Respondents, p. 9. The fact that the ballot title of Citizen’s Petition No. 1 says that if approved that measure will allow the taxing district to "levy an annual special excise tax not to exceed 1.4%" provides no extra taxing authority to SPMA. CP 256. The Legislature did not expressly authorize either CPSRTA or SPMA to impose annual taxes, so the annual taxes they implemented exceed what the statutes prescribe.
The Out-of-State Vehicle License Tax Cases are Inapposite Respondents cite cases from other states addressing those states’ vehicle licensing taxes. These cases hold annual vehicle license tax amounts may be based on vehicle value (Brief of Respondents, pp. 24-25), and that licensing taxes are not property taxes (Brief of Respondents, pp. 29-30). Each of these cases is inapposite because the taxes they address were specified by the appropriate legislatures to be vehicle licensing condition levies. In contrast, no statute provides taxes implemented under the grants CPSRTA and SPMA rely on are to be imposed as vehicle licensing conditions. The opinion from Virginia is instructive. The Virginia statute expressly provides that political subdivisions may impose licensure condition taxes: "Except as provided in Sec. 46.1-66 counties, incorporated cities and towns may levy and assess taxes and charge license fees upon motor vehicles . . . The amount . . . imposed . . . shall not be greater than the amount . . . imposed by the State on vehicles of like class." Ashland v. Hanover County, 202 Va. 409, 411-412 (1961) (citing Sec. 46.1-65 of the Code of Virginia). No statute provides comparable authority to CPSRTA or SPMA to "assess taxes and charge license fees upon motor vehicles." Id.
CPSRTA and SPMA Were Afforded Ample Taxing Authority. The Legislature provided four different tax grants to both CPSRTA and SPMA.9 The revenue streams from a combination of those taxes could support worthy transportation system projects, and could be pledged to long-term bonds.
The Relief Requested Would Not Unconstitutionally Impair Contracts. Respondents refer to bonds that could be "impaired" if the revenue streams from the taxes at issue do not continue. Brief of Respondents, p. 6. The state and federal constitutional provisions prohibiting the impairment of contracts are invoked when certain types of legislation are enacted after contract formation. See, generally, Tyrpak v. Daniels, 124 Wn.2d 146, 874 P.2d 1374 (1994). No claims in this case are based on laws enacted after CPSRTA and SPMA formed their contracts. "A contract is not considered impaired by a statute in force when the contract was made, as parties are presumed to enter contracts in contemplation of existing law." Shoreline Community College Dist. No. 7 v. Employment Sec. Dep't, 120 Wn.2d 394, 410, 842 P.2d 938 (1992).
These Are Not Excise Taxes on Using a Vehicle, Although They Should Have Been. CPSRTA and SPMA misstate, in a variety of ways, what they actually are taxing. They claim they tax "upon the voluntary taxpayer act of exercising the privilege to operate a motor vehicle," and "upon the exercise of that privilege" ("that privilege" meaning "operating an automobile")10 These are not excise taxes on vehicle use, despite the assertions to that effect in the Brief of Respondents. Using a vehicle should have been the taxing event. Instead, the act triggering both of these taxes is registering a vehicle with the State. (Former) RCW 81.104.160(1) and RCW 35.95A.080(1) prescribe implementing excise taxes. A proper type of tax to impose under these grants would be one that is triggered and measured by using a vehicle. SPMA’s grant specifies "using" the vehicle must be the taxing event. Under the grant CPSRTA relies on, using a vehicle also would have been a proper taxing event. The excise tax grant in the Whatcom County v. Taxpayers case11 is RCW 36.58.140. It is similar to CPSRTA’s grant because the statutory granting language does not specify any particular taxing event. The Whatcom County Council selected a proper taxing event during the implementation process: contracting for solid waste to be hauled. That was a justifying taxing event because it was the right kind of underlying transaction. A justifying taxing event under each of (former) RCW 81.104.160(1) and RCW 35.95A.080(1) would be driving a mile. That is using a motor vehicle. A proper excise tax to implement under these grants would be one measured by some fraction of a dollar, multiplied by each mile driven since the last time the owner applied for a vehicle license. The more vehicle use, the bigger the tax (as long as the aggregate of the payments does not exceed the statutory caps). That type of tax on using a vehicle is voluntary because the taxpayer can drive less, thereby lowering the tax bill. Such a tax also would be voluntary because avoiding it would not cause vehicles to become illegal for their owners to operate.
Cases establish the CPSRTA and SPMA taxes are not excise taxes on vehicle use. Similar taxes in Harbour Village Apartments v. City of Mukilteo,12 Covell v. City of Seattle,13 and Arborwood Idaho, supra. were distinguished from valid excise taxes. The residential dwelling unit fees Mukilteo levied were not excise taxes in part because they were not measured by actual property use. They were imposed "regardless of whether [a unit] is actually rented, the number of rental transactions associated with the property, or any other factors normally associated with ongoing business activity, including income." Harbour Village Apartments, supra. at 607. The situation in Covell is similar. Seattle unsuccessfully argued its periodic taxes were excise taxes. It also ostensibly was taxing "the use or availability of the streets." Covell, supra. at 891. Those periodic tax amounts did not vary based on how much actual use the taxpayer made of the streets. The ambulance service charge in Arborwood Idaho was not an excise tax in part because the tax amounts bore no relation to actual ambulance services provided. The periodic taxes CPSRTA and SPMA impose are comparable to each of those three illegal taxes. They come due in amounts that bear no relation to how much, or even whether, the vehicle actually was used.
Hansen Holds a Different Type of Tax Is Not a Property Tax. CPSRTA and SPMA rely on State ex rel. Hansen v. Salter, 190 Wash. 703, 70 P.2d 1056 (1937) for the proposition that their taxes are not property taxes. The Hansen Court correctly concluded the State’s former vehicle licensing tax had a different "character" than the county property tax on vehicles it supplanted. Hansen, supra. at 706. The holding in Hansen does not validate the taxes at issue here because they are fundamentally dissimilar to that State tax. The reason that State tax could be distinguished from the county property tax was because it was a legal licensing precondition levy. The taxes CPSRTA and SPMA impose are not. The fact that DOL requires that vehicle license applicants pay them (because of the contracts DOL signed) does not alter the fundamental character of these two local taxes. Nothing about their underlying characters distinguishes either from an ad valorem property tax.
