Western Petroleum Importers, Inc. v. Friedt

Durham, C.J.

(dissenting) — The majority’s artificially narrow interpretation of section 13 of Initiative 601 is belied by the broad and simple language of the section itself. See Laws of 1994, ch. 2. Under that section, "the state may raise existing taxes, impose new taxes as authorized by law, or make revenue-neutral tax shifts only with approval of a majority of the voters at a November general election.” Laws of 1994, ch. 2, § 13, p. 23. The language covers all possibilities; even revenue-neutral tax shifts are barred. If there is a more clear or comprehensive way of saying "no further taxes,” I am unaware of it. Therefore, I respectfully dissent. I would hold the Legisla*430ture’s action should be submitted to a vote of the people, as section 13 requires.

The majority offers two holdings. The first holding boils down to the conclusion that repeal of a tax exemption is not a tax increase. The second suggests that section 13 of Initiative 601 amends a preexisting statute and is subject to the limited scope of that statute. In my view, neither holding is compelling, convincing, or correct.

Three rules of construction guide my interpretation of Initiative 601. First, in construing an initiative, the language is to be read as the average informed lay voter would understand it. Estate of Turner v. Department of Revenue, 106 Wn.2d 649, 654, 724 P.2d 1013 (1986). Second, the collective intent of the people becomes the object of a court’s search for legislative intent when construing a law adopted by a vote of the people. (Citation omitted.) Department of Revenue v. Hoppe, 82 Wn.2d 549, 552, 512 P.2d 1094 (1973). Third, "[i]n case of doubt, taxing statutes are construed most strongly against the government and in favor of the taxpayer.” (Citation omitted.) Hoppe, 82 Wn.2d at 552.

The majority first holds that:

[T]he words "raise existing taxes” as contained in section 13 are plain, unambiguous, and well understood according to their natural and ordinary meaning. In its ordinary sense, the phrase "raise existing taxes” means to increase the existing statutory rate of taxation.

Majority at 424. To support this natural and ordinary reading, the majority appeals to Black’s Law Dictionary and Shepard’s Tax Dictionary. Majority at 426. I do not think the average lay voter is conversant with Shepard’s Tax Dictionary. I think the more natural and direct reading is, to paraphrase Gertrude Stein, that a tax is a tax is a tax.

I cannot agree with the majority that raising taxes is defined by an increase in tax rates alone. While an increase in tax rates is surely a form of tax increase, there are other forms of raising taxes as well. In the ordinary *431commonsense view of things, subjecting a class to a tax to which it had not previously been subject is a form of "raising] existing taxes.” Section 13. In other words, the repeal of an exemption is equivalent to raising a tax. A simple example makes the point. If the exemption from the state sales tax for food were abolished, the average person would experience a tax increase, even though the sales tax rate would not have changed at all. See RCW 82.08.0293.

The majority’s analysis suffers from additional problems. Its narrow interpretation requires wrenching the phrase "raise existing taxes” from its context. Even assuming the majority’s crabbed reading is plausible in isolation or in some other context, the phrase is part of a sentence that bans all logically possible forms of tax increase, including revenue-neutral tax shifts. Moreover, even granting for the sake of argument that the phrase is ambiguous, the relevant rule of construction requires us to construe ambiguous tax statutes "most strongly against the government and in favor of the taxpayer.” (Citations omitted.) Hoppe, 82 Wn.2d at 552.

The Department of Licensing mischaracterizes the nature of the main issue also. Respondents do not assert that the resulting increase in revenue is the distinguishing mark of an increase in existing taxes. See Corrected Br. of Appellants at 20. Instead, Respondents’ contention is simple. Bringing a class of entities within the scope of an existing tax raises the taxes of that class.

The majority implies that the mere effect of raising an individual’s tax burden does not amount to raising a tax. Majority at 425-26. However, the tax exemption here did not merely benefit a particular individual. Instead, it applied to an entire class of persons. Obviously, most taxes apply only to specific classes or groups (those making purchases, those owning homes, those engaged in a business or occupation, etc.) not the whole population.

