American River Transportation Co. v. Bower

JUSTICE BOWMAN,

dissenting:

I respectfully dissent. I disagree with the majority’s conclusion that a use tax upon ARTCO’s line haul tugboats is not fairly related to the services provided by the State. I believe that the majority’s analysis focusing on whether Illinois provided any actual services to the line haul tugboats is too narrow.

The majority cites no authority for the proposition that ARTCO’s line haul tugboats must directly benefit from state services before the State may impose a use tax upon the fuel consumed by those tugboats. The “fair relation” prong of the Complete Auto Transit test requires only that the tax be fairly related to the taxpayer’s presence or activities in the State. Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 279, 51 L. Ed. 2d 326, 331, 97 S. Ct. 1076, 1079 (1977). The majority concedes that, through its laws, Illinois provides protections that are related to waterways used by ARTCO. It is also undisputed that the line haul tugboats spend at least 50% of their time in Illinois waters. I believe that the line haul tugboats’ significant presence in Illinois waters, coupled with the State’s provision of navigable waterways (615 ILCS 5/5 et seq. (West 2002)), emergency services, and access to the judicial system, among other benefits, justify the imposition of the use tax upon the line haul tugboats.

Moreover, I believe that it is incorrect to look at the line haul tugboats in isolation. Rather, we should consider that the line haul tugboats are part of an operation that makes extensive use of Illinois waterways and ports. For this reason, the majority’s aircraft analogy is inapposite. This is not a situation where a vehicle briefly passes through or over Illinois territory. Rather, the line haul tugboats, while in Illinois waters, transfer barges to harbor service tugboats, which then move the barges on to Illinois ports. Because the operation of the line haul tugboats is so interconnected with that of the harbor service tugs, I believe that it is inaccurate to say that the harbor service tugboats are the only portion of ARTCO’s fleet that receives benefits from the State.

I would also reject ARTCO’s argument that imposing a use tax upon the line haul tugboats violates the uniformity clause of the Illinois Constitution (Ill. Const. 1970, art. IX, § 2) because trains are exempt from such tax. I agree with the Department that, even if we were to find a uniformity clause violation, ARTCO would not be relieved of its tax obligation. ARTCO suggests that this court should either (1) hold that barge carriers are not subject to the use tax, effectively creating a use tax exemption for barge carriers, or (2) put barge carriers and rail carriers on equal footing by retroactively eliminating the exemption for trains. We cannot read into the Use Tax Act an exemption for tugboats. See Rogy’s New Generation, Inc. v. Department of Revenue, 318 Ill. App. 3d 765, 771 (2000) (holding that “courts have no power to create exemption from taxation by judicial construction”). Alternatively, even if we were to hold that trains should not be exempt from the use tax (which I do not believe we could properly do in this particular matter), ARTCO would still owe its tax.

. For the foregoing reasons, I would reverse the judgment of the circuit court of Du Page County.