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The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us)



STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL


Opinion No. 5737

July 11, 1980

CONSTITUTIONAL LAW:

Const 1963, art 9, Sec. 9

MOTOR VEHICLES:

Expenditure of proceeds of specific taxes on motor vehicles

TAXATION:

Specific taxes

Use taxes

TRANSPORTATION:

Regional transportation authority

1967 PA 204, Sec. 16a, which imposes additional taxes upon registration of and transfer of the title of motor vehicles within a certain regional transportation district and to provide for the payment of the proceeds of such taxes to the authority, violates Const 1963, art 9, Sec. 9.

Honorable Thomas H. Brown

State Representative

The Capitol

Lansing, Michigan 48909

In your recent letter you advise that 1967 PA 204, Sec. 16a, as added by 1976 PA 266 and as last amended by 1980 PA 89; MCLA 124.416a; MSA 5.3475(116a), provides for funding for a certain transportation district through a $2.50 tax on motor vehicle registrations and a $6.00 tax on motor vehicle title transfers within a certain transportation district to support transportation facilities within that district.

You have requested my opinion on the following question:

Whether Const 1963, art 9, Sec. 9, as amended by the people in 1978, is applicable to the funds raised for such transportation district through the above-mentioned taxes levied in the transportation district.

1967 PA 204; MCLA 124.401 et seq; MSA 5.3475(101) et seq, authorizes the creation of metropolitan transportation authorities and transportation districts, including the establishment of the Southeastern Michigan Transportation Authority (SEMTA), composed of the Counties of Livingston, Macomb, Monroe, Oakland, St. Clair, Washtenaw and Wayne.

1967 PA 204, Sec. 16a, as last amended by 1980 PA 89, supra, provides for the imposition of a tax upon the transfer and registration of certain vehicles for the use and benefit of certain transportation districts, and which provides, in relevant part, as follows:

'(2) Effective April 15, 1977, in addition to other methods provided in this act for financing the acquisition or improvement of public transportation facilities in a transportation district, and operating the facilities, there shall be imposed the following:

'(a) A use tax of $2.50 on each vehicle for which a registration fee is collected by the secretary of state pursuant to section 801 of Act No. 300 of the Public Acts of 1949, as amended, being section 257.801 of the Michigan Compiled Laws, if the address of the registrant, as indicated on the application for registration, is in a county which is part of a transportation district. If the application for registration is submitted to the secretary of state by mail, the tax of $2.50 shall be imposed upon a vehicle if the registered owner resides in a county which is part of a transportation district. The tax shall be collected by the secretary of state at the same time and in the same manner as the fee collected under section 801 of Act No. 300 of the Public Acts of 1949, as amended.

'(b) A use tax of $6.00 upon the transfer of the title of a motor vehicle when the application for a certificate of title, except a salvage certificate of title, is submitted in a county which is part of a transportation district. The tax shall be imposed upon the person, association, or corporation who is the purchaser or transferee of the motor vehicle and shall be collected for the counties by the secretary of state at the same time and in the same manner as the fee collected under section 806 of Act No. 300 of the Public Acts of 1949, as amended, being section 257.806 of the Michigan Compiled Laws.

'(3) The revenue from the taxes shall be deposited in a separate account in the state treasury and all of the revenue except that used for the necessary expenses incurred in collecting the taxes shall be returned on a quarterly basis to the authority in which a transportation district has been created.' (Emphasis added.)

Thus 1967 PA 204, Sec. 16a, supra, imposes certain taxes upon motor vehicles and provides for their disbursements to a transportation authority. The taxes imposed by 1967 PA 204, Sec. 16a, supra, while most recently denominated as use taxes, are similar to those required by 1949 PA 300, Secs. 801 and 806; MCLA 257.801 and 806; MSA 9.2501 and 2506, with both taxes being required for motor vehicle registrations and title transfers occurring within a metropolitan transportation district.

Const 1963, art 9, Sec. 9, as amended by the people in 1978, provides:

'All specific taxes, except general sales and use taxes and regulatory fees, imposed directly or indirectly on fuels sold or used to propel motor vehicles upon highways and to propel aircraft and on registered motor vehicles and aircraft shall, after the payment of necessary collection expenses, be used exclusively for transportation purposes as set forth in this section.

'Not less than 90 percent of the specific taxes, except general sales and use taxes and regulatory fees, imposed directly or indirectly on fuels sold or used to propel motor vehicles upon highways and on registered motor vehicles shall, after the payment of necessary collection expenses, be used exclusively for the transportation purposes of planning, administering, constructing, reconstructing, financing, and maintaining state, county, city, and village roads, streets, and bridges designed primarily for the use of motor vehicles using tires, and reasonable appurtenances to those state, county, city, and village roads, streets, and bridges.

'The balance, if any, of the specific taxes, except general sales and use taxes and regulatory fees, imposed directly or indirectly on fuels sold or used to propel motor vehicles upon highways and on registered motor vehicles, after the payment of necessary collection expenses; 100 percent of the specific taxes, except general sales and use taxes and regulatory fees, imposed directly or indirectly on fuels sold or used to propel aircraft and on registered aircraft, after the payment of necessary collection expenses; and not more than 25 percent of the general sales taxes, imposed directly or indirectly on fuels sold to propel motor vehicles upon highways, on the sale of motor vehicles, and on the sale of the parts and accessories of motor vehicles, after the payment of necessary collection expenses; shall be used exclusively for the transportation purposes of comprehensive transportation purposes as defined by law.

