TAXATION ‑- AIRPLANES ‑- APPLICABILITY OF REGISTRATION FEE AND EXCISE AND USE TAXES
Civil aircraft operated within this state are subject to the registration fee, the excise tax and the use tax unless they come within the specific statutory exemptions found in RCW 14.04.250, 82.48.100 and 82.12.030.
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June 13, 1961
Honorable John J. Lally
Cite as: AGO 61-62 No. 37
You have requested an opinion of this office on whether the registration fee imposed by RCW 14.04.250, the excise tax imposed by chapter 82.48 RCW and the use tax imposed by chapter 82.12 RCW are applicable to the aircraft under the following circumstances:
1. P is a Washington corporation with its principal place of business in Spokane, Washington. It is also licensed to do business in Oregon, Idaho and possibly South Dakota. This corporation purchased an airplane in Oregon through its Idaho office and took delivery in Boise, Idaho. The airplane is registered in Idaho in the name of the P corporation of Boise; P is not incorporated in Idaho. While the pilot of the corporation maintains his home in Spokane, the airplane is used as needed at the different offices of the corporation both in and out of the state of Washington.
2. H is a Washington corporation with its principal place of business in Spokane, Washington. H has leased an airplane from a firm in Oregon where the airplane is registered. The pilot for H corporation lives in Spokane and the company maintains a permanent hanger there. While the airplane is used at the various offices and job sites of the corporation, both in and out of the state of Washington, it is in this state more than any other state.
In our opinion these aircraft are subject to the registration fee, the excise tax and the use tax imposed by the respective statutes cited above.
[[Orig. Op. Page 2]]
Since the registration fee and aircraft excise tax are imposed by nearly identical statutes, we will discuss the application of both statutes together.
RCW 14.04.230 reads, in part, as follows:
"It shall be unlawful for any person to operate or cause or authorize to be operated any civil aircraft within this state unless such aircraft has an appropriate effective certificate, permit or license issued by the United States, if such certificate, permit or license is required by the United States,and a current registration certificate issued by the director, [Washington state director of aeronautics] if registration of the aircraft with said commission is required by this chapter. . . ." (Emphasis supplied.)
RCW 14.04.250 reads, in part, as follows:
"Every aircraft shall be registered with the state aeronautics commission for each calendar year in which the aircraft is operated within this state. A fee of two dollars shall be charged for each such registration and each annual renewal thereof. Registration certificates issued after June 30th of any year, shall be issued at the rate of fifty percent of the annual fee.
"Possession of the appropriate effective federal certificate, permit, rating, or license relating to ownership and airworthiness of the aircraft, and payment of the excise tax imposed by Title 82 [[Title 82 RCW]]for the privilege of using the aircraft within this state during the year for which registration is sought, and payment of the registration fee required by this section shall be the only requisites for registration of an aircraft under this section."
RCW 82.48.020 reads as follows:
"An annual excise tax is hereby imposed for the privilege of using any aircraft in the state. The tax shall be collected for each calendar year by the auditor of the countyin which the aircraft is based, and paid on and after the first day of [[Orig. Op. Page 3]] December of the preceding year. No additional tax shall be imposed under this chapter upon any aircraft upon the transfer of ownership thereof, if the tax imposed by this chapter with respect to such aircraft has already been paid for the year in which transfer of ownership occurs."
From the facts which you have given us, it would appear clear that both these aircraft are subject to the registration and excise tax statutes set forth above. In your letter, however, you suggest that possibly one of the exemption statutes in chapters 14.04 and 82.48 RCW applies. We turn then to these statutes.
RCW 14.04.250 reads, in part, as follows:
"The provisions of this section shall not apply to:
"(1) An aircraft owned by and used exclusively in the service of any government or any political subdivision thereof, including the government of the United States, any state, territory, or possession of the United States, or the District of Columbia, which is not engaged in carrying persons or property for commercial purposes;
"(2) An aircraft registered under the laws of a foreign country;
"(3) An aircraft which is owned by a nonresident and registered in another state: Provided, That if said aircraft shall remain in and/or be based in this state for a period of ninety days or longer it shall not be exempt under this section;
"(4) An aircraft engaged principally in commercial flying constituting an act of interstate or foreign commerce;
"(5) An aircraft owned by the manufacturer thereof while being operated for test or experimental purposes, or for the purpose of training crews for purchasers of the aircraft;
"(6) An aircraft being held for sale, exchange, delivery, test, or demonstration purposes solely as stock in trade of an aircraft dealer licensed under Title 14 RCW." (Emphasis supplied.)
[[Orig. Op. Page 4]]
RCW 82.48.100 reads as follows:
"This chapter shall not apply to:
"Aircraft owned by and used exclusively in the service of any government or any political subdivision thereof, including the government of the United States, any state, territory, or possession of the United States, or the District of Columbia, which are not engaged in carrying persons or property for commercial purposes;
"Aircraft registered under the laws of a foreign country;
"Aircraft which are owned by a nonresident and registered in another state: Provided, That if any such aircraft shall remain in and/or be based in this state for a period of ninety consecutive days or longer it shall not be exempt under this section;
"Aircraft engaged principally in commercial flying which constitutes interstate or foreign commerce; and aircraft owned by the manufacturer thereof while being operated for test or experimental purposes, or for the purpose of training crews for purchasers of the aircraft;
"Aircraft being held for sale, exchange, delivery, test, or demonstration purposes solely as stock in trade of an aircraft dealer licensed under RCW Title 14 [[Title 14 RCW]]."
