Appeal from the Commonwealth Court order, dated June 19, 1995 and docketed at No. 101 CD 1995, which affirmed the order of the Court of Common Pleas of Montgomery County, dated July 21, 1994 and docketed at No. 84-11815. JUDGE(S) BELOW: CCP - Hon. Stanley R. Ott / Commonwealth - FRIEDMAN, NEWMAN, JJ., LORD, S.J.
Before: Flaherty, C.j., And Zappala, Cappy, Castille, And Nigro, JJ. Opinion BY Mr. Justice Nigro. Madame Justice Newman did not participate in the consideration or decision of this case. Mr. Justice Cappy files a Concurring opinion in which Mr. Chief Justice Flaherty joins.
The opinion of the court was delivered by: Nigro
In this business privilege tax case, Cheltenham Cinema ("the Cinema") operated a movie theater in Cheltenham Township ("the Township") between 1978 and 1987. During these years, the Cinema paid an annual business privilege tax to the Township on all non-admissions revenues, including revenues from concession sales. *fn1 See Trial Court Opin. at 2. However, during these same years, the Cinema refused to pay any business privilege taxes to the Township based upon revenue generated from admission ticket sales, relying on section 6902(10) of the Local Tax Enabling Act ("the Act") which provides, in relevant part, that the Township shall not have the authority to "levy, assess or collect a tax on admissions to motion picture theaters." 53 Pa. C.S. § 6902(10)(emphasis added).
In July, 1984, the Township filed an action in the Court of Common Pleas of Montgomery County, seeking to compel the Cinema to pay business privilege taxes on total gross receipts including revenue derived from admission ticket sales. *fn2 On July 21, 1994, following a non-jury trial in the Court of Common Pleas of Montgomery County, the trial court found that the Township was barred under section 6902(10) of the Act from collecting the business privilege tax based upon gross revenue generated from ticket sales. The Commonwealth Court affirmed in Cheltenham Township v. Cheltenham Cinema, Inc., 661 A.2d 23 (Pa. Commw., 1995). This Court granted allocatur limited to the question of whether the Township was barred under section 6902(10) of the Local Tax Enabling Act from collecting business privilege taxes from the Cinema. We disagree with the Commonwealth Court's reasoning with regard to the interpretation of the business privilege tax, but we nevertheless affirm the Order. *fn3
In the instant case, both the trial court and the Commonwealth Court interpreted the language in section 6902(10) as preempting the Township's ability to collect any tax on the Cinema's ticket admission sales, thus precluding collecting municipal business privilege tax based on total gross receipts.
In Middletown Township v. Alverno Valley Farms, 105 Pa. Commw. 311, 524 A.2d 1039 (1987), allocatur denied, 517 Pa. 600, 535 A.2d 1058 (1987), appellee, Alverno Valley Farms was a building and construction firm engaged in the business of erecting and constructing new residential dwellings in Middletown Township. The Commonwealth Court reviewed the issue of preemption of state regulatory taxing schemes in relation to local taxation measures and found that the application of a municipal business privilege tax to a building construction firm was permissible pursuant to 53 Pa. C.S. § 6902(11) even though a provision of the Local Tax Enabling statute prohibited imposing a local tax on the construction of, or improvement to, residential dwellings. Middletown Township, 105 Pa. Commw. at 315, 524 A.2d at 1041. See also 53 Pa. C.S. § 6902. In Middletown Township, the Commonwealth Court explained that to resolve the question of whether the municipality's business privilege tax on construction firms was permissible, it was necessary to perform a preemption analysis. *fn4 Unlike both the Banking Code *fn5 and the Liquor Code *fn6 which contain sufficiently comprehensive state regulatory schemes to preempt local taxation measures, the Middletown Township Court emphasized that there was "no intent on the part of the legislature to control the building industry by a comprehensive regulatory scheme." Middletown Township, 105 Pa. Commw. at 314, 524 A.2d at 1041.
Also, in Middletown Township, the court found that the Township's business privilege tax on the construction industry did not tax the subject matter Section 6902(11) of the Act prohibited because:
The local tax is a tax on the privilege to do business and it is measured by the gross volume, determined by receipts, of business conducted by the taxpayer, whereas the prohibition under section 2(11) of the Act addresses taxes on the construction of a residence, and thus has no relationship to the volume of business conducted. The impact of the two taxes is on a totally different basis. Carrying on a construction business, such as that in which appellee is engaged, involves much more than the construction of a residence.
Middletown Township, 105 Pa. Commw. at 315, 524 A.2d at 1041 (emphasis added).
Finding that the Township's business privilege tax on the construction industry was not preempted and did not conflict with section 6902(11) of the Act, the Middletown Township court ruled that the business privilege tax was therefore permissible.
We find the rationale of Middletown Township equally applicable. As with the construction industry in Middletown Township, we do not see any intent on the part of the legislature to control the movie theater industry by a comprehensive regulatory scheme. Here, the Cinema which is subject to the business privilege tax bears stark contrast to the banking and liquor industries at issue in Allegheny Valley Bank and Wilsbach, respectively, where, in those industries, the existence of comprehensive regulatory schemes preempted local taxation measures. *fn7 We thus do not find that section 6902(10) of the Act preempts the Township's authority to collect a business privilege tax from the Cinema based upon gross receipts derived from ticket sales.
Moreover, the local tax in this case does not tax the same subject matter which is excluded from taxation under section 6902(10) of the Act. The Township's business privilege tax on the Cinema is a tax on the Cinema's privilege to do business, and it is measured by gross volume, determined by gross receipts, which would include both the Cinema's concession business and its ticket sales. In contrast, section 6902(10) of the Act prohibits the Township from collecting a tax directly on movie theater admission sales. Since the business privilege tax in this case does not tax the identical subject matter as specified in section 6902(10) of the Act, nor is it measured by the same base, we find ...