Cheltenham Township v. Cheltenham Cinema, Inc.

OPINION

NIGRO, Justice.

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.1 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 *387provides, 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.2 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.3

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 Middle-town Township. The Commonwealth Court reviewed the is*388sue 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.4 Unlike both the Banking Code5 and the Liquor Code6 which contain sufficiently comprehensive state regulatory schemes to preempt local taxation measures, the Middle-town 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 *389construction 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.7 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 that the Township is not *390barred under section 6902(10) of the Act from collecting the business privilege tax from the Cinema based upon gross receipts derived from ticket sales.

Therefore, as explained, we disagree with the Commonwealth Court’s reasoning insofar as the interpretation of the business privilege tax, but we nevertheless affirm the Order.

NEWMAN, J., did not participate in the consideration or decision of this case. CAPPY, J., files a concurring opinion in which FLAHERTY, C.J., joins.

. Pursuant to Pennsylvania's Local Tax Enabling Act, 53 P.S. § 6901-6924, the Township on December 30, 1976 enacted a Business Privilege Tax Ordinance (Ordinance No. 1400), which imposes an annual business privilege tax upon, inter alia, "operators of places of amusement providing either passive or active recreation.”

. The Complaint was amended twice, with the Second Amended Complaint filed by the Township on December 5, 1989.

. The lower courts held that the Township was barred from collecting business privilege taxes because it failed to comply with procedural requirements under the local ordinance. See Cheltenham, 661 A.2d at 24. We affirm.

. The preemption analysis by the Commonwealth Court in Middletown Township focused on "whether the legislature intended to deprive the municipality of its statutory power to levy a business privilege tax ... whether the ‘general tenor’ of the state statute was intended to preempt the field as to local taxation.” Middletown Township, 105 Pa. Commw. at 314, 524 A.2d at 1040 (citing Western Pennsylvania Restaurant Ass'n v. Pittsburgh, 366 Pa. 374, 77 A.2d 616 (1951)).

. Pittsburgh v. Allegheny Valley Bank, 488 Pa. 544, 412 A.2d 1366 (1980) (holding that Banking Code of 1965, Act of November 30, 1965, P.L. 847, No. 356, as amended, 7 P.S. §§ 101-2204, preempted local tax).

. Commonwealth v. Wilsbach Distribs., Inc., 513 Pa. 215, 519 A.2d 397 (1986)(holding that Liquor Code, Act of April 12, 1951, P.L. 90, as amended, 47 P.S. §§ 1-101 to 9-902 preempted local tax).

. See footnotes 4 and 5.