'The legislature may authorize the incurrence of indebtedness and the issuance of obligations pledging the taxes allocated or authorized to be allocated by this section, which obligations shall not be construed to be evidences of state indebtedness under this constitution.' (Emphasis added.)

In Pingree v Auditor General, 120 Mich 95; 78 NW 1025 (1899), the Court set forth the general rule to determine whether taxes are specific or ad valorem. In that decision, the Court recognized that specific taxes are of a fixed amount by the head or number, or by some standard of weight or measurement, and require no assessment other than a listing or classification of the subjects to be taxed. The fact that in imposing a specific tax, the value of the thing taxed is taken into consideration in determining the amount of it, does not change the nature of the tax. The ad valorem tax, on the other hand, is a tax of a fixed proportion of the value of the property with respect to which the tax is assessed, and requires the intervention of assessors or appraisers to estimate the value of such property before the amount due from each taxpayer can be determined.

It has been held that taxes similar to those imposed by 1967 PA 204, Sec. 16a, supra, i.e., certain motor vehicle taxes, specifically imposed on the registration and transfer of title of motor vehicles, are specific taxes, additionally classified or defined as 'privilege' taxes. Jasnowski v Board of Assessors of the City of Detroit, 191 Mich 287; 157 NW 891 (1916).

Upon examination and comparison, it is evident that the taxes imposed by 1967 PA 204, Sec. 16a, supra, are in the nature of those described in Jasnowski v Board of Assessors of the City of Detroit, supra, and are thus specific taxes. C.F. Smith Co v Fitzgerald, 270 Mich 659; 259 NW 352, app dis, 296 US 659; 56 S Ct 115; 80 L Ed 470 (1935).

Although the Legislature recently amended 1967 PA 204, Secs. 16a(2)(a) and (b), supra, to change the name of the taxes to 'use taxes,' the name or designation given by the Legislature to the taxes in question is not conclusive upon the courts in determining the true nature of such taxes. It has been variously stated that the character or nature of a particular tax must be determined by its operation, practical results, and incidents, and by the substance and natural and legal effect of the language employed in the statute or law imposing it. Such factors should be relied upon, rather than the name given the tax by the legislature or the particular descriptive language which may have been applied to it. 71 Am Jur 2d, State and Local Taxation, Sec. 22.

That this is particularly true in our state can be seen from the opinion of Pingree v Auditor General, supra, where the Court devoted the better part of its opinion to an analysis of the true nature of the tax in question before it, not taking at face value the label placed upon it by the Legislature. This point is emphasized by the Court in that case, wherein it was stated:

'The name is not material. It is the nature of the tax imposed which settles the question as to its validity.' (p 114)

As was indicated in Western Electric Co v Department of Revenue, 312 Mich 582, 596; 20 NW2d 734, 739; (1945):

'The use tax was enacted for the purpose of levying and collecting a specific tax for the privilege of using, storing or consuming tangible personal property. Goebel Brewing Co. v State Board of Tax Administration, 306 Mich 222. It is complementary to the sales tax. . . . Property, the sale of which is subjected to the sale tax, is exempted from payment of the use tax. . . . This act is designed to impose an excise tax on the use, storage or consumption of tangible personal property brought into the State in interstate commerce, after it has come to rest in this State. . . .' [Citations omitted.]

1937 PA 94, Sec. 3; MCLA 205.93; MSA 7.555(3) additionally provides in pertinent part:

'There is levied upon and there shall be collected from every person in this state a specific tax for the privilege of using, storing or consuming tangible personal property in this state, which tax shall be equal to 4% of the price of such property, or services specified in section 3a, and to such tax there shall be added penalties and interest where applicable as hereinafter provided. For the purpose of the proper administration of this act and to prevent the evasion of the tax, it shall be presumed that tangible personal property purchased shall be subject to the tax if brought into the state within 90 days of the purchase date and shall be considered as acquired for storage, use or other consumption in this state.'

The Legislature accordingly has provided for the imposition of a use tax to reach those out-of-state purchases exempt from the imposition of a sales tax. National Bank of Detroit v Department of Revenue, 334 Mich 132, 141; 54 NW2d 278, 283 (1952), cert den, 349 US 934; 75 S Ct 781; 99 L Ed 1264 (1954). The $6.00 and $2.50 taxes imposed by 1967 PA 204, Sec. 16a, supra, however, are not based on out-of-state purchases to complement the sales tax imposed on certain in-state purchases and cannot be considered use taxes, as set forth above, inasmuch as they are arbitrary flat fees imposed on the registration and transfer of title of motor vehicles within the state and are not based on the price of the tangible personal property involved. In addition, the taxes in question are not general use taxes by reason of their selective applicability to only the registration and transfer of title of motor vehicles.

