25 Pa. Commw. 359 | Pa. Commw. Ct. | 1976
Opinion by
This is an appeal from a decision of the Board of Finance and Revenue denying First Federal Savings and Loan Association of Hazleton’s (appellant) petition for review of the resettlement of its Mutual Thrift Institutions (MTI) tax for the year ending December 31, 1971.
“Except as otherwise provided by law, all stocks, bonds, Treasury notes, and other obligations of the United States, shall be exempt from taxation by or under State or municipal or local authority. This exemption extends to every form of taxation that would require that either the obligations or the interest thereon, or both, be considered, directly or indirectly, in the computation of tax, except nondiscriminatory franchise or other nonproperty taxes in lieu thereof imposed on corporations, and except estate taxes or inheritance taxes.” (Emphasis added.) It is not disputed that the MTI tax is a “franchise or other nonproperty” tax within the meaning of 31 U.S.C. §742. Appellant’s argument is that the tax is discriminatory in that the income from Federal obligations is included in net earnings while that from state and local obligations is, or rather should legally be, excluded. If the tax does have such a discriminatory effect, it is invalid. Commonwealth v. Curtis Publishing Co., 363 Pa. 299, 69 A.2d 410 (1949), petition denied, 339 U. S. 928 (1950). However, the fact is, as the parties have stipulated, the Department has, since the effective date of the tax, included income on Commonwealth obligations in computing net income for MTI tax purposes. Thus, appellant’s argument is reduced to the proposition that such practice is and has been illegal.
Appellant places primary reliance on Act No. 94, which provides in pertinent part:
Appellant argues that this provision clearly exempts the income from Commonwealth obligations from “net income” for purposes of the MTI tax. We cannot agree.
Appellant ignores the fundamental and long standing distinction between a franchise tax and a direct property tax. The MTI tax is a franchise or excise tax “for the privilege of doing business in the Commonwealth”, measured by annual net earnings or income received or accrued “from all sources.”
However, appellant argues that the legislature has recently clarified any ambiguity as to the exempt status of Commonwealth obligations for franchise or excise tax purposes by the Act of December 19, 1975, P.L. 576, amending the Industrial and Commercial Development Authority Law.
“ [T]he bonds issued by any authority, their transfer, and the income therefrom . . . shall at all times be free from taxation within the Commonwealth of Pennsylvania. ’ ’ 73 P.S. §385.
This is identical to the language in Act No. 94. The amendment adds the following:
“The scope of the foregoing exemption from taxation includes, but is not limited to, property taxes, excise taxes for the privilege of doing business, and taxes measured or determined by income or net earnings.” 73 P.S. §385.
It is clear that this amendment exempts bond interest of an authority created under this Act received after December 19,1975, from the MTI tax. Consequently, the inclusion of interest received after that date from Federal obligations raises the specter of invalid dis
Consequently, whatever the effect this amendment will have on taxable periods subsequent to December 19, 1975, it can have no bearing on the appellant’s tax year, which is the subject of this appeal. We find that income from state and local obligations was lawfully included as net income for MTI tax purposes in 1971, and the similar inclusion of income derived from the appellant’s Federal obligations did not have a discriminatory effect.
Accordingly, we make the following
Order
Now, July 1, 1976, the decision of the Board of Finance and Revenue refusing appellant’s petition for resettlement is hereby affirmed. Unless exceptions are filed within thirty (30) days hereof, the Chief Clerk is hereby directed to enter judgment in favor
The Mutual Thrift Institutions Tax Act, Act of June 22, 1964, P.L. 16, as amended, 72 P.S. §1986.1 et seq.
72 P.S. §1986.3. (Emphasis added.)
Act of August 23, 1967, P.L. 251, as amended, 73 P.S. §371 et seq.
The Statutory Construction Act, 1 Pa. C.S. §1922(4), provides the following presumption: “That when a court of last resort has construed the language used in a statute, the General Assembly in subsequent statutes on the same subject matter intends the same construction to be placed upon such language.” While our Supreme Court has not specifically construed the applicable language of Act No. 94, it has consistently ruled, since at least 1881, see cases supra, that similar language did not prevent the inclusion of tax exempt obligations and interest for the purpose of measuring franchise or excise taxes.