These are Involuntary Taxes. The excise tax definition in Arborwood Idaho, supra. at 367 uses the word voluntary twice. Respondents state vehicle licensing "is entirely voluntary." Brief of Respondents, p. 25. They point out vehicle owners can reduce tax amounts paid at the time of vehicle licensing by changing the "type, age and number" of vehicles. Brief of Respondents, p. 26. Changing a periodically recurring tax bill that way is characteristic of a property tax or a personal property licensing tax, because what changes is the property value taxed. Voluntary excise taxes are lowered by decreasing the size of an underlying transaction, or obtaining less utility service, not by reducing the value of the property the taxpayer owns. Buying a collector car is merely buying an exempt type of property. A tax on the hundreds of thousands of urban residents of Snohomish, King and Pierce Counties who own vehicles is unavoidable if the alternative is, as Respondents suggest, driving exclusively on a private island or ranch during the upcoming year. See, Brief of Respondents, p. 26. CPSRTA and SPMA also point out vehicle owners can avoid their taxes by not applying for the State vehicle license. Brief of Respondents, p. 27. A vehicle owner who desires to relinquish the availability of the vehicle for driving can let the current tabs expire and not re-register. However, cases analyzing the validity of purported excise taxes establish that if avoiding a tax involves relinquishing a beneficial use of property, it is not a voluntary excise tax. Three illegal local taxes could have been avoided by the property owners who were subject to them giving up the availability of their valuable properties for an on-going use: -- In Covell, the Seattle property owners who chose to continue their residential use of their properties were taxed; -- In Harbour Village Apartments, Mukilteo taxed the dwelling unit owners who chose to rent their units or hold them out for future rentals; -- In Arborwood Idaho, it was the Kennewick property owners who chose to keep water/sewer service available for the on-going use of their properties who were subject to the tax. The taxes in those three cases were determined to be not voluntary excise taxes. In each case, not all the owners of a particular type of property were taxed, moreover, the subset of owners subject to the taxes were those who had chosen to retain the availability of their properties for some beneficial use. A tax on property ownership does not have to fall on all the owners of a type of property. As stated in Harbour Village Apartments, "a tax on rental property is no less a tax on property." Id. at 607. Under these cases, the CPSRTA and SPMA taxes can not be validated as voluntary excise taxes merely because the large subset of vehicle owners taxed are those who chose to retain the availability of their vehicles for driving during an upcoming twelve-month period. The taxes in those three opinions were involuntary in part because the valuable properties quickly became unavailable for the owners’ continued use if the tax was not paid. The CPSRTA and SPMA taxes are involuntary in that same way.
The Legal Nature of The CPSRTA and SPMA Taxes. CPSRTA and SPMA characterize their taxes as "expressly authorized excise taxes, labeled as excise taxes, modeled after a longstanding Washington excise tax . . .." Brief of Respondents, p. 19 As stated in P. Lorillard Co., supra. "we must go beyond labels to determine the true legal nature or character of the tax." Id. at 588. A comparable local tax was characterized in an opinion as a property ownership tax. The tax on the Mukilteo dwelling unit owners who paid the periodic levies so their units would remain available for them to rent was held to be a tax on property in Harbour Village Apartments. A fair description of the legal nature of the CPSRTA and SPMA taxes is that each is a "nonstatutorily authorized tax on property,"14 implemented to resemble a legal vehicle licensing tax.
----------------footnotes--------------- 9. CPSRTA was granted authority for a per-employee tax on employers, an excise tax, a sales and use tax on retail car rentals, and a general sales and use tax. RCW 81.104.140(1). SPMA was granted authority for a special excise tax, a sales and use tax on retail car rentals, a $100 annual vehicle relicensing tax, and an annual ad valorem real property tax. RCW 35.95A.080-100. 10. Brief of Respondents, pages 3 and 25. Additionally, CPSRTA and SPMA claim they tax: "on the voluntary act of using the public roadways," "upon the privilege of using Washington’s public roadways," "upon the privilege of using the public roadways," "the use of motor vehicles," "based on the privilege of using a motor vehicle," and "on vehicles licensed for use on public roads." Brief of Respondents, pp. 19, 21, 27, 28, 29, and 30. 11. Whatcom County v. Taxpayers, 66 Wn. App. 284, 831 P.2d 1140 (1992). 12. Harbour Village Apartments v. City of Mukilteo, 139 Wn.2d 604, 989 P.2d 542 (1999). 13. Covell v. City of Seattle, 127 Wn.2d 874, 905 P.2d 324 (1995). 14. Harbour Village Apartments, supra. at 608.
APPELLANTS’ RESPONSE TO BRIEF OF AMICI CURIAE FILED BY ASSOCIATION OF WASHINGTON CITIES AND WASHINGTON STATE TRANSIT ASSOCIATION (FIRST PART)
Introduction Appellants respond hereby to the Brief of the Amici Curiae Association of Washington Cities (281 local taxing districts) and Washington State Transit Association (25 large consumers of local taxes). These amici curiae want local governments to have free rein when implementing taxes under their statutory grants. They urge this Court to begin applying Washington Constitution Article VII, section 5 loosely. Their Brief echoes the arguments of CPSRTA and SPMA, who claim their excise tax grants "impliedly" (CP 308, line 24) and "implicitly" (CP 373, line 3) authorize periodic involuntary taxes on a group of property owners.