Accordingly, changing the name of the taxes in question to 'use taxes' does not remove the revenue collected from the expenditure restrictions contained in Const 1963, art 9, Sec. 9, supra. To the extent the specific taxes fall upon motor vehicles, the taxes come within the designated operation and restricted uses of Const 1963, art 9, Sec. 9 and not within the types of specific taxes, i.e., general sales and use taxes or regulatory fees, categorically excepted therefrom. 2 OAG, 1960, No 3481, p 1 (January 2, 1960).

It should be noted that 1967 PA 204, Sec. 16a(3), supra, requires that the specific taxes imposed therein be returned on a quarterly basis to the authority of the transportation district. Thus, 1967 PA 204, Sec. 16a, supra, is squarely in conflict with Const 1963, art 9, Sec. 9.

It is therefore my opinion, in answer to your question, that the tax of $2.50 on each motor vehicle for which a registration fee is collected and the tax of $6.00 upon the transfer of title of motor vehicles as imposed by 1967 PA 204, Sec. 16a, supra, are specific taxes which come within the purview of Const 1963, art 9, Sec. 9.

The law is well settled that where a legislative enactment conflicts with a constitutional provision the Constitution must prevail. C.F. Smith Co v Fitzgerald, supra.

In Chambe v Durfee, 100 Mich 112; 58 NW 661 (1894), the Legislature enacted a statute imposing specific taxes on certain gifts and inheritances, the proceeds from which were directed to be spent in a particular manner, whereas Const 1850, art 14, Sec. 11, mandated the expenditure of all specific tax revenues in another manner. The court, in its opinion in that case, stated:

'. . . The Legislature has attempted by section 20 of the act to apply the money arising from the tax to the expenses of the State government, and to such other purposes as the Legislature may direct. These provisions of the Constitution as to the application of the funds arising from specific taxes are mandatory, and the Legislature has no power to place the moneys arising from such taxes into any other fund than those designated. Walcott v. People, 17 Mich. 68; Youngblood v. Sexton, 32 Id. 406. The moneys, therefore, arising from this tax, if it be regarded as a specific tax, must go into a different fund by this constitutional provision than that designated by the Legislature under section 20 of the act. . . .' Chambe v Durfee, 100 Mich 112, 115; 58 NW 661, 662 (1894).

The Court therefore, held that the legislative disposition of specific taxes, being in conflict with the Constitution, was void.

The Court further held that since the taxation objectives of the statute as originally contemplated by the Legislature were no longer capable of being achieved, being contrary to the Constitution, the whole act must fall.

Const 1963, art 9, Sec. 9, supra, requires that not less than 90 percent of all the specific taxes in question, after payment of necessary collection expenses, be used exclusively for the six transportation purposes set forth in Const 1963, art 9, Sec. 9, supra, with the balance of the specific taxes to be used for the comprehensive transportation purposes, as defined by law.

However, 1967 PA 204, Sec. 16a, supra, does not require that revenue from the specific taxes will be used in accordance with the requirements of Const 1963, art 9, Sec. 9, supra. Instead, Section 16a, supra, of said act requires only that the revenue from the taxes be deposited in a separate account in the state treasury, with all the revenue being returned to the metropolitan transportation authority on a quarterly basis, with the exception of necessary collection expenses.

Therefore, in applying the case law of Chambe v Durfee, supra, to 1967 PA 204, Sec. 16a, supra, it is clear that all the taxation provisions and the disbursement provisions contained in Section 16a, supra, of said act are in conflict with the provisions of Const 1963, art 9, Sec. 9, and are, therefore, void.

It must be observed that amendatory 1976 PA 266 not only added Section 16a to 1967 PA 204, supra, but it also amended 1967 PA 204, Secs. 2, 5, 10 and 16.

As was said in Mathias v Treasurer of the Township of Owosso, 73 Mich 5, 8-9; 40 NW 926, 927 (1888):

'An unconstitutional provision or section in a statute will not affect the other provisions of the law unless they are essentially and inseparably connected in substance. Where, therefore, a part of a statute is unconstitutional, the fact does not authorize the courts to declare the remainder void also, unless all the provisions are connected in subject-matter, depending on each other, operating together for the same purpose, or otherwise so connected together in meaning that it cannot be presumed the Legislature would have passed the one without the other. Cooley, Const. Lim. 177; Com. v. Hitchings, 5 Gray, 485; People v. Biggs, 50 N.Y. 553. If the general provisions of the law are unobjectionable, the whole act will not be declared nugatory in consequence of some objectionable provisions. Smith v. Village of Adrian, 1 Mich. 495; Ames v. Booming Co., 6 Id. 266; People v. Haug, 68 Id. 549 (37 N. W. Rep. 21).'

1967 PA 204, Secs. 2, 5, 10 and 16, which relate to powers and duties of authorities and their successors as well as definitions, are not essentially and inseparably connected in substance to Section 16a and are, therefore, separable therefrom and are valid.

It is my opinion, therefore, that 1967 PA 204, Sec. 16a, as added by 1976 PA 266, and as last amended by 1980 PA 89, is in conflict with the provisions of Const 1963, art 9, Sec. 9, and is void.

Frank J. Kelley

Attorney General


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