The majority offers a second or alternative holding:

Additionally, we hold that section 13 of Initiative 601 was enacted as an amendment or addition to the existing law *432which limited the Legislature’s authority to raise state tax revenues. As such, the section must be construed as part of the existing statute. That statute does not apply to legislation affecting motor vehicle fuel taxes.

Majority at 427. There are two problems with this holding. First, notwithstanding its protestations, see majority at 428 n.6, the majority comes perilously close to deciding an important issue not before the court. Whether the restrictions in the second phase7 of Initiative 601 apply only to the general fund is an issue of great consequence to the people of this state. That issue should not be decided by implication in a case that does not directly raise the issue. At best, the majority clouds the larger question by deciding that section 13, which does not even mention the general fund, is nevertheless restricted to it.

Second, the majority’s argument supporting the second holding is far weaker than it appears. The majority argues that Initiative 601 generally amends RCW 43.135. Since the limitations in RCW 43.135 apply only to the general fund, the majority argues, the limitations in section 13 also apply only to the general fund. Majority at 427-28.

That some of the sections in Initiative 601 amend RCW 43.135 does not, of course, mean section 13 does. The majority’s argument rests on nothing more than the vague assertion that section 13 must have someplace to go when it comes time to codify session laws, and RCW 43.135 looks like a good candidate.8 One may contrast this vague imputation of a context with the clear, unequivocal, and comprehensive prohibition on tax increases of any kind in section 13 itself.

Moreover, the majority fails to notice a crucial fact. *433The Initiative took special care to delineate which sections of the Initiative were to be added to RCW 43.135. "Sections 2, 3, 4, 8, 9, and 10 of this act are each added to chapter 43.135 RCW.” Laws of 1994, ch. 2, § 11, p. 23. Note that section 13 is not among the sections listed. See also Laws of 1994, ch. 2, preamble, p. 18; Laws of 1994, ch. 2, § 9, p. 23. It is a standard rule of construction that what is not expressly mentioned is intentionally excluded. Bour v. Johnson, 122 Wn.2d 829, 836, 864 P.2d 380 (1993). In any event, even if this only creates an ambiguity, ambiguities in tax statutes must be construed "strongly against the government and in favor of the taxpayer.” (Citations omitted.) Hoppe, 82 Wn.2d at 552.

Finally, the Department of Licensing reminds us that the people of Washington have an interest in the elimination of obsolete tax credits and preferences. I have no doubt of that. Indeed, a structure for the periodic reevaluation of tax preferences and credits exists. See generally RCW 43.136. Nevertheless, the language of section 13 is clear. Under that language, any legislative action taken between December 2, 1993 and July 1, 1995 which had the effect of raising existing taxes, imposing new taxes, or making revenue neutral tax shifts is subject to the approval of the voters. Even if the Legislature was acting under the tax credit review mechanism in RCW 43.136, section 13 would still control. As that section explicitly states, "[t]he requirement for a vote at a November general election is in addition to any other requirements established by law.” (Italics mine.) Laws of 1994, ch. 2, § 13(1), p. 24. I would hold the Legislature’s action should be submitted to a vote of the people in accord with section 13 and the enactment at issue here.9

Alexander, J., concurs with Durham, C.J.

Initiative 601 has two phases. The first phase was limited in duration. It began December 2, 1993 (the day the November 1993 election results were certified) and ended June 30, 1995. See Laws of 1994, ch. 2, § 13, p. 23. In the first phase, the Legislature is prohibited from raising existing taxes, imposing new taxes, or shifting taxes in a revenue-neutral manner. The second phase began July 1, 1995 and continues indefinitely. In the second phase, there is no longer a blanket cap on raising taxes. Rather, a state spending limit is set. Only the first phase is at issue here. Id.

In fact, the Code Reviser did not codify section 13 under RCW 43.135, a fact the majority does its best to obscure. See majority at 427 n.4.

"If a court enters a final order invalidating or remanding section 1 of this act on the grounds that it does not comply with section 13, chapter 2, Laws of 1994, it is the intent of the legislature that this measure be submitted to the people for their adoption, ratification, or rejection, at the next succeeding general election . . . .” Laws of 1994, ch. 225, § 3(1), p. 1246.