Tax Type
Retail Sales and Use Tax
Description
Consumer Utilities Taxes
Topic
Exemptions
Date Issued
03-23-1973
I have received your recent letter from which I quote:
``Can the County Board of Supervisors of Prince William County exempt any or all of those organizations enumerated in § 58-12 of the Code from the collection of the consumer tax under its ordinance adopted pursuant to §§ 58-587.1 and 58-617.2?'
Sections 58-587.1 and 58-617.2, Code of Virginia (1950), as amended, authorize cities, towns, and counties to impose a tax upon the consumers of certain utility services. I have previously opined that a locality may classify residential and commercial consumers separately and fix a different maximum amount of tax applicable to taxpayers in each classification. See Report of the Attorney General (1970-1971), p. 400. It follows that other classifications which have a reasonable basis may be established for purposes of the utility tax and that exemptions may be provided for organizations included in such classifications. If a locality may exempt a residential consumer from a tax upon part of his utility usage and not exempt a commercial consumer upon the same basis, it may completely exempt religious, charitable, educational, and other consumers which it has placed in a separate classification. The constitutional requirement of uniformity in Article X, § 1, of the revised Virginia Constitution does not apply to utility taxes because they are not direct taxes on property. See Ashland v. Board of Supervisors, 202 Va. 409 (1961), and my opinion to the Honorable Charles L. McCormick III, Commonwealth's Attorney for Halifax County, dated May 2, 1972, a copy of which is enclosed.
The classifications, of course, must have a reasonable basis or they may violate the equal protection clause of the Fourteenth Amendment to the United States Constitution. See Whyy, Inc. v. Borough of Glassboro, 393 U. S. 117 (1968), and the cases cited therein. But those classifications prescribed by Article X, § 6(a), and § 58-12 are accorded a strong presumption of reasonableness and may be relied upon by the county if it creates exemptions from its utility tax. See Fireman's Mutual Aid Ass'n. v. Commonwealth, 166 Va. 34 (1936).
Accordingly, it is my opinion that the Prince William County Board of Supervisors may exempt all or part of the organizations enumerated in § 58-12 from its consumer utility taxes imposed pursuant to §§ 58-587.1 and 58-617.2.
Attorney General's Opinion