Appeal, No. 143, March T., 1955, from order of Superior Court of Pennsylvania, April T., 1954, Appeal No. 228, affirming order of Court of Common Pleas of Allegheny County, April T., 1954, No. 3135, in case of Samuel M. Fischer, Morris Fischer and Paul L. Fischer, trading as Fischer Bed Spring Company v. City of Pittsburgh et al. Order affirmed.
David Stahl. Assistant City Solicitor, with him J. Frank McKenna, Jr., City Solicitor, for appellants.
Jerome C. Bachrach, with him Abe R. Cohen, and Crone & Cohen, for appellees.
Before Stern, C.j., Stearne, Jones, Musmanno and Arnold, JJ.
OPINION BY MR. CHIEF JUSTICE HORACE STERN
We allowed this appeal from a decision of the Superior Court (178 Pa. Superior Ct. 16, 112 A.2d 814) affirming an order of the Court of Common Pleas of Allegheny County which held that plaintiffs were not subject to an earned income tax imposed by an ordinance of the City of Pittsburgh.
Plaintiffs are a partnership engaged in the manufacture of bed springs and allied products. The ordinance in question was enacted under and by virtue of the authority granted by the Act of June 25, 1947, P.L. 1145, which authorized certain political subdivisions, including cities of the second class, to levy, assess and collect taxes, with certain specified exceptions, on persons, transactions, occupations, privileges, subjects and personal property. An amendment of May 9, 1949, P.L. 898, added another exception, namely, that they should not have authority to levy, assess and collect a tax on goods and articles manufactured in such political subdivision or on the by-products of manufacture, or on any privilege, act or transaction related to the business of manufacturing. The Pittsburgh ordinance imposed a tax on the net profits earned from businesses, professions and other activities conducted by residents of the city, "business" being defined as "an enterprise, activity, profession, or
undertaking of any nature conducted for profit or ordinarily conducted for profit, whether by an individual, partnership, association, or any other entity." Partnerships were required to pay the tax for each partner's share of the total net profits therefrom whether or not the net profits were actually distributed to the partners. Plaintiffs contended that the profits earned in their business were not subject to the tax because of the statutory provision above cited forbidding the taxation of goods and articles manufactured in the city or any privilege, act or transaction related to the business of manufacturing. They filed a complaint to enjoin the city from collecting the tax on their net profits, and both the Common Pleas Court and the Superior Court sustained their position.
Much of the argument of both the plaintiffs and the city is directed to the question whether the exception added by the 1949 amendment should be strictly construed against the city or against the taxpayer. Plaintiffs argue that it constituted a limitation on the power of the municipality to tax, whereas the city contends that it is in the nature of an exemption provision. On the one hand, municipal corporations can levy no taxes unless the power be plainly and unmistakably conferred by the sovereign state, and the grant of such right must be strictly construed and not extended by implication: Hillman Coal & Coke Co. v. Jenner Township, 300 Pa. 108, 112, 150 A. 293, 295; Breitinger v. Philadelphia, 363 Pa. 512, 514, 515, 70 A.2d 640, 642; Allentown School District Mercantile Tax Case, 370 Pa. 161, 171, 87 A.2d 480, 484, 485. But if the power to tax exists and the taxpayer is within the general language of the statute or ordinance imposing the tax, all provisions relied upon to establish an exemption from the tax should be strictly construed against the claim for exemption: Commonwealth v. McCarthy, 332 Pa. 465, 468,
A.2d 267, 269; Thaw Estate, 163 Pa. Superior Ct. 484, 488, 63 A.2d 417, 419. The Act of 1947 as amended authorizes the municipalities therein designated to impose taxes on certain persons, property and subjects except that they shall not have authority to impose a tax on goods and articles there manufactured, or on any privilege, act or transaction related to the business of manufacturing. It is obvious, therefore, that since the act does not give municipalities the authority to impose such taxes the exception in question is not an exemption provision but a limitation of the general authority to tax ...