holding that payment of the state corporate income tax and other taxes does not bar the City, under the Sterling Act, from exacting a mercantile tax measured by the gross volume of business
How later courts described this case
- holding that payment of the state corporate income tax and other taxes does not bar the City, under the Sterling Act, from exacting a mercantile tax measured by the gross volume of business
- observing that, in McClelland, we concluded that “a tax imposed for the benefit merely of a local political subdivision, and not for general State purposes, is not to be regarded as a State tax”
- finding that a tax administered entirely for the benefit of a municipality was not a state tax, but a local tax
- which are still the test of a “regulatory” license fee
Written by the judges who cited it.
The opinion
Opinion by
Mr. Justice Allen M. Stearne,
Concurring In Part and Dissenting In Part:
I concur in the illuminating opinion of the Chief Justice as to the validity of the ordinance. The sole concern of this Court is the power of the City Council to malee and enforce enactments. With the wisdom of the ordinance we are not judicially concerned.
I dissent, however, in Appeal No. 196 of J. Alden Tifft et al., Insurance Agents and Brokers. The Act of May 17, 1921, P. L. 789, as amended, 40 PS 1 et seq., empowers the Insurance Commissioner to examine and investigate the affairs of every person engaged in the business of insurance. Section 211 of that Act, 40 PS 49, imposes a fee of $10. for insurance brokers and $25. for license in the name of a copartnership or corporation, and a fee of $2. for an agent’s license for each company. I disagree with the majority conclusion that because the individual charges are relatively small, this charge is not a “true license fee”. The report of the Insurance Commissioner discloses that in the biennial period of 1949 and 1951 the amount of the agents’ and brokers’ licenses amounted to $836,923.27, while the *628 total of the expenditures of the entire insurance department during that period amounted to $1,147,533.97. Such large figures, to my mind, demonstrate that the gross amount was intended to and did cover almost the entire probable cost of properly regulating the business of such agents and brokers. As stated in the majority opinion: “While it may seem, from a practical standpoint, that the payment of a mere license fee to the Commonwealth ought not to be regarded as sufficient to preclude the City from imposing a mercantile license tax on the State’s licensee, nevertheless the provision in the Sterling Act in that regard is explicit and unambiguous, and it is for the legislature alone to remove this limitation on the City’s power if that body should determine that such action is desirable.” I would reverse the decree of the court below and hold that such insurance agents and brokers are exempted from liability under the ordinance in question.
I also disagree with the ruling that the fees exacted of bakeries under the provisions of the Act of May 22, 1933, P. L. 912, as amended, 43 PS 403 et seq., are not true license fees. The distinction between amounts which are merely designed to cover the cost of registration and those which are true license fees intended to defray a substantial portion of the cost of regulation was first introduced into our law in Rice Drug Company v. Pittsburgh, 360 Pa. 240 , 61 A. 2d 878 , wherein we said (p: 243, 244): “There-is no merit in appellant’s contention that the payment of a fee of One Dollar under the State Cigarette Tax Act, in order to secure a permit to sell cigarettes, is a payment for the privilege of selling cigarettes, wherefore the City, mercantile tax: duplicates the State tax. Obviously the legislature intended, by the use of these words, to inform the Commonwealth of the identity of the sellers of cigarettes who would-be liable-for the payment of the tax. Clearly the imposition *629 of this nominal charge was not intended to be an excise tax for the privilege of selling cigarettes.” On the same day we handed down onr opinion in Pittsburgh Milk Company v. Pittsburgh, 360 Pa. 360 , 62 A. 2d 49 , in which we decided that the payments made by milk companies under the Milk Control Law of April 28, 1937, P. L. 417, as amended, 31 PS 700j-101 et seq., were real license fees which precluded imposition of the Pittsburgh Mercantile Tax.
