Western Petroleum Importers, Inc. v. Friedt
| Citation | 127 Wn.2d 420,899 P.2d 792 |
| Decision Date | 10 August 1995 |
| Docket Number | No. 62771-1,62771-1 |
| Court | Washington Supreme Court |
| Parties | WESTERN PETROLEUM IMPORTERS, INC., Hogan & Company, Inc., Christopher Bodiford, Respondents, v. Katherine Baros FRIEDT, Director, Washington State Department of Licensing; and Washington State Department of Licensing, Appellants. |
Carney, Badley, Smith & Spellman, James Lobsenz, Seattle, WA, for respondents.
This appeal involves the interpretation and At issue is whether the Legislature's repeal of a tax exemption and tax credit relating to gasohol production and distribution is a "raise" in existing taxes that is subject to the terms of section 13 and, consequently, must be approved by a majority of the voters at a general election before it is effective. We hold that section 13 does not apply in this instance.
application of section 13 of the taxpayer protection act, Laws of 1994, ch. 2, p. 18 (Initiative 601). Section 13 expired on July 1, 1995, just 3 days after we heard oral argument in the case, and the same day the [899 P.2d 794] key provisions of Initiative 601 became effective.
The Plaintiffs are two corporations which sell alcohol used in the production of gasohol, a motor vehicle fuel, and a King County resident who purchases gasohol and other motor vehicle fuel for his automobile. The Plaintiffs brought this action to challenge the validity of Engrossed Substitute House Bill 2326, § 1, now Laws of 1994, ch. 225, § 1, p. 1245 (hereafter ESHB 2326) (repealing the tax exemption and tax credit available to certain producers and distributors of alcohol used in gasohol). Plaintiffs also sought an order enjoining the Defendants, the Department of Licensing and its director, Katherine Baros Friedt, from enforcing the law. 1
The facts in this case are undisputed and the only question to be resolved is one of law. Accordingly, both parties moved for summary judgment.
The trial court granted the Plaintiffs' motion, declaring section 1 of ESHB 2326 null and void and enjoining its enforcement until such time as it might be approved by the voters of the state of Washington.
The Department appealed directly to this court and we retained jurisdiction.
We reverse and remand for entry of an order granting the Department's motion for summary judgment.
Does section 13 of Initiative 601, requiring voter approval before the Legislature may raise existing taxes, apply to the repeal of a tax exemption and tax credit relating to the distribution of alcohol used in the production of a motor vehicle fuel?
This case involves only one section--section 13--of Initiative 601. Section 13 is one of two sections of the initiative which went into effect in December 1993, 1 month after Initiative 601 was approved by the voters.
Section 13 provides:
(1) After [December 2, 1993], the state may raise existing taxes, impose new taxes as authorized by law, or make revenue-neutral tax shifts only with approval of a majority of the voters at a November general election. The requirement for a vote at a November general election is in addition to any other requirements established by law.
(2) This section expires on July 1, 1995.
(Italics ours.) Laws of 1994, ch. 2, § 13, p. 23-24; RCW 43.135.904.
The narrow issue presented by this appeal is whether the limitation imposed by section 13 on any legislative attempt to "raise existing taxes" applies to the Legislature's repeal of a tax preference granted to certain producers and distributors of alcohol used in the manufacture of gasohol.
In determining the proper construction of section 13, we apply general rules of statutory construction. Hi-Starr, Inc. v. Liquor Control Bd., 106 Wash.2d 455, 460, 722 P.2d 808 (1986) (). Thus, where the language of the enactment is plain, unambiguous and well understood according to its natural and ordinary sense and meaning, the enactment is not subject to judicial interpretation. Tacoma v. State, 117 Wash.2d 348, 356, 816 P.2d 7 (1991) (citing Seattle v. Ross, 54 Wash.2d 655, 658, 344 P.2d 216 (1959)). The intent behind the language of an enactment becomes relevant only if there is some ambiguity in that language. Spokane v. Taxpayers of Spokane, 111 Wash.2d 91, 98, 758 P.2d 480 (1988). In construing the meaning of an initiative, the language of the enactment is to be read as the average informed lay voter would read it. Estate of Turner v. Department of Rev., 106 Wash.2d 649, 654, 724 P.2d 1013 (1986).
