City of Scranton v. Scranton Electric Light & Heat Co.

Opinion by Rice, P. J., The ordinance in question was approved on November 4, 1901, and by its express terms was to take effect on the first Monday of April, 1902. It provides that every person, firm and corporation engaged in or about to engage in any calling, vocation or business named in the ordinance shall procure a license from the city treasurer and pay for the same a certain percentage annually of gross receipts. Electric light companies are required to pay two per cent, of their gross receipts. The second section provides that all license taxes shall be due the first Monday of April in each year, and if not paid before the first day of June next ensuing a penalty of five per cent, shall be added ; further, that all the persons required to pay a percentage of their gross earnings shall furnish to the city treasurer a statement showing the amount of business done “ for year ending June 1, before the payment of the license tax shall become due and payable, and on the first of June in every year [436] thereafter .... and license fees collected by tbe city treasurer shall be based on said return.” Upon September 16,1903, the defendant, in compliance with the request of the city treasurer, furnished to him a statement of its gross receipts for the twelve months ending June 1, 1902, and upon the amount thereof the city treasurer assessed a license tax of two per centum; for which, with a penalty of five per cent., this suit was brought. The first question to be considered is whether the tax became due and payable on the very day the ordinance went into effect. As the tax is made payable on the first Monday of April and is based on a statement of the gross receipts of the company for the year ending June 1, preceding, “the gross receipts for the year ending June 1,1902, could be the basis of no other tax than that which was due the first Monday of April, 1903 ” as the learned referee well says. We see no escape from his conclusion, which was approved by the learned court below, that no tax was due for the year ending April 1, 1902, the period covered by this action. Nor, even if it be assumed that the tax for each fiscal year is payable in advance, can we see how the ordinance can be so construed as to make a statement -of gross earnings for the year ending June 1, 1902, the basis of taxation for the fiscal year which began on April 1, preceding. The ordinance clearly contemplates that the tax due on the first Monday of April shall be based on the . gross receipts for the year ending the preceding June; therefore, whether we regard the first Monday of April as the beginning or the end of the year for which the tax is exacted, the referee and the court were right in holding that the present action cannot be maintained. The important question raised by the exceptions and assignments of error and discussed in the-report of the referee and the opinion of the court, as well as by counsel upon both sides in the printed briefs upon which the case was submitted, is whether the ordinance is a valid exercise of the taxing powers conferred on cities of the second class. We agree with counsel for the appellant that the question involved is one of great interest to all cities of the second class and public service corporations operating therein, and invites the most careful consideration. The power to impose a license tax upon the gross receipts of such corporations is supposed to be derived from sec [437] tion 4, article 3, of the act of May 7, 1901, which reads: “ 4. Every city of the second class shall have power, for general revenue purposes, to levy and collect a license tax, to be fixed by ordinance, upon street railways, hack drivers, auctioneers, and all and every corporation, company or individual doing business in said city, payable annually, and to regulate the collection of the same.” This section of the act was under consideration in the recent case of Pittsburg Railways Co. v. Pitts-burg, 211 Pa. 479, and the three cases which immediately follow it. It was there held that a tax imposed by a city of the second class of twenty-five cents per foot for each lineal foot of track laid, maintained or operated by a street railway within the city, exclusive of such tracks as may be in its yards or buildings, is a property tax and not a license tax or fee within the meaning of the section of the act of 1901, above quoted, although so designated in the ordinance. The difference between the two cases as to the basis upon which the amount of the tax is to be computed does not, in our judgment, distinguish them in principle. Indeed, it would seem that a tax or fee measured by the extent and manner |n which a street railway company occupies the streets of a municipality might more appropriately be imposed under a power to collect a license tax, than a tax or fee measured by the gross receipts of the company. A full consideration of the cases cited in the briefs of counsel leads us to the conclusion that the referee and court were right in holding that the power delegated to a municipality to collect license taxes, even for revenue purposes, cannot be construed to include a tax upon gross receipts. Their conclusion is so well supported by the report of the learned referee and the opinion of the learned judge overruling the exceptions thereto as to render it unnecessary for us to do more than to state our concurrence therewith. In view of the foregoing conclusions upon the two points suggested we need not consider the question whether the taxes levied under the ordinance are in violation of séctiori 1,- article 9 of the constitution relative to uniformity of taxation. Judgment affirmed.