These Amici Curiae Misstate Appellants’ Claims These amici curiae completely misstate Appellants’ claims. They say: "Appellants assert that for the Legislature to authorize a local tax such as [CPSRTA and SPMA impose], each and every detail of the tax must be spelled out in the enabling statute." Brief of Amici Curiae at 8. Appellants make no such assertion. The two tax grants are sufficiently detailed. The taxing authority granting terms in (former) RCW 81.104.160(1) and RCW 35.95A.080(1) each prescribe that any tax implemented under them must be imposed as an excise tax no greater than a specified percentage of vehicle value. Those terms, in context, establish sufficient clear and definite limits. CPSRTA and SPMA made a series of mistakes when they set out to implement their taxes. They selected the wrong taxing event to tax, and they misapplied the tax cap terms the Legislature placed in both grants (those upper-limit value percentages were applied as annual, not aggregate, tax caps). More details were not needed in the grants. The problems with these local taxes arose because the limits the Legislature did set were disregarded.
The Grants at Issue Do Not Expressly Authorize MVET’s, But These Amici Curiae Nonetheless Argue The MVET’s That Are Being Imposed Should be Upheld Because Voters Approved Them These amici curiae point out that in 1996 and 2002 voters approved the two transportation system ballot measures. The lengthy implementing ordinances, which were not provided to the voters, refer only obliquely to excise taxes. CP 236, CP 247. Neither distinctly states the taxing event will be the act of applying to DOL for a vehicle license. Each ordinance was approved without voters being informed by its terms when or how the tax it mentions would be triggered. Several months after the measures passed, CPSRTA and SPMA began imposing the same kind of tax: a periodic levy on vehicle owners, measured by vehicle value, that must be paid as a condition precedent to vehicle licensure by the State (hereinafter, an "MVET"). The Legislature did not expressly authorize MVET’s in either (former) RCW 81.104.160(1) or RCW 35.95A.080(1). The acronym MVET is not in those grants, nor is the noun phrase "motor vehicle excise tax." No statute states that paying taxes implemented under those two grants is to be a condition precedent to vehicle licensure. If the Legislature had intended to expressly authorize an exception to the State’s preemption of the field of vehicle licensing, it could have used terms referring to these two grants like it did in the statute referring to the State’s vehicle license tax ("no license . . . for a motor vehicle shall be issued unless such tax is paid in full." RCW 82.44.060 (enacted as Laws 1937 ch 228 sec 5)). It also is clear that MVET’s were not expressly authorized because the grants CPSRTA and SPMA are relying on do not state that an "annual amount" of tax must be paid. The Legislature could have said "annual amount" in the grants at issue had it intended to authorize imposition of MVET’s, because that is what the statute relating to the State’s vehicle license tax states ("The annual amount of [the State’s vehicle license tax] shall be two and two-tenths percent of the value of such vehicle." (Former) RCW 82.44.020(1)). CPSRTA and SPMA used that State tax as a model, but they don’t have the right statutory authority for that kind of tax. MVET’s were not expressly authorized by the grants CPSRTA and SPMA rely on. In arguing they nonetheless are justified, these amici curiae disregard how the "in pursuance of law" clause of Washington Constitution Article VII, section 5 is applied. Local governments only may tax pursuant to express statutory authority, and if there is any doubt or ambiguity about the nature or scope of the taxing authority the granting terms confer, those doubts or ambiguities are to be resolved in the taxpayers’ favor. Arborwood Idaho, L.L.C. v. City of Kennewick, 151 Wn.2d 359, 89 P.3d 217 (2004); Ski Acres, Inc. v. Kittitas County, 118 Wn.2d 852, 857, 827 P.2d 1000 (1992); Pacific First Fed. Sav. & Loan Ass'n v. Pierce County, 27 Wn.2d 347, 352, 178 P.2d 351 (1947). The second clause of Washington Constitution Article VII, section 5 requires that a law imposing a tax state distinctly the object of the same. These amici curiae claim the two ordinances were sufficiently precise because they revealed the tax revenue would be spent on transportation projects. Amicus Brief at 9-10. The voters were asked to approve ordinances describing complex transportation systems. The reference in each to an excise tax was vague. The term excise tax alone, outside of context, is inherently ambiguous because more than one type of tax has been denominated an excise tax. The ordinances CPSRTA and SPMA asked voters to approve did not specify when or how the proposed taxes would be triggered. Neither ordinance identifies the subject of the proposed excise tax. The subject of a tax is the activity, event, privilege, or specific property right that is taxed. See, Agrilink Foods, Inc. v. State Dept. of Revenue, 153 Wn.2d 392, ____, 103 P.3d 1226, 1230 (2005). The actual event taxed – vehicle licensing by DOL – was not distinctly stated. CP 236 (Resolution 75), CP 247 (Citizens Petition No. 1). In Okeson v. City of Seattle, 150 Wn.2d 540, 78 P.3d 1279 (2003), a statute amendment and an ordinance each were held to violate the second clause of Washington Constitution Article VII, section 5. Both of those legislative enactments clearly indicated where the revenue would be spent (on streetlights), yet they were unconstitutional. The ordinances presented to the voters in this case were just as imprecise. An ordinance referencing an excise tax that does not specify the taxing event has terms that are no more distinct than an ordinance imposing a tax that does not use the word tax. These amici curiae want the two taxes at issue upheld so in the future they can follow suit and put vague tax implementing ordinances on ballots. If the subject of the tax is not specified the measure will be more popular. People are more likely to vote "yes" for a tax if they are not distinctly told when or how it will impact them. Amici curiae urge this Court to look beyond case law, and find additional room under the Constitution for taxes voters will approve. Brief of Amici Curiae, pages 6-8. They claim MVET’s are popular. They argue an advisory ballot in 2004 demonstrates that among tax choices "the clear front runner was an MVET." Amicus Brief at 7. They conclude: "As demonstrated by the RTID 2004 advisory ballot, voters continue to prefer the use of the MVET to fund local transportation initiatives." Amicus Brief at 8. That ballot measure did not even mention an MVET. The voters were not presented with any type of vehicle license tax to choose from. Attached as Exhibit A is the relevant page from the King County Local Voters Pamphlet, November 2, 2004 General and Special Elections. None of those five choices is a vehicle license tax. There are no references whatsoever on that ballot to vehicle licensing. Exhibit A. Read in context with the other tax choices, the preferred excise tax choice could not be an MVET. A different choice expressly was an annual tax: "a tax on total annual vehicle miles traveled." Since the excise tax presented does not state it also would be annual, that choice does not have the plain meaning of an annual vehicle license tax. The results of that 2004 advisory measure are attached as Exhibit B. An excise tax where the subject of the tax is not specified received 26.7% of the vote, not an MVET. These results show the winning tax was the only one of the five where the voters were not told when or how it would impact them. The voters approved the tax where the taxing event was not distinctly stated. Taxes that do not say what they target are most popular. In interpreting these advisory ballot results, amici curiae failed to accord significance to the plain terms used, and they ignored the related terms that provide meaning through context. CPSRTA and SPMA misread their respective statutory tax grants in exactly the same ways. They see what they want to see and disregard the rest.
