STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 6354

April 16, 1986

HORSE RACING:

Source of funding of purses for certain Michigan sired horses

TAXATION:

Imposition of taxes upon racetrack license holders

Funding for the special fund to provide purses for Michigan sired standardbred horses established pursuant to MCL 431.73(9); MSA 18.966(43)(a), and for the special fund to provide purses for Michigan sired thoroughbred horses established pursuant to MCL 431.73(10); MSA 18.966(43)(10), are to be derived from specific taxes expressly imposed by MCL 431.75(2); MSA 18.966(45)(2).

MCL 431.73(9)-(10); MSA 18.966(43)(9)-(10), do not impose taxes upon racetrack license holders.

Dr. Paul E. Kindinger

Director

Department of Agriculture

Ottawa Building, North

Lansing, MI 48909

You have requested my opinion concerning the source of the state revenue which is to be deposited in the two special funds mandated by MCL 431.73(9)-(10); MSA 18.966(43)(9)-(10). Each of these funds is to be comprised of 3/10 of 1% of all money wagered on certain classes of horse races. Your question concerning these funds may be stated as follows:

The Racing Law of 1980, MCL 431.61 et seq; MSA 18.966(31) et seq, establishes a comprehensive scheme for the regulation of various forms of horse racing and related activities. Among the activities authorized by the Act, under stringent controls, is pari-mutuel wagering. MCL 431.72(1); MSA 18.966(42)(1), provides in pertinent part:

It is upon the money so wagered that the Legislature has imposed the taxes here in question.

In addition, MCL 431.72; MSA 18.966(42), in pertinent part, establishes a fixed percentage of the total amounts wagered which may be retained by the license holder as a commission on various types of wagers:

The license holder is thus permitted to retain a commission of between 17% and 25%, depending upon the type of wager involved.

MCL 431.75(2); MSA 18.966(45)(2), imposes a tax upon various racing activities, including the following:

Finally, reference must be made to MCL 431.73; MSA 18.966(43), which governs the use and distribution of the state revenue generated under the Act. It states in pertinent part:

It is a fundamental rule of statutory construction that statutes must be read as a whole so as to harmonize and reconcile the meaning of their separate provisions, to avoid inconsistency, and to give effect to the legislative intent. Delta County, v Department of Natural Resources, 118 Mich App 458; 325 NW2d 455, lv den 414 Mich 954 (1982); Bannan v City of Saginaw, 120 Mich App 307; 328 NW 2d 35 (1982), aff'd, 420 Mich 376; 362 NW 2d 668 (1985). Where one section of a statute is ambiguous or susceptible of more than one interpretation, the entire statute must be read as a whole, and the meaning given to the ambiguous section must be determined by considering all other pertinent sections of the statute. Arbor Sales, Inc v Department of Treasury, 104 Mich App 181; 304 NW2d 522 (1981).

In construing tax statutes, moreover, it is fundamental that tax exactions must rest upon legislative enactment and the collection of such taxes must be within the express statutory authority; the scope of taxing statutes cannot be extended by implication or forced construction and any ambiguity or doubt concerning the imposition or scope of a tax must be resolved in favor of the taxpayer. Waterways Navigation Co v Corporation & Securities Commission, 323 Mich 153; 35 NW2d 227 (1949); E F Mac Donald Co v Department of Treasury, 62 Mich App 626; 233 NW2d 678 (1975). These principles are, moreover, of a constitutional dimension, resting upon Const 1963, art 4, Sec. 32, which expressly provides:

Application of these rules of statutory construction and of Const 1963, art 4, Sec. 32, clearly compels the conclusion that the legislative intent and purpose of MCL 431.75; MSA 18.966(45), was to impose specific taxes upon holders of race meeting licenses while the legislative intent and purpose of MCL 431.73(9)-(10); MSA 18.966(43)(9)-(10), was merely to provide for the allocation and distribution of certain specified portions of the state revenue generated by the taxes imposed pursuant to MCL 431.75; MSA 18.966(45).

MCL 431.73(9)-(10); MSA 18.966(43)(9)-(10), provide that 3/10 of 1% of all money wagered on harness and thoroughbred racing, respectively, shall be placed in two separate special funds used to provide purses for races conducted exclusively for Michigan sired standardbred and thoroughbred race horses. Neither of these subsections, however, clearly and distinctly imposes a tax in that amount on race meeting license holders or upon anyone else. To read these subsections as imposing an additional tax upon license holders would be in direct contravention of Const 1963, art 4, Sec. 32.

MCL 431.75; MSA 18.966(45), in contrast, is clearly a taxing statute. It distinctly imposes specific taxes on the commission earned by the holders of race meeting licenses. In light of these distinct taxing provisions, it is abundantly clear that if the Legislature had intended to impose and additional 3/10 of 1% tax on the holders of harness and thoroughbred race meeting licenses in order to fund the two special funds created by MCL 431.73(9)-(10); MSA 18.966(43)(9)-(10), it would have expressly done so.

The clear implication of MCL 431.73(1); MSA 18.966(43)(1), is that the revenue necessary to establish the special funds is to be derived from the 'money received by the racing commissioner under this Act.' Because the only revenue received by the racing commissioner under the Racing Law of 1980 is derived from the license fees and taxes distinctly imposed by MCL 431.75; MSA 18.966(45), it follows that each of the special funds created pursuant to MCL 431.73; MSA 18.966(43) is to be established from revenue received by the state pursuant to MCL 431.75; MSA 18.966(45).

This conclusion is further supported by a comparison of the provisions of MCL 431.73(9)-(10); MSA 18.966(43)(9)-(10), with those of MCL 431.75(2); MSA 18.966(45)(2). MCL 431.73(9)-(10); MSA 18.966(9)-(10), provide that the special funds to be created thereunder are to consist of 3/10 of 1% of the money wagered on harness and thoroughbred horse racing, respectively. MCL 431.75(2)(a)-(b); MSA 18.966(45)(2)(a)-(b), specifically establish distinct taxes, to be paid out of the license holder's commission, on money wagered on pari-mutuel wagering for thoroughbred and harness racing, respectively. In addition, MCL 431.75(2)(f); MSA 18.966(45)(2)(f), imposes a tax on a license holder's commission for money wagered on special sweepstakes pari-mutuel pool wagering for various types of racing, including both thoroughbred and harness racing. It is clear from a comparison of these provisions that the special fund established by MCL 431.73(9); MSA 18.966(43)(9), for harness racing is to be derived from the taxes expressly imposed by MCL 431.75(2)(b) and (f); MSA 18.966(45)(2)(b) and (f), upon harness race wagering commissions. Similarly, it is clear that the special fund established by MCL 431.73(10); MSA 18.966(43)(10), for thoroughbred racing is to be derived from the taxes expressly imposed upon thoroughbred race wagering commissions by MCL 431.75(2)(a) and (f); MSA 18.966(45)(a) and (f).

It is my opinion, therefore, that MCL 431.73(9)-(10); MSA 18.966(43)(9)-(10), do not impose an additional tax to be paid by the holders of race meeting licenses. It is my further opinion that the revenues used to establish the special funds created by those subsections are to be derived from the corresponding specific taxes expressly imposed by MCL 431.75(2); MSA 18.966(45)(2).

Frank J. Kelley

Attorney General