Request By:
Mr. Louis M. Waller
Attorney at Law
P.O. Box 27
139 W. Fourth Street
Russellville, Kentucky 42276
Opinion
Opinion By: Steven L. Beshear, Attorney General; Walter C. Herdman, Asst. Deputy Attorney General
This is in response to your letter of March 8, in which you relate the following facts:
"For several years the City of Adairville has utilized, as its principal revenue source, a tax on the privilege of operating a motor vehicle on the streets of the city.
"Recently the city has adopted a license tax and a payroll tax measured by 1% of the amounts earned within the city.
"The Mayor and City Council now desire to consider having both the 'city sticker' and the license and payroll tax in effect at the same time but to allow a credit equal to the amount of payroll or license tax paid toward the purchase price of the sticker. In other words, if a resident bought a $20.00 motor vehicle sticker but had paid over $20.00 in payroll tax during the same quarter no amount would be required as payment for the sticker.
"The reason for consideration of the fore-going proposal is to more equally spread the tax burden to those persons not employed in the City of Adairville."
Under the above referred to facts you raise the question concerning the legality of the City of Adairville extending a credit equal to the amount of payroll or license tax paid toward the purchase of a city automobile sticker.
Our response to your question would be in the negative. A city automobile license sticker is completely unrelated to an occupational tax levy on persons doing business in the city. The so-called automobile sticker is levied under the police powers of the city for the regulation and upkeep of the city streets. It is not supposed to be a revenue raising method and must be uniform on all residents as well as non-residents of the city who operate their automobiles within the city. The courts have discussed the question of a possible difference in classification with respect to residents and nonresidents and have consistently held that every vehicle using the streets (resident or nonresident owners) must pay the same fee. We refer you initially to the case of Commonwealth v. Kelly, 229 Ky. 722, 17 S.W.2d 1017 (1929) and particularly to the case of Johnson v. City of Paducah, 285 Ky. 294, 147 S.W. 721 (1941). We also enclose copies of OAG 80-521 and 80-202 which go into more specific detail and case law with respect to a city's right to levy a uniform automobile license tax on all regular users of the city streets.
In addition we also refer you to the case of Markendorf v. Friedman, 280 Ky. 484, 133 S.W.2d 516 (1939), 127 ALR 416, dealing with the question of city licenses in which the court referred to the constitutional prohibition against granting special privileges and enacting special or local legislation and pointed out that all businesses similarly situated must be placed upon the same plane of equality to render it impossible for any class to obtain preferred treatment. The court did of course recognize that Section 3 and Section 59 of the Constitution do not forbid separate classification based on reasonable and natural distinctions. However, in your situation, we do not believe that such exist since there can be no distinction or different classification between a resident and a nonresident for automobile tax purposes irrespective of the fact that a resident may have to pay an occupational tax as well as an automobile sticker tax and a nonresident pays only the sticker tax where he does not carry on a business in the city. In other words credit cannot legally be given on an automobile sticker license fee simply because the resident also operates a business in the city and is required to pay an occupational license.