Briefing in the Sheehan Suit
The Appellants' Brief Arguments
II. STATEMENT OF THE CASE
A. The Parties, And An Overview Of The Case
This case presents constitutional and statutory challenges to two purported excise taxes. Central Puget Sound Regional Transit Authority (CPSRTA) and Seattle Popular Monorail Authority (SPMA) are the local taxing districts imposing the taxes. CPSRTA uses the name Sound Transit.
Department of Licensing (DOL) is requiring that vehicle license applicants pay these taxes. If residents of the two authority areas do not pay the CPSRTA and SPMA taxes, DOL will not issue them a vehicle license.
Appellants Mr. Sheehan and Mr. Reynolds own motor vehicles. Mr. Sheehan resides inside both districts’ boundaries, and Mr. Reynolds resides within CPSRTA’s boundaries. They have paid these taxes, and like hundreds of thousands of identically-situated vehicle owners, they will face DOL’s demands that they pay these taxes the next time they apply for a State of Washington vehicle license.
One constitutional claim is that the tax grant statutes do not expressly authorize taxing vehicle license applicants. Another claim is that the taxes CPSRTA and SPMA are imposing are not valid excise taxes. The statutory claims are that RCW 46.08.010 preempts these taxes, and that both taxes are in effect property taxes on motor vehicles of the type two tax exemption statutes prohibit.
B. The Proceedings In The Superior Court
After the pleadings were complete, Appellants moved to certify this case as a class action. That CR 23 motion was noted for consideration on May 14, 2004. CPSRTA and SPMA opposed the CR 23 motion. Their brief argued certification was not appropriate, and alternatively, that the trial Court should delay deciding the certification motion until after it had decided whether to dismiss the lawsuit. CP 116 – 129. CPSRTA and SPMA then moved for summary judgment, seeking dismissal of the lawsuit on the grounds that their taxes are in all respects legal.
Appellants filed cross-motions for partial summary judgment, on the grounds that the taxes are illegal.
The Superior Court resolved the three summary judgment motions by concluding the taxes are legal. It then denied the class certification motion as moot, and dismissed the lawsuit. CP 399 – 405. Neither of the two orders identifies any case or fact as persuasive, and neither shows how any of the claims were analyzed.
C. The Tax Grant Statutes, And The Tax Implementing Processes
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.
A. Standard Of Review For Summary Judgment Rulings
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).
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. CP 155.
The CPSRTA and SPMA taxes are only "masquerading as an excise." 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). 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. See Harbour Village Apartments v. City of Mukilteo, 139 Wn.2d 604, 989 P.2d 542 (1999) at 608 ("¼ 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. 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). 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.
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 trash or purchasing commercial food fish either triggers liability for these taxes or determines their amounts. Justifying taxing events are:
-- The State’s sales tax is triggered by purchases. 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.
-- The State’s leasehold sales tax is triggered when the taxpayer transfers a leasehold. The amount of the tax is function of the price the taxpayer chooses to accept in that voluntary transaction. Black v. State.
-- The State’s Business and Occupations tax is triggered on receipt of business revenue. Its amount varies depending on how the taxpayer has structured the revenue stream of the business. Clifford v. State.
-- The commercial food fish tax is triggered on the transfer of fish. The tax amount depends on the price the purchaser agreed to pay for the fish. High Tide Seafoods.
-- The wine distribution sales tax is triggered when a wine distributor sells wine to wholesalers. The tax is measured as a function of voluntary sales contract prices. Cosro, Inc. v. Liquor Control Bd.
-- A solid waste haulage tax is triggered upon the transfer of trash from the taxpayer to a waste hauler. The amount of the tax is a function of the contract price. Whatcom County v. Taxpayers.
-- The State’s tax on the use and occupancy of a leasehold 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.
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, 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.
F. These Taxes Are Unconstitutional Because Neither Implementing Ordinance Distinctly Describes Taxes On The State Vehicle License
A fourth reason both taxes are unconstitutional is because the two implementing ordinances do not "state distinctly the object of the [tax] to which only it shall be applied." Wash. Const. art. VII, sec. 5. Each of the two taxes is triggered by the same act -- registering a vehicle with DOL to obtain a vehicle license. CPSRTA’s implementing ordinance does not state registering a vehicle for license tabs is the object of the tax; it merely describes "a motor vehicle excise tax of three tenths of one percent." CP 236. SPMA’s implementing ordinance likewise does not distinctly describe an annual tax on vehicle license applicants. Instead, it describes a tax on "using" a vehicle:
a special excise tax not to exceed 1.4 percent on the value of every motor vehicle owned by a resident of the Authority Area for the privilege of using a motor vehicle.
Different taxes are described by these two implementing ordinances, yet CPSRTA and SPMA are imposing taxes with the same incidents. Both taxes as implemented are unconstitutional, because neither of the tax descriptions in the ordinances quoted above distinctly states the object of the taxes. See, Okeson v. City of Seattle, supra, 150 Wn.2d at 556. CPSRTA and SPMA are taxing those vehicle owners who register their vehicles for license tabs, yet neither ordinance distinctly describes that act as the triggering event.
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. 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, but even with narrow constructions each prohibits the kind of taxes CPSRTA and SPMA are imposing.
The Four Tax Grant Statutes Referenced in the Appellants' Brief
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 Project’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).
The Tax Grant in Whatcom County v. Taxpayers, 66 Wn. App. 284, 831 P.2d 1140 (1992).
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).
The Tax Grant in Arborwood Idaho, L.L.C. v. City of Kennewick, 151 Wn.2d 359, 89 P.3d 217 (2004).
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).
The Reply Brief Arguments
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.
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.