APPELLANTS’ RESPONSE TO BRIEF OF AMICI CURIAE FILED BY ASSOCIATION OF WASHINGTON CITIES AND WASHINGTON STATE TRANSIT ASSOCIATION (SECOND PART) The Constitution grants no special dispensation to enactments that succeed on ballots. Voter-approved measures have been struck down on the same bases as other laws. "The people acting in their legislative capacity are subject to constitutional mandates." Amalgamated Transit Union Local 587 v. State, 142 Wn.2d 183, 204, 11 P.3d 762 (2000).1
For these amici curiae, who are advocacy groups for maximum local taxes, political expediency is by definition the paramount goal. This Court should disregard the entreaties of their Brief, and continue to afford the citizens of this State the protections of our Constitution as it always has been applied.
CPSRTA and SPMA Failed to Implement the Type of Tax The Grants They Rely on Authorize A chief argument of these amici curiae is premised on the untenable contention that the tax grants conferred by (former) RCW 81.104.160(1) and in RCW 35.95A.080(1) are general enough to justify the annual property-value-based vehicle licensure taxes CPSRTA and SPMA are imposing. Neither of those tax grants contains "a broad delegation of authority" (Amicus Brief at 12) such as would justify a local government in Washington in imposing such a tax. Nor did the Legislature in those two statutes "broadly authorize a tax without delineating every aspect." Amicus Brief at 13. These two particular grants clearly are not statutes whereby "the Legislature defers to the taxing entity to establish the parameters of a particular tax levy without the boundaries set by the legislature," and they are not "general grants of authority by the Legislature." Amicus Brief at 14. The grants at issue in this case in fact impose several definite limits, which were exceeded by the type of tax that was implemented. The type of tax CPSRTA and SPMA were required to implement is circumscribed by the terms used in the grants, and by the context related statutes provide. (Former) RCW 81.104.160(1) prescribes an excise tax, and RCW 35.95A.080(1) prescribes a special excise tax. Those statutes contain the same kind of excise tax granting language to a local government that the Legislature used in RCW 36.58.140 (Laws 1982 ch 175 sec 5), the tax grant analyzed and applied in Whatcom County v. Taxpayers, 66 Wn. App. 284, 831 P.2d 1140 (1992). That taxing authority grant to a limited-purpose local government also prescribed implementation of an excise tax. Had that tax been used as a model, CPSRTA and SPMA could have implemented legal excise taxes. Just like it did in the two grants here, the Legislature left a certain amount of discretion to the local taxing district in RCW 36.58.140 to select the particular taxing event that would trigger the excise tax and determine its amount. The Whatcom County Council was able to properly implement a legal local excise tax because it accurately ascertained from what the Legislature said in that grant (and in related statutes) what kind of taxing event it would need to select. Because an excise tax was prescribed in the grant, the taxing event had to be voluntary, and the amount of the tax had to be measured by a voluntary taxpayer undertaking. The statute at issue in the Whatcom County case is similar to the excise tax grants here because the particular taxing event is not specified: "A solid waste disposal district may levy and collect an excise tax on the privilege of living in or operating a business in a solid waste disposal taxing district sufficient to fund its solid waste disposal activities." RCW 36.58.140. The proper local excise tax implementation process described in the Whatcom County case occurred because the Whatcom County Council selected the right kind of taxing event as its first step. The tax subject the Whatcom County Council selected was the act of contracting with a private waste hauler for trash removal services. RCW 36.58.140 does not specify that particular act must be the taxing event. The Legislature left it up to the Whatcom County Council to select a justifying taxing event, and that local body discharged its discretionary responsibility properly by selected a taxing event that is voluntary in the right ways (the amount of the tax can be reduced by contracting for less trash hauling services, and avoiding the tax will not result in property owners losing the right to continue using their residences or businesses). Had the Whatcom County Council instead implemented an annual property-value based levy on all residents and business owners in the taxing district as a condition precedent to their continued enjoyment of the "privilege of living in or operating a business in a solid waste disposal taxing district" (that is, a tax with incidents and characteristics comparable to those of the taxes CPSRTA and SPMA impose), such a tax would not have been a legal excise tax. "Excise tax" is not a term of art meaning involuntary periodic tax measured by property value. Under the type of non-self-executing local option excise tax grants that CPSRTA and SPMA are relying on in this case, the Whatcom County opinion shows that the first thing they needed to do was select a proper taxing event. After that a proper proposed ordinance could have been drafted, then the implementing ordinance could have been adopted, then if voters approved it the taxing could commence. Driving a mile is an example of a proper, justifying taxing event. The right kind of tax on that taxing event would be a nickel a mile. Driving less would mean less tax, and avoiding the tax would not result in using the vehicle becoming illegal. Instead, CPSRTA and SPMA selected vehicle licensing as the taxing event. Statutory context demonstrates why that act is an improper taxing event. Vehicle licensing is a preempted subject of taxation. RCW 46.08.010 states the State has the exclusive authority over the field of vehicle licensing. The scope of that preemption extends to matters provided for in Title 46, and those include taxes that vehicle license applicants must pay DOL in exchange for license tabs. RCW 46.16.210. Respondent the State of Washington has supported every argument CPSRTA and SPMA have put forward in this case. The State does not even see fit to