Request By:
Mr. Steve D. Hurt
Hurt & Heist
Cumberland Law Building
Public Square
P.O. Box 818
Burkesville, Kentucky 42717-0818
Opinion
Opinion By: David L. Armstrong, Attorney General; By Susan G. Leavenworth, Assistant Attorney General
In your letter to the Attorney General, you ask three questions:
1. May the City of Burkesville levy its occupational license tax on employers at a flat rate without regard to income and at 3/4 of 1% on employees?
2. May the City of Burkesville impose no occupational license tax on employers while continuing to tax employees?
3. May the city council pass an ordinance requiring employees to be city residents? May it be applied retroactively and may it be applied to policemen?
Your first two questions are related and our answer to both is the same. Cities may impose occupational taxes on businesses, trades and occupations. KRS 92.280, Ky. Const. § 181. Ky. Const. § 171 requires that "taxes . . . shall be uniform upon all property of the same class subject to taxation . . . ." The Courts in Kentucky have consistently held that classifications of businesses, trades and occupations and the persons engaged therein must be based on reasonable distinctions among the different classes. Williams v. City of Bowling Green, 254 Ky. 11, 70 S.W.2d 967 (1934); Paducah Automotive Trades Association v. City of Paducah, 307 Ky. 524, 211 S.W.2d 660 (1948); Jellico Grocery Company v. City of Whitesburg, 286 Ky. 470, 151 S.W.2d 35 (1941); Great Atlantic & Pacific Tea Company v. Kentucky Tax Commission, 278 Ky. 367, 128 S.W.2d 581 (1939); City of Lexington v. Motel Developers, Inc., Ky., 465 S.W.2d 253 (1971). It is our opinion that a classification of employer and employee is unreasonable and hence unconstitutional. The tax must be applied to all persons within a business, trade or occupation uniformly.
As to your third question, we assume you are referring to city employees. We can find no prohibition to such a requirement. KRS 61.015 says that no person shall be disqualified for employment, for which position the law requires prior residency, solely because of alterations of city boundaries. By implication, residency requirements would appear to be permissible for all city employees except policemen. Peace officers are specifically exempt from all residency requirements by KRS 15.335. OAG 71-246, 73-556, 76-416, 79-505. As to whether the requirement may be applied retroactively, it would depend on the exact provisions of the ordinance. However, we refer you to KRS 446.080(3): "No statute shall be construed to be retroactive, unless expressly so declared." Taylor v. Asher, Ky., 317 S.W.2d 895 (1958).