In construing tax statutes we are bound by the rules of statutory construction which require that the provisions in tax statutes should not be extended by implication beyond the clear import of the language used. When the language is ambiguous it must be construed in favor of the citizen. Exemptions however must be rigidly construed in favor of the taxing power so that the burdens of taxation should be distributed equally and fairly among the members of the group to which the particular tax applies. See, 3 Sutherland Statutory Construction, §§ 6701 and 6702 (1943);Guinness v. State, 40 Wn. (2d) 677, 246 P. (2d) 433;White v. State, 49 Wn. (2d) 716, 306 P (2d) 230 (1957); Crown Zellerbach v. State, 45 Wn. (2d) 749, 278 P. (2d) 305 (1954). Our court, inStokely-Van Camp v. State, 50 Wn. (2d) 492, 496, 312 P. (2d) 816 (1957), applied these rules in stating:
[[Orig. Op. Page 5]]
"'"Statutes providing for the raising of revenue required by the state in carrying on its functions are vital to its welfare, and a person, natural or artificial, should not be declared exempt from the payment of a tax required of business generally, unless it clearly appears that the constitution and laws of the United States (or of the state) require such exemption."'"
As to P corporation:
In our opinion the exemptions set forth here do not apply to P corporation. P corporation is not a nonresident nor is its aircraft owned by a nonresident. Accordingly, it cannot qualify for the exemption of subdivisions 1, 2 or 3 and presumably 5 and 6 of RCW 14.04.250,supra.
This aircraft is not primarily used for commercial flying within the normal and usual meaning of that term. In our opinion the meaning of "commercial flying" is limited to "the transportation of persons or property for hire." See, RCW 14.16.020; Burns v. Mutual Ben. Life Ins. Co., 79 F. Supp. 847 (1948);Leif v. Graham, 63 N.D. 257, 247 N.W. 612 (1933); andGuinness v. King County, 32 Wn. (2d) 503, 202 P. (2d) 737 (1949). Accordingly, P cannot qualify for exemption under subsection (4) of RCW 14.04.250,supra.
As to H. corporation:
The aircraft leased by H corporation is owned by a nonresident. It is therefore exempt from the registration fees and excise taxes imposed by the above quoted statutes unless the proviso in the exemption section pertaining to aircraft owned by a nonresident applies. In your letter you stated that you doubted that this aircraft remained in any state for a period of ninety days. Assuming this to be the case, it is nevertheless our opinion that this aircraft is "based within this state for ninety consecutive days."
Where a statute does not define a word, it must be given its plain and ordinary meaning. Miller v. Pasco, 50 Wn. (2d) 229, 310 P. (2d) 863 (1957). In AGO 51-53-184 [[to Department of Aeronautics on December 1, 1951]], a copy of which is enclosed, we attempted to define the term "based" by likening the word to military or naval bases as defined in Webster's New International Dictionary, 2nd Ed. 1944. There "base" is defined as "The locality on which a force relies for supplies,or from which it initiates its operations; as a submarine base."
[[Orig. Op. Page 6]]
In the 1961 Edition of Webster's Dictionary, "base" is also defined as " . . . anything from which a start is made." And "a center of operations or source of supplies, headquarters."
An aircraft is by its very nature an extremely transitory article of personal property capable of moving from one taxing authority to another in a short period of time. As the facts which you have supplied us illustrate, this aircraft is consistently moved from one job site or office of the H corporation to another, both within and without this state.
This, of course, does not alter the fact that Washington has imposed an excise tax on the privilege of using such an aircraft in this state. InState ex rel. Hansen v. Salter, 190 Wash. 703, 705, 70 P. (2d) 1056 (1937), our court upheld a similar tax on automobiles. In sustaining that tax statute against an attack based on the claim that it was in fact an ad valorem tax unconstitutionally imposed, our court states:
". . . That a tax upon the use of personal property is an excise, [tax] is no longer open to question in this state. . . ."
CitingMorrow v. Henneford, 182 Wash. 625, 47 P. (2d) 1016 (1935);Vancouver Oil Co. v. Henneford, 183 Wash. 317, 49 P. (2d) 14 (1935);Henneford v. Silas Mason Co., 300 U.S. 577, 57 S.Ct. 524, 81 L.Ed. 814 (1937). See, also,Spokane v. State, 198 Wash. 682, 89 P. (2d) 826 (1939), and St. Paul & Tacoma Lbr. Co. v. State, 40 Wn. (2d) 347, 243 P. (2d) 474 (1952).