offer its own explanation for why these two local taxes that are imposed as "conditions precedent to the issuance of a valid vehicle license" (CP 134) are not illegal pursuant to its statutory preemption of that field. The State just signs the briefs CPSRTA and SPMA draft. Additional statutory context demonstrates the Legislature intended that vehicle licensing must not be the subject of taxes implemented under either of these two particular grants; other tax grants enacted in the same two enacting statues expressly state that registering a vehicle is to be the taxing event. Moreover, the type of tax that was implemented exceeds what the grants expressly prescribe (an excise tax). The taxes CPSRTA and SPMA are imposing are measured based on property value, not on the size of any underlying transaction. Also, they are involuntary because avoiding the taxing event of vehicle licensing results in the property becoming unavailable for the owner’s future use. A number of cases establish that local taxes with such characteristics are not excise taxes, including Harbour Village Apartments v. City of Mukilteo, 139 Wn.2d 604, 989 P.2d 542 (1999); Covell v. City of Seattle,2 and Arborwood Idaho, L.L.C. v. City of Kennewick, supra. CPSRTA and SPMA made the same initial and fundamental error that Kennewick did when it set out to implement a tax under its excise tax grant RCW 35.21.768. Arborwood Idaho, L.L.C. v. City of Kennewick, supra. Like the two local governments here, Kennewick selected an improper taxing event (receipt of water/sewer service) as the first step in its tax implementing process. It should have selected actual ambulance service use. Had CPSRTA and SPMA selected actual vehicle use, and proposed a tax to the voters that varied based on the amount of vehicle use the owner had made of the vehicle during the preceding twelve-month period, a proper excise tax could have been implemented. Such a tax might not have won voter approval, but it would have been legal if it had passed. Another way in which CPSRTA and SPMA exceeded the limited discretion the Legislature provided them is by applying the statutory tax cap terms as annual caps, and not as aggregate caps. The narrowest application of the percentage figures set out in each of the two grants would be as maximum aggregate caps on the tax. By applying those cap terms as upper limits on annual tax levies, when neither grant says those figures are to be imposed as annual caps, CPSRTA and SPMA exceeded the authority the grants expressly afforded them. Department of Revenue v. Hoppe, 82 Wn.2d 549, 512 P.2d 1094 (1973).
Hansen Is No Panacea The Amicus Brief relies on State ex rel. Hansen v. Salter, 190 Wash. 703, 70 P.2d 1056 (1937). The tax at issue in Hansen was the State’s former vehicle license tax. That tax was the annual tax imposed by the State as a condition precedent to its licensing of vehicles for future legal use on Washington’s roadways. CPSRTA and SPMA used that State tax as their model when they were implementing their taxes. They each copied the taxing event of that State tax – the act of applying to DOL for a State vehicle license. In reference to the State’s former vehicle license tax, this Court stated: "That a tax upon the use of personal property is an excise, is no longer open to question in this state." Hansen, supra. at 705. The only way the State’s vehicle license tax was "upon the use of personal property" was that it was a licensing tax. Vehicle owners were required to pay it as a condition precedent to obtaining the license that the State requires in order for a vehicle to be legally operated during an upcoming twelve-month period. The amount of that State tax did not depend on how much actual use the owner had made of the vehicle. That kind of licensing tax is not an excise tax of the type that the Legislature expressly authorized in the tax grants CPSRTA and SPMA rely on. In tax grants to local governments, the term "excise tax" is used to prescribe a tax of the type defined by this Court in Arborwood Idaho, supra. at 367. Seven additional examples of this latter type of tax (the voluntary type that is measured by the size of an underlying transaction) are validated in the cases identified in the Brief of Appellants, on pages 17-18. When the Legislature authorizes a local government to implement an excise tax, that term has a plain meaning. It is the plain meaning that the Legislature intended when it used the term excise tax in the tax grants to local governments in RCW 35.21.768 and RCW 36.58.140 (the statutes at issue in the Arborwood Idaho and Whatcom County cases). The statutory context relating to the two grants CPSRTA and SPMA rely on supports that plain meaning in all respects. The Hansen opinion held that the State’s vehicle license tax was legal, and that it had a different character than a property tax. There is nothing incorrect about the Hansen opinion. Hansen does not cure any of the problems with the CPSRTA and SPMA taxes. Those problems include the following: -- Neither of these local governments was afforded express statutory authority to impose a vehicle licensure precondition tax, whereas the State had the inherent authority for that kind of tax because it is the sovereign with the original authority to condition the use of its roads by the means it deems appropriate; -- the taxing event CPSRTA and SPMA selected (vehicle licensing) is a statutorily preempted subject of taxation; -- the tax caps were misapplied by these local governments as annual caps, whereas they should have been applied as aggregate caps because that is a narrow application of the statutory tax cap terms; -- the taxes implemented were not valid excise taxes because they are measured by property value (not the size of an underlying transaction), they are imposed on a regular periodic basis unrelated to actual use of the property, and they are involuntary; and-- the statutory context (including the preemption statute and the other tax grants enacted in the same two enacting statutes that specify registering a vehicle with DOL for license tabs was to be the taxing event) demonstrates that the Legislature intended that vehicle licensing must not be the taxing event for taxes implemented under (former) RCW 81.104.160(1) or RCW 35.95A.080(1).
