Judge Traylor on Taxes
From Judgepedia
2006
- Justice Traylor concurred in the majority opinion of Justice Bernette J. Johnson, which held that a Government Agency Order requiring cell phone providers to pay into a fund for setting up rural phone service was a permissible "fee" rather than an unconstitutionally impermissible "tax," even though the eventual effect of these fees would be to pass on the costs to cell phone users rather than the general public.
ISSUES:
- The issue in this case was whether the plaintiff was correct in arguing that the forced contribution was an impermissible tax under Article 7, Section 1 of the Louisiana Constitution, rather than a permissible administrative fee, since it was not intended to defray costs incurred in the administration of any regulatory program, but intead was intended to be distributed to private businesses for the sole purpose of subsidizing the costs of rural telecommunication carriers."
HOLDING:
- The Majority held that the "principal object" of this forced contribution from cellular phone providers was not "the raising of revenue, but was merely incidental to the making of rules and regulations to promote public order, individual liberty, and general welfare," and was thus "an exercise of the police power."
MAJORITY REASONING:
- (1) Other courts in other states have held that "charges imposed to 'reallocate costs' between utilities or telecommunications companies are not taxes."
- (2) An assessment only amounts to a tax where "the primary purpose of the assessment is to raise revenue."
- (3) The Louisiana Public Service Commission is an expert in its own specialized field and ints interpretation and application of its own General Orders * * * deserves great weight * * *."
- (4) The Nebraska Supreme Court, Kansas Supreme Court, North Carolina Supreme Court, and a Michigan court all reached the conclusions that such an assessment was not a tax.
Potential Flaws in the Court's Reasoning:
- (1) In reaching this conclusion, the court may been been attempting to circumvent the Louisiana Constitution, which requires supermajorities in order ot raise taxes: See Article 7, Section 2 of the Louisiana Constitution, which states that "The levy of a new tax, an increse in an existing tax, or a repeal of an existing tax exemption shall require the enactment of a law by two-thirds of the elected members of each house of the legislature."
- (2) The Louisiana Public Service Commission advised the objecting cellular service providers that they could simply "recover the amounts contributed from its customers either by surcharge," or through a rate increase.
- (3) Bell South, a potential recipient of the assessments intervened in the case on its own behalf to argue that the assessment was a fee, and not a tax.
- (4) The assessments were intended to raise revenue for the subsidization of local telephone companies, and were to be given to a third party for disbursement to rural phone companies.
