Miller v. Agrico Chemical Co.
| Decision Date | 21 May 1980 |
| Docket Number | No. PP-385,PP-385 |
| Parties | Randy MILLER et al., Appellants, v. AGRICO CHEMICAL COMPANY et al., Appellees. |
| Court | Florida District Court of Appeals |
Jim Smith, Atty. Gen. and E. Wilson Crump, II, William D. Townsend and David K. Miller, Asst. Attys. Gen., for appellants.
Julian D. Clarkson, John Radey and Chesterfield Smith, John Radey and Julian D. Clarkson of Holland & Knight, Tallahassee, for appellees.
The Department of Revenue (DOR) appeals a final judgment entered by the circuit court awarding appellees-chemical companies (taxpayers) a refund of 1977 severance taxes paid under Section 211.30(5), Florida Statutes. The Department contends that the trial court erred in striking down its revised method of computing the tax for 1977 by means of which the Department added the amount of the severance tax itself to its formula for computing "value", for tax purposes. We affirm.
The Department presents a multi-faceted argument to support its basic contention that computation of the "value" of minerals at the point of severance, under Chapter 211, Part II, Florida Statutes, should include the severance tax which accrues at the time of severance. The Department argues that the severance tax is an element of cost, arising at severance, which a hypothetical seller at the point of severance would seek to recover. Thus, according to the Department, the amount of the tax should be included as part of the "value" of the minerals at severance. The Department emphasizes its position that the severance tax is an excise tax on the privilege of severance, so that the severing party becomes liable for the tax at the time of severance. It reasons that a hypothetical seller of phosphate rock at the point of severance would recognize that its liability for the severance tax had already arisen, and would pass this tax on to the customer. The Department recognizes that Florida courts have not adopted this principle, but it points to courts of other jurisdictions which have held that liability for oil and gas production taxes arise at the time the oil or gas is severed and reduced to possession. Humble Oil and Refining Company v. Calvert, 478 S.W.2d 926 (Texas 1972), cert. den. 409 U.S. 967, 93 S.Ct. 293, 34 L.Ed.2d 234 (1972); Texas Company v. Fontenot, 200 La. 753, 8 So.2d 689 (1949).
The Department further asserts that although the Florida courts have not had occasion to consider the "double taxation" argument presented by the taxpayers in the circuit court, other jurisdictions have upheld tax assessments which are similar to the Florida severance tax in their operation and effect, citing Hillard v. Big Horn Coal Company, 549 P.2d 293 (Wyo.1976); and Cyprus Mines Corporation v. Madison County, 172 Mont. 116, 560 P.2d 1342 (1977).
Finally, the Department further attacks as inconsistent and illogical the taxpayers' contention that the last sentence of Section 211.30(5), which excludes any shipping, handling, processing or other charges arising between the point of severance and point of sale from determination of the "market price" at the point of severance of the minerals, also requires that the amount of the severance tax paid be similarly excluded in determining market price.
While we recognize and appreciate the position taken by the Department, resting as it does upon basic principles of taxation, we find no occasion to agree or disagree with the cases from other jurisdictions cited by the Department because we feel compelled to base our decision upon more mundane principles of statutory construction. Taxing statutes are to be construed in a light most favorable to the taxpayer, and strictly against the taxing authority, particularly where taxes are being imposed upon taxes, or double taxation is involved. The Supreme Court of the United States has applied such presumptions by rejecting double taxation in the absence of unequivocal statutes requiring such pyramiding of taxes. See Maass v. Higgins, 312 U.S. 443, 61...
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