This Suit Does Not Threaten Local B&O Taxes, Or The Funding For The Viaduct And I-405 Projects The Amicus Brief states on page 12: ". . . the grant of taxing authority contained in RCW 35.22.280(32) constitutes a valid grant of authority to cities to levy taxes on business functions for regulation or revenue." That particular statute pertains to First Class cities. It is a licensing authority statute that expressly authorizes cities to license businesses, in order to regulate and tax them. It is not in any way comparable to the excise tax grants to the limited-purpose local governments that are at issue here. CPSRTA and SPMA received no such authority to "grant licenses" to regulate or otherwise condition motor vehicle use, and they are statutorily preempted from doing so by RCW 46.08.010 because those are matters provided for in Title 46. Appellants seek no holdings or relief that would undermine the ability of any local government to impose valid excise taxes in general, or taxes like a business and occupation ("B & O") tax in particular. CPSRTA and SPMA should have implemented a valid excise tax like the State’s B & O tax, which is triggered and measured by a voluntary taxpayer undertaking. Clifford v. State, 78 Wn.2d 4, 469 P.2d 549 (1970). The amount of the B & O tax can be reduced by receiving less business revenue. Avoiding the B & O tax does not result in a property owner losing the availability for use of the owner’s property. The State’s B & O tax is a valid excise tax because the right kind of underlying transaction justifies it (receiving business income). Had CPSRTA and SPMA used that kind of tax as a model, as opposed to the involuntary State personal property licensing tax that they instead chose to use, legal taxes could have been implemented. The Amicus Brief on page 8 asserts that if the CPSRTA and SPMA taxes are held illegal, projects that a new limited-purpose local government called RTID may undertake "such as the reconstruction of the Highway 99 viaduct or the widening and improvement of Interstate 405 would have to be funded through less desired revenue mechanisms such as a gas tax or a luxury tax." RTID has several tax grants. It has not yet implemented taxes under them. The RTID tax grant to which these amici curiae refer is RCW 81.100.060. That statute is not at issue in this case, and it does not authorize an excise tax, a special excise tax, or an MVET. RCW 81.100.060 only expressly authorizes the implementation of "a local surcharge." Id. The taxes CPSRTA and SPMA are imposing are illegal in part because related statues provide context establishing that the taxing event for taxes implemented under those grants must not be the act of vehicle registration (that is because other grants enacted in the same two enacting statutes did specify vehicle licensing as the taxing event). In contrast, RTID’s surcharge grant states registering a vehicle is to be the taxing event. If the CPSRTA and SPMA taxes are held unlawful, nothing would prevent RTID from implementing a surcharge of the type RCW 81.100.060 expressly authorizes.3 A holding that CPSRTA and SPMA are imposing unlawful taxes should ensure RTID properly implements a levy under its surcharge grant. RTID will need to pay close attention to related statutory terms, because context evinces legislative intent about the plain meaning of terms. CPSRTA and SPMA misread their statutes. Their argument in this case – that their taxes are justified due to a "term of art" that is not even present in either grant ("motor vehicle excise tax")4 – is not the approach RTID should emulate. The citizens of Washington do not need RTID as well playing fast and loose with tax grant language.
----------footnotes----------- 1. Popular enactments held unconstitutional include initiatives relating to an income tax, veterans bonuses, a mandatory death penalty, campaign reform, and term limits. Culliton v. Chase, 174 Wn. 363, 25 P.2d 81 (1933); Gilman v. Tax Comm’n., 32 Wn.2d 480, 202 P.2d 443 (1949); State v. Green, 91 Wn.2d 431, 588 P.2d 1370 (1979); Washington Fed’n. of State Employees v. State, 127 Wn.2d 544, 901 P.2d 1028 (1995); and Gerberding v. Munro, 134 Wn.2d 188, 949 P.2d 1366 (1998). 2. Covell v. City of Seattle, 127 Wn.2d 874, 905 P.2d 324 (1995). 3. Should RTID set out to implement such a surcharge, the second clause of Washington Constitution Article VII, section 5 requires that the implementing ordinance distinctly state registering a vehicle is the taxing event. The voters must be informed by the text of the ordinance what the subject of the tax is. 4. Brief of Respondents, page 20.
APPELLANTS’ RESPONSE TO BRIEF OF AMICI CURIAE FILED BY A.H. LARSON, TERRANCE SCOTT WEAN, LISA G. OLSEN, JOHN SPEIRS, KENNETH H. TORP, ARTHUR L. WAHL, B.L. FOX, AND PETER H. NICKERSON
Introduction Appellants respond hereby to the Brief of the Amici Curiae A.H. Larson, et. al. These individuals are vehicle owners residing in Seattle. They instituted a separate lawsuit, challenging SPMA’s tax but not CPSRTA’s tax. That lawsuit appears to be based on substantially different allegations of fact, and their legal theories may not apply to the issues on appeal in this case.
This Amicus Brief Does Not Distinguish Between Two Types of Taxes Denominated "Excise" Taxes More than one type of tax has been named an excise tax by the Legislature. This Amicus Brief refers to five legal taxes referred to in statutes as excise taxes: the State motor vehicle licensing tax, the State business and occupations tax, the State gross receipts tax, the State sales tax, and the State compensating use tax. Brief of Amici Curiae, page 13. These five taxes fall into two groups: the State’s vehicle license tax, and the remaining four. This latter group of four legal excise taxes is comprised of taxes that are the type of tax that the Arborwood Idaho1 opinion defines as a "valid excise tax" (hereinafter, a "VET"): "Our cases establish that an assessment is a valid excise tax if (1) the obligation to pay an excise tax is based upon the voluntary action of the person taxed in performing the act, enjoying the privilege, or engaging in the occupation which is the subject of the excise tax, and (2) the element of absolute and unavoidable demand is lacking. Arborwood Idaho, L.L.C. v. City of Kennewick, supra, at 367." Seven VET’s validated in cases are identified in the Brief of Appellants, pages 17-18. Appellants disagree with an implication of the following sentence on page 6 of the Amicus Brief: "Hansen v. Salter did not mark a dramatic expansion in the traditional scope of excise taxation." The opinion referenced is State ex rel. Hansen v. Salter, 190 Wash. 703, 70 P.2d 1056 (1937). The tax at issue in that opinion is the State’s former vehicle license tax. Amici curiae appear to take the position that the State’s former vehicle license tax possessed the same legal nature and character as a VET. The State’s former