Our most recent decision on this point is Armour and Company v. Pittsburgh, 363 Pa. 109 , 69 A. 2d 405 . We there decided that the Act of May 28, 1915, P. L. 587, as amended, 31 PS 461 et seq., which required meat packers to pay a flat fee of $10. for each establishment, imposed a mere registration charge. Mr. Chief Justice (then Justice) Steen distinguished the milk control fees by saying (p. 114) : . . that fee was a graded one imposed upon milk dealers according to the average quantity of milk daily received or produced by them, ranging from a minimum of $1 to a maximum of $5,000, thus indicating that it was intended by way of reimbursement for the expense of supervision and regulation of the milk industry, the burden being placed upon the dealers in the proportions in which the magnitude of their respective business operations required such supervision.” (Italics mine)
It thus appears that the controlling consideration in each case was the intent of the Legislature: did it intend the fee.-to cover only registration costs or the expense of regulation as well? We have thus far recognized two indicia of this intent; a) Is the fee so small that it could not possibly defray the expense of regulation; and b)‘ is the i&e graduated so that large companies requiring greater regulation pay more?
It seems to me that the application of these two 'tests requires, a conclusion that the bakeries pay “real” license *630 fees. The graduated amounts range from five to twenty dollars annually depending upon the quantity of flour used weekly. These fees have aggregated approximately $23,000.00 in each of the three fiscal years 1950, 1951 and 1952. Neither the City nor appellants have given us any estimate of the cost of regulation to the Commonwealth, and it would be pure speculation for us to attempt to guess what relationship the sum collected bears to the sum expended. But it is clear that $23,000 would pay for a great deal of registration.
The second test of legislative intent mentioned above is more helpful in the present instance. The Legislature has established some difference in fees paid depending on quantity of business done. I do not believe that we should introduce further uncertainty into this field of the law by reaching a different result from that in the Pittsburgh Milk case, supra, by recognizing a difference in degree of graduation of the tax. The important thing is that the Legislature has made some attempt to correlate the size of the fee to the cost of regulation. This is enough to indicate an intent to impose a real license rather than a registration fee. . It is immaterial that the fees exacted may not cover the entire cost of regulation. I therefore dissent in Appeal No. 214.
While the authority of this Court is so circumscribed, speaking for myself alone, I have the temerity to suggest the dire consequences which, in my opinion, are certain to follow the enforcement of this ordinance. It superimposes upon an already heavy property tax what is termed a “mercantile license tax”, i. e., an excise tax, for the privilege of doing business and practicing professions, occupations, etc. within the City. Such tax is imposed “. . . on persons engaging in certain businesses, including manufacturing, professions, occupations, trades, vocations, and commercial activities. . .”. The scope of the tax is so inclusive that it approaches *631 the ancient Domesday Book, of which it has been said that it was so named because, like the day of doom, it spared no one. The only limitation imposed upon the City by the Sterling Act (August 5, 1932, P. L. 45, 53 PS 4613 et seq.) was that City Council could not tax objects which were or thereafter might become “subject to a State tax or license fee”. It is a matter of judicial knowledge that every city and town in the Commonwealth is presently suffering from an anti-urban trend. The imposition of the present and proposed taxes will unquestionably accelerate a further mass commercial, corporate and vocational anti-urban escape from taxation.
The Act of 1947, facetiously termed the “Tax Anything Act”, granted to all other political subdivisions in the Commonwealth the same taxation authority that the Sterling Act conferred on Philadelphia. It is reasonable to suppose that this ordinance, which is now validated, will immediately be followed by all other political subdivisions. The “Tax Anything Act” will then surely be known as the “Tax Everything Act”. If such taxation is thus extended throughout the Commonwealth, there will be a speedy general exodus of business from the Commonwealth. Such tax ordinances and enactments will not prove, I am certain, the anticipated tax “horn of plenty”, but on the contrary will result in the opening of a Pandora’s box releasing economic ills which cannot be recaptured, to the irreparable injury to the City and the Commonwealth.
For these reasons, while I feel impelled to concur in the validity of the ordinance, I venture the suggestion that if the City persists in enforcing this ordinance as now written, there should be appropriate legislation limiting the broad powers now possessed by the municipality.