We hold the words "raise existing taxes" as contained in section 13 are plain, unambiguous, and well understood according to their natural and ordinary meaning. In its ordinary sense, the phrase "raise existing taxes" means to increase the existing statutory rate of taxation.
The motor vehicle fuel tax rate which existed when section 13 became effective in December 1993, is set forth in RCW 82.36, the motor vehicle fuel tax statute. That statute provides in part:
Tax imposed--Rate to be computed--Allocation of proceeds. Every distributor shall pay, in addition to any other taxes provided by law, an excise tax to the director at a rate computed in the manner provided in RCW 82.36.025 for each gallon of motor vehicle fuel sold, distributed, or used by him in the state as well as on each gallon upon which he has assumed liability for payment of the tax under the provisions of RCW 82.36.100[.]
The rate of tax imposed is set forth in RCW 82.36.025 which states in part:
State-wide motor vehicle fuel taxes. The motor vehicle fuel tax rate shall be computed as the sum of the tax rate provided in subsection (1) of this section and the additional tax rates provided in subsections (2) through (5) of this section.
The existing motor vehicle fuel tax, as calculated under RCW 82.36.025(1) through (5), is approximately 23 cents per gallon.
In order to encourage the use of gasohol and to aid in-state producers of alcohol used in the production of gasohol, the Legislature created a tax preference, excusing certain producers and distributors of alcohol used in gasohol from paying the full motor vehicle fuel tax. The tax preference was in the form of an exemption and credit and was set forth in former RCW 82.36.2251 2 as follows:
(1) Alcohol of any proof that is sold in this state for use as fuel in motor vehicles, farm implements and machines, or implements of husbandry is exempt from the motor vehicle fuel tax under this chapter if such alcohol was manufactured by a company that has been verified by the department [of licensing] as having sold less than eight million gallons of alcohol for use as motor fuel in the prior calendar year.
(2) In addition, a tax credit of sixty percent of the tax rate imposed by RCW 82.36.025 shall be given for every gallon of alcohol receiving the exemption under subsection (1) of this section and used in an alcohol-gasoline blend which contains at least nine and one-half percent or more by volume of alcohol: PROVIDED, That in no case may the tax credit claimed be greater than the tax due on the gasoline portion of the blended fuel.
(3) This section shall expire on December 31, 1999.
The effect of former RCW 82.36.2251 was to reduce the actual fuel tax paid by certain producers and distributors of gasohol from the 23 cents per gallon fuel tax imposed on gasoline to approximately 19 cents per gallon.
Section 1 of ESHB 2326 repealed RCW 82.36.2251.
Plaintiffs claim that the amount of taxes due to the State as motor vehicle fuel taxes has increased due to the repeal of RCW 82.36.2251. Because individual tax payments and the State's tax revenue from those payments have increased, the Plaintiffs argue that the existing motor vehicle fuel tax has been raised in violation of section 13.
However, taxes are not "raised" because the amount of tax that an individual taxpayer pays or that the State receives may increase from one year to the next. This state's motor vehicle fuel tax is set forth in RCW 82.36.025, and taxpayer liability is determined according to that statute. A tax credit is an amount subtracted from that liability, reducing the amount that certain taxpayers must pay. Black's Law Dictionary 1461 (6th ed. 1990). A tax exemption relieves certain taxpayers from payment, in whole or in part, of taxes due. Shepard's Tax Dictionary 195 (1990). Both are considered tax preferences, RCW 43.136.020, and are used in reducing a tax liability owed and in arriving at the sum that an individual taxpayer must pay. Both are computed by first looking at the existing tax liability.
In enacting ESHB 2326 the Legislature made a policy decision that these tax preferences were no longer efficient or equitable tools for achieving legislative objectives. The Legislature determined that because the public interest was no longer being served by the continued existence of the gasohol tax credit and tax exemption, these particular tax preferences should be terminated. See RCW 43.136.010 () 3
The effect of ESHB 2326 is to require the producers and distributors of alcohol used in gasohol to pay the full existing motor vehicle fuel tax. Although this requirement has an effect of increasing the amount certain individual taxpayers will pay, it does not constitute a raise in the existing motor vehicle fuel tax set forth in RCW 82.36.025.
Because it is not a raise in the existing motor vehicle fuel tax, it is not subject to the provisions of section 13.
Additionally, we hold that section 13 of Initiative 601 was enacted as an amendment or addition to the...
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