vehicle license tax was a materially different type of tax than a VET. It possessed the fundamental character of a licensing tax. It was used by the State to raise revenue and condition the use of the public roadways of Washington. It was imposed as an integral element of the State’s vehicle licensing process. Other comparable examples of personal property licensing taxes in Washington are the watercraft registration excise tax in RCW Ch. 82.49, and the former camper registration levy in RCW Ch. 82.50. These three State licensing taxes have a different character than a property tax. Hansen, supra. at 705. However, the fact that they are a type of tax that can be distinguished from a property tax does not mean they have the same legal nature and character as VET’s (which also have fundamentally different characters than a property tax).2 VET’s and licensing taxes are different types of taxes. This Court recognizes the distinction. It distinguished the State gross receipts business tax from a licensing tax in Rainier Nat. Park Co. v. Henneford, 182 Wash. 159, 45 P.2d 617 (1935) at 161, and a State business receipts tax was distinguished from a licensing tax in Smith v. State, 64 Wn.2d 323, 391 P.2d 718 (1964) at 333. Although both are named "excise" taxes, VET’s and the State’s personal property licensing taxes exhibit materially different attributes: Involuntary vs. Voluntary. These three State license taxes are involuntary – avoiding them results in the owner of the particular type of personal property to which they apply relinquishing the availability of the watercraft or motor vehicle for future operations on the public ways of Washington. In contrast, VET’s are voluntary. The amount of a VET can be reduced by the taxpayer modifying the terms of some underlying transaction that has independent economic significance to the taxpayer, and avoiding a VET does not entail relinquishing future beneficial use of property. Triggered by a Periodic Statutory Licensing Requirement vs. Triggered by a Voluntary Taxpayer Undertaking. The State’s personal property license taxes are triggered by a periodic statutory registration requirement for the future legal use of personal property, further, statutes specify the State license shall not be issued unless the tax is paid. In contrast, VET’s only come due if and when the taxpayer chooses to undertake a particular underlying transaction, such as transferring property, or receiving some service from the taxing district. Measured by Property Value vs. Measured by the Size of a Voluntary Underlying Transaction. The State’s personal property license taxes are measured based on property value. The owner of the property cannot reduce the tax amount by using the property less. VET’s are measured based on the size of an underlying transaction, or how much of some service the taxpayer has chosen to obtain. The taxpayer can reduce the amount of a VET by reducing the magnitude of the underlying transaction. Prospective Application vs. Retroactive Application. The State’s personal property license taxes are prospective in application (one pays it now to use the watercraft or motor vehicle in the future). VET’s all are retroactive in application. They are triggered and measured by a voluntary underlying transaction that the taxpayer actually has entered into. VET’s and the State’s personal property licensing taxes have different material characteristics and tax incidents, so they have different legal natures. P. Lorillard Co. v. Seattle, 83 Wn.2d 586, 521 P.2d 208 (1974). All the terms in the two grants, and related statutory terms, demonstrate the Legislature intended CPSRTA and SPMA would implement a VET. The plain meaning of statutory terms is to be ascertained from all that the Legislature has said in the statute, and related statutes, which disclose legislative intent about the provision in question. Rest. Dev., Inc. v. Canawill, Inc., 150 Wn.2d 674, 681, 80 P.3d 598 (2003). A number of other statutes (cited on pages 6 through 9 of the Reply Brief of Appellants) provide context demonstrating that a tax imposed annually as a condition of vehicle licensing was not intended by the Legislature under those two excise tax grants. Moreover, even the statutes that CPSRTA and SPMA cite as providing context3 fully support Appellants’ contention that the plain meaning of "excise tax" in these grants refers to a VET. That is not the kind of tax they are imposing.
The Taxing Event Is Vehicle Licensing These amici curiae supplemented the record with excerpts from the record in their lawsuit. Those excerpts show SPMA is equivocating in that lawsuit as well about what the taxing event is. At the outset of this case, CPSRTA and SPMA forthrightly acknowledged they were taxing vehicle licensing: "Payment of both the registration fee and the Vehicle Taxes are conditions precedent to the issuance of a valid vehicle license." CP 134. The affidavits from both CPSRTA and SPMA specified that registering for a vehicle license is the taxing event. The CPSRTA affiant states: "The Sound Transit MVET is assessed solely on motor vehicles . . . that are registered for use with DOL. . . . Vehicles not registered for use are not taxed." CP 152. The SPMA affiant states: "The [SPMA tax] is only assessed on motor vehicle in the City of Seattle that are registered for use. . . . Vehicles not registered for use are not taxed." CP 148-149. After they were confronted with the preemption statute RCW 46.08.010, CPSRTA and SPMA began prevaricating about what the subject of their taxes is. The Legislature did not provide them with an express statutory exception to the preemption RCW 46.08.010 affords the State, so they now refuse to say vehicle licensing is the taxing event. When Judge Downing asked counsel for SPMA about this directly, the response was a non-response: THE COURT: What, in your view, is the best articulation of the taxable event? MR. LAWRENCE: Well, I think it was best articulated by the state legislature. The tax is for the privilege of using a motor vehicle. That’s what the state legislature said. I think that’s the best articulation. Appendix Ex. 4 to Declaration of William Severson, page 2. The Brief of Respondents in this case is replete with similar misstatements about what act is taxed. A selection of those characterizations is in footnote 10 on page 15 of the Reply Brief of Appellants. The subject taxed is DOL’s vehicle licensure process. The act of a vehicle owner that CPSRTA and SPMA tax is registering with DOL for a State of Washington vehicle license. Vehicle licensing is the taxing event. One reason these two local taxes are illegal is because they each are imposed on a subject of taxation the State preempts. Vinup v. Seattle presents an analogous situation: a local tax is struck down in that case because it is preempted by a statute that identifies taxing a particular subject as the exclusive province of the State.