The authority of the legislature to impose excise taxes is however not without some restriction. In 84 C.J.S. Taxation, § 19, the following statement on this subject appears:
"The imposition of excise taxes is generally held to be within the power of the legislature, unless specifically restrained by the constitution, whether laid on particular commodities, on the privilege of pursuing particular occupations, on the privilege of declaring and receiving dividends, or on the franchises of corporations. The legislature can change or increase an excise tax during the term for which it is imposed, and it has been held to have power to impose as many excise taxes, in addition to an ad valorem tax, as it sees fit. Corporate franchises are deemed commodities within the meaning of a constitutional provision permitting excises on goods, wares, merchandise, and commodities; but rights and [[Orig. Op. Page 7]] privileges exercised by a copartnership, association, or trust do not fall within the terms of such a provision.
"Excise taxes must be reasonable, but need not be proportional. An excise cannot be imposed on mere ownership or possession or the right to own or possess property. Constitutional provisions relating to property taxes do not apply to excise taxes." (Emphasis supplied.) pp. 72-75.
We turn then to a determination of whether the aircraft involved here has maintained a base in Washington within the language used by our legislature in the proviso to the exemption statute set forth above. In interpreting the language used, we are, of course, favored with the presumption that the legislature was aware of the existing law on the subject of the limitation on its authority to impose excise taxes. SeeHatzenbuhler v. Harrison, 49 Wn. (2d) 691, 306 P. (2d) 745 (1957). With this presumption in mind we are of the opinion that the legislature recognized that the operation of an aircraft owned by a nonresident and registered in another state could not be lawfully subjected to an excise tax in Washington until that aircraft had made more than a casual contact with this state.
They therefore exempted the operation of aircraft which had neither remained in nor had been based here for ninety consecutive days. As we read this exemption in the light of the case law on the subject, aircraft owned by a nonresident would be subject to the registration fee and excise tax if it either remained in this state for ninety consecutive days or even though it left this state at intervals within such ninety-day period, it still maintained its base here. Applying this construction to the facts you have given us, we feel that inasmuch as the principal place of business of H corporation is in Washington, that a permanent hanger is maintained for the aircraft in Washington, that the pilot maintains his permanent residence in Washington, and that the aircraft is in Washington more than any other state, the base of this aircraft within the meaning of that term as used in the statute, is also in Washington. In this respect we note that the supreme court in Northwest Airlines v. Minnesota, 322 U.S. 292, 88 L.Ed. 1283 (1944), and many of the state courts have used the terms "home base" "main base" or "home port" when speaking of the place an aircraft is "based." It could hardly be contended that an aircraft obtains a "base" within the usual or normal meaning of that term when it is temporarily located at an airport in another state.
[[Orig. Op. Page 8]]
You also ask if these aircraft are subject to the use tax imposed by chapter 82.12 RCW. In this respect we direct your attention to RCW 82.12.020, which reads as follows:
"There is hereby levied and there shall be collected from every person in this state a tax or excise for the privilege of using within this state as a consumer any article of tangible personal property purchased at retail, or acquired by lease, gift or bailment, or extracted or produced or manufactured by the person so using the same. This tax will not apply with respect to the use of any article of tangible personal property purchased, extracted, produced or manufactured outside this state until the transportation of such article has finally ended or until such article has become commingled with the general mass of property in this state. This tax shall apply to the use of every article of tangible personal property, including property acquired at a casual or isolated sale, and including byproducts used by the manufacturer thereof, except as hereinafter provided, irrespective of whether the article or similar articles are manufactured or are available for purchase within this state. Except as provided in subdivision (2) of RCW 82.12.030, payment by one purchaser or user of tangible personal property of the tax imposed by chapter 82.08 or 82.12 shall not have the effect of exempting any other purchaser or user of the same property from the taxes imposed by such chapters. The tax shall be levied and collected in an amount equal to the value of the article used by the taxpayer multiplied by the rate of three and one‑third percent:Provided, That from April 1, 1959 until July 1, 1961 the tax levied in this section shall be in an amount equal to the value of the article used by the taxpayer multiplied by the rate of four percent."
and to RCW 82.12.060, which reads as follows:
"In the case of installment sales and leases of personal property, the commission, by regulation, may provide for the collection of taxes upon the installments of the purchase price, or amount of rental, as of the time the same fall due."
Inasmuch as the aircraft involved here are not engaged in the interstate transportation of property or persons for hire it is our [[Orig. Op. Page 9]] opinion that the exemption provided for by RCW 82.12.030 (4) does not apply to the aircraft here under discussion.
The aircraft which are the subject matter of this discussion have, as we have pointed out above, become commingled with other property of a similar nature in this state as a result of their acquiring a "home base of operations." It therefore would follow that they are subject to the use tax imposed by the above quoted statute. In this respect seeHenneford v. Silas Mason Co., supra, in which the United States Supreme Court upheld a use tax imposed upon machinery brought into this state for work on the construction of the Grand Coulee Dam. See, also,Flying Tiger Line v. State Board of Equalization, 157 Cal.App.2d 85, 320 P. (2d) 552 (1958).
We trust that the foregoing will be of assistance to you.
Very truly yours,
JOHN J. O'CONNELL
R. TED BOTTIGER
Assistant Attorney General