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AUTOMOBILE TRADE ASSOC. GREATER PHILADELPHIA v. CITY PHILADELPHIA (09/24/87)

decided: September 24, 1987.

AUTOMOBILE TRADE ASSOC. OF GREATER PHILADELPHIA, ET AL., APPELLANTS
v.
CITY OF PHILADELPHIA, HONORABLE WILLIAM J. GREEN, MAYOR AND HONORABLE EUGENE L. CLIETT, JR., COMMISSIONER OF REVENUE, APPELLEES



Appeal from the Orders of the Court of Common Pleas of Philadelphia County, in case of Automobile Trade Association of Greater Philadelphia, et al. v. City of Philadelphia, et al., No. 2130 November Term, 1982.

COUNSEL

Alvin J. Ivers, Alvin J. Ivers, P.C., for appellants.

Christine Tomasch Bak, Chief Assistant City Solicitor, for appellees.

President Judge Crumlish, Jr., Judges Craig, MacPhail, Doyle, Barry, Colins and Palladino. Opinion by Judge Palladino. Judge Colins dissents. Dissenting Opinion by Judge Doyle. Judge MacPhail joins in this dissent.

Author: Palladino

[ 109 Pa. Commw. Page 525]

This is an appeal by thirty (30) named automobile dealers in the Philadelphia area and their trade association, Automobile Trade Association of Philadelphia, (collectively Appellants) from an order of the Court of Common Pleas of Philadelphia County (trial court) dismissing Appellants' motion for summary judgment and granting the cross-motion for summary judgment of the City of Philadelphia, the Honorable William J. Green, Mayor, and the Honorable Eugene L. Cliett, Jr., Commissioner of Revenue (Appellees). For the reasons which follow, we affirm.

Appellants filed a complaint in equity in the trial court on November 10, 1982 seeking a declaratory judgment

[ 109 Pa. Commw. Page 526]

    that the Philadelphia Mercantile License Tax*fn1 (MLT) be declared unconstitutional as violative of Article VIII, Section 1 of the Pennsylvania Constitution, known as the Uniformity Clause.*fn2 Appellants also sought a refund of the tax paid from 1980 through 1984, totaling $2,300,000.00.

The MLT is an annual tax imposed on all wholesalers, manufacturers and retailers situated in Philadelphia. The rate of the MLT is 5 mills on the gross receipts for all businesses (4 mills for 1981 and 1982). The ordinance, however, provides an alternative method of computation for wholesalers and manufacturers. Wholesalers may elect to compute their tax liability as five percent (5%) of gross profit while manufacturers may elect a four percent (4%) of gross profit rate. No alternative exists for retailers but all three categories of taxpayers may exclude sales outside of Philadelphia. The MLT was repealed, effective July 31, 1984.

Primarily, Appellants argued that the existence of two methods of computation with different tax rates based upon two distinct tax bases makes the MLT non-uniform. In further support of their assertion of nonuniformity, Appellants argued that although all taxpayers may exclude sales outside Philadelphia this exclusion had virtually no benefit to retailers while allowing great reductions in the tax liability of wholesalers and manufacturers.

Appellants are mostly involved in retail sales of automobiles to consumers, but are involved in some transactions at ...


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