CPSRTA’s Tax Grant is Different Than SPMA’s Tax Grant This Amicus Brief uses the word "privilege" many times. That word is in the tax grant statute that SPMA is relying on. The existence of the word privilege in RCW 35.95A.080 is not significant with respect to whether or not SPMA implemented a tax within the scope of the taxing authority actually conferred to it by the Legislature. The term privilege does not indicate legislative intent respecting the character of a tax. The Legislature uses the phrase "for the privilege" of doing something in taxing authority statutes relating to VET’s. Examples include the statute establishing the State’s business and occupations tax under RCW 82.04.220 ("a tax for the act or privilege of engaging in business activities"), and also in the taxing authority grant to the local taxing district that was at issue in the Whatcom County v. Taxpayers case: RCW 36.58.140 ("A solid waste disposal district may levy and collect an excise tax on the privilege of living in or operating a business in a solid waste disposal taxing district."). Several times this Court has held gross receipts business taxes (which are VET’s) are not license taxes: "[State business tax] is in no sense a license tax." Rainier Nat. Park Co. v. Henneford, supra. at 161; Smith v. State, supra. at 333 (State business tax "not a licensing provision for the regulation of a business or calling, nor does it impose conditions prerequisite to engaging in business within the state."). The Legislature also uses the phrase "for the privilege of [doing something]" in reference to a tax that is in all respects a license tax. That phrase is in a statue that refers to the annual tax that the State imposed pursuant to its inherent authority to license, condition, and regulate the operation of a motor vehicle on its public roadways: (former) RCW 82.44.020. CPSRTA’s grant does not contain the word privilege. It provides in relevant part: . . . regional transit authorities may submit an authorizing proposition to the voters, and if approved, may levy and collect an excise tax, at a rate approved by the voters, but not exceeding eighty one-hundredths of one percent on the value, under chapter 82.44 RCW, of every motor vehicle owned by a resident of the taxing district . . .. (Former) RCW 81.104.160(1) (Laws 1992 ch. 194 sec. 13; 1992 ch. 101 sec. 27; 1991 ch. 318 sec. 12; 1990 ch. 43 sec. 42). CPSRTA’s grant is different than SPMA’s grant in other ways as well. Because of how (former) RCW 81.104.160(1) is structured, there is a rule for gleaning the plain meaning of terms in that grant that does not apply to SPMA’s grant. That rule assists in ascertaining the meaning of the tax cap provision in CPSRTA’s grant. The words "but not exceeding eighty one-hundredths of one percent on the value, under chapter 82.44 RCW, of every motor vehicle" are tax cap terms. The rule at issue for determining what that cap applies to can be described as the "comma exception to the last antecedent phrase" rule: "[U]nless a contrary intention appears in the statute, qualifying words and phrases refer to the last antecedent. However, the presence of a comma before the qualifying phrase is evidence the qualifier is intended to apply to all antecedents instead of only the immediately preceding one." In re Sehome Park Care Ctr., Inc., 127 Wn.2d 774, 781-782, 903 P.2d 443 (1995). That rule applies to (former) RCW 81.104.160(1), because of the comma introducing the qualifying phrase (the tax cap) that begins "but not exceeding . . .." The antecedent to which that qualifier thus applies is the excise tax. Accordingly, the Legislature intended that the total excise tax an owner would pay for each vehicle must be capped at .8% of the vehicle’s value. That rule for ascertaining Legislative intent does not apply in analyzing what RCW 35.95A.080 says about the cap on the SPMA excise tax. The tax cap there (2.5% of vehicle value) is expressly stated as an integral part of the excise tax granting provisions: ". . . a special excise tax not exceeding two and one-half percent on the value of every motor vehicle." RCW 35.95A.080. In both cases, the tax cap terms apply to limit the tax as a whole. In both cases those capping terms were misapplied when the local governments went to implement their taxes. CPSRTA and SPMA applied those capping percentages as annual caps, even though the word annual is not in either grant. These local governments interpret their grants as if the word annual is in them, but it is not. Tax caps must be applied in favor of taxpayers. The required narrow application, which is consistent with the plain terms used, would have been for the tax as a whole to be capped. Department of Revenue v. Hoppe, 82 Wn.2d 549, 512 P.2d 1094 (1973).
------------footnotes--------- 1. Arborwood Idaho, L.L.C. v. City of Kennewick, 151 Wn.2d 359, 89 P.3d 217 (2004). 2. VET’s have a different legal character than a property tax. See, e.g., High Tide Seafoods v. State, 106 Wn.2d 695, 725 P.2d 411 (1986), appeal dismissed, 479 U.S. 1073 (1987); and Black v. State, 67 Wn.2d 97, 406 P.2d 761 (1965). 3 Those statutes are RCW 81.104.190, RCW 35.95A.130, and (former) RCW 81.104.160(1). Brief of Respondents, pp. 10, 11, 21, and 31-33. None of that statutory context is inconsistent with "excise tax" in the two grants meaning a VET. The fact that vehicles are to be valued by the RCW Ch. 82.44 assessment method simply means that the tax caps in the two grants are to be calculated that way. The narrow application of such caps is that they would be aggregate caps (DOL would collect tax amounts each year until the specified percentage of assessed vehicle value is reached). Also, the tax administrations and collections by DOL of a VET could occur at the time and in the manner that the $30 registration fee is collected. The manner in which DOL administers and collects the registration fee is by sub-agents, and directly over the internet, and then the proceeds are forwarded to the State Treasury for eventual disbursal to CPSRTA and SPMA. Had VET’s been implemented under these two grants, the tax payments likewise could have been collected and administered by DOL that same way.
------------------------------------ ------------------------------------ ----------------------------------- SMP Sound Transit Seattle Monorail Project MVET corrupt judge bias biased Washington Supreme Court Justice Tom Chambers Susan Owens Mary E. Fairhurst Gerry L. Alexander Charles W. Johnson Justices Barbara A. Madsen Richard B. Sanders Bobbe J. Bridge Justice James M. Johnson reelection Washington Supreme Court Justice car tab tax car tab taxes graft payola Justice Tom Chambers Susan Owens Mary Fairhurst Gerry Alexander Charles Johnson Justice Barbara Madsen Richard Sanders Bobbe Bridge Justices James Johnson Sheehan case Sheehan case Sheehan case payoffs judge judges payoff illegal tax PAC independent expenditures PAC independent expenditure judicial campaign judicial campaigns electing judges Citizens to Uphold the Constitution BIAW SEIU Sheehan v. Central Puget Sound Regional Transit Authority, 155 Wn.2d 790, 123 P.3d 88 (2005) Sheehan v. Central Puget Sound Regional Transit Authority, 155 Wn.2d 790, 123 P.3d 88 (2005) Sheehan v. Central Puget Sound Regional Transit Authority, 155 Wn.2d 790, 123 P.3d 88 (2005) union payment judges PACs Political Action Committee |
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