GHEGAN & GHEGAN, INC., On Bеhalf of Itself and All Taxpayers Similarly Situated v. Richard WEISS, Director of the Arkansas Department of Finance and Administration
98-1310
Supreme Court of Arkansas
June 3, 1999
991 S.W.2d 536
Ann. § 5-4-603(d) (Repl. 1997; Hill v. State, 331 Ark. 312, 962 S.W.2d 762, cert. denied, 119 U.S. 145 (1998)).2
The record in this case has been examined for errors prejudicial to the defendant in accordance with Ark. Sup. Ct. R. 4-3(h), and no reversible errors have beеn found. Hence, for the reasons above, we find no error in the trial court‘s rulings and therefore affirm Collins‘s conviction and sentence of death.
Kenneth R. Williams, for appellee.
ANNABELLE CLINTON IMBER, Justice. This is an illegal-exaction case. The appellant, Ghegan & Ghegan, Inc. (“Ghegan“), claims that the trial court erred when it rulеd that Ghegan did not have standing to challenge the constitutionality of a portion of the Arkansas Soft Drink Tax Act. We reverse and remand.
Ghegan, an Arkansas Corporation, filed on behalf of itself and all taxpayers similarly situated an illegal-exaction action challenging the constitutionality of section 26-57-904 (Repl. 1997) of the Arkansas Soft Drink Tax Act, which provides that:
(a) There is hereby levied and there shall be collected a tax upon every distributor, manufacturer, or wholesale dealer, to be calculated as follows:
- Two dollars ($2.00) per gallоn for each gallon of soft