dissenting:
The payments made by the company-employer to the plaintiff seem to me to fall within the plain, unambiguous language of the Retailers’ Occupation Tax Act. Section 2 imposes the tax upon “persons engaged in the business of selling tangible personal property at retail at *** [a percentage] of the gross receipts from such sales ***.” (Ill. Rev. Stat. 1971, ch. 120, par. 441.) Section 1 defines gross receipts as “the total selling price or the amount of such sales,” and total selling price or the amount of sale is therein defined as “the consideration for a sale valued in money.” Ill. Rev. Stat. 1971, ch. 120, par. 440.
In this case the only question is whether subsidies and guarantees paid by the employer to the plaintiff are includible in the gross receipts measuring the tax. It is not disputed that without these subsidies ($360 per month in the case of Magnaflux) and guarantees plaintiff would not have provided the food and beverages. The conclusion that they are part of “the consideration for a sale” and therefore a part of “the gross receipts from such sales of personal property” seems to me inescapable.
My colleagues deem important their observation that the “evidence shows no basis for relating any portion of the fixed fee or guarantee payment to any individual sale as part of the ‘selling price.’ ” (71 Ill. 2d at 42.) This is irrelevant and constitutes the basic error in the majority’s rationale, for there is nothing in the Revenue Code which requires the taxing authorities to relate portions of consideration received to the individual items of property transferred or to individual transactions in which tangible property is transferred. Rather, the tax is an occupation tax upon those engaged in selling tangible personal property at retail, and it is measured by the gross receipts from those sales. If one were to pay a retailer $10 in order to induce the retailer to sell him two items, is it not apparent that the $10 is part of the consideration for the transfer, even though there is no definite basis for allocating the consideration to the sale of each item? One may have intended one dollar or five dollars as the inducement for one of the items, but the Department of Revenue need not prove the allocation. If a father slips the storekeeper a payment so the storekeeper will transfer presents for their mother to the children in exchange for the pennies they saved, can it be contended that the payment is not part of the retailer’s gross receipts because there is no basis for relating the payment to each individual sale?
The court’s opinion permits an employer to enter into an agreement with a caterer whereby the caterer would sell employees food and drink at a very low price provided the employer pays a substantial subsidy, thus escaping the retailers’ occupation tax on most of the consideration for the sale. Any third party with an interest in having goods transferred to others could use this device as a means of eliminating or substantially reducing the tax. Clearly, neither the intent nor the language of the Retailers’ Occupation Tax Act permits this result.
The lower court cases from other States cited by the court do not compel this holding. In Szabo Food Service, Inc. v. State Board of Equalization (1975), 46 Cal. App. 3d 268, 119 Cal. Rptr. 911, the food-service company entered into a “management operating agreement” (46 Cal. App. 3d 268, 270, 119 Cal. Rptr. 911, 912) with each employer whereby each employer controlled revenue and expenses and took any profit or loss from the operation while the food-service company simply received its expenses plus a “management fee” (46 Cal. App. 3d 268, 270, 119 Cal. Rptr. 911, 912). Similarly, in H-W Corp. v. Department of Treasury, Mich. Bd. of Tax Appeals (Docket No. 700), aff'd, H-W Corp. v. Department of Treasury, 15 Mich. App. 554, 166 N.W.2d 822, the opinion of the Michigan Board of Tax Appeals shows that the employer enjoyed all profits and suffered all losses from the operation and that the food-service company merely received a management fee. The Texas district court case, Mobil Research & Development Corp. v. Bob Bullock, Texas State Comptroller, Travis County, Texas (Case No. 239962), also involved mere reimbursement of expenses plus, management fees.
In our case plaintiff is not receiving a “management fee” in return for running the employer’s cafeteria. Plaintiff is itself providing the food and service for a price, a part of which is paid by the employer.
We recently held that application of the Retailers’ Occupation Tax Act was not determined by narrowly viewing the transaction through the eyes of the transferee, emphasizing that the crucial element in this taxation scheme is the gross receipts of the retailer. (Keystone Chevrolet Co. v. Kirk (1978), 69 Ill. 2d 483.) There, a plaintiff purchased a new automobile for $4,800 on which a 5% retailers’ occupation tax in the amount of $240 was paid. Subsequently, the manufacturer paid the purchaser a $500 rebate. The plaintiff there contended that the rebated amount should not be subject to the retailers’ tax, notwithstanding the fact that the retailer received the full $4,800 price, because the net cost to the buyer was actually only $4,300. We rejected this contention because the statutory scheme imposes a tax upon the occupation of selling goods at retail, the tax to be measured by the gross receipts of the seller; the position of the purchaser or transferee was not a matter for consideration under the Act. Here, the court is considering only the “sale” which occurred at the point of transfer of the food. The majority incorrectly views the transaction through the eyes of the employee, and refuses to consider the company-employer as a purchaser because it cannot relate the subsidy and guarantee payments to these individual transactions between plaintiff and employee. The statute and this court’s decisions make it clear that the tax is imposed upon the retailer and the amount of tax is determined by viewing the retailers’ gross receipts from the retail sales he has made. The details of the individual transfers and the method and source from which those gross receipts come should not ordinarily interfere with the determination of tax liability.
I would affirm the judgment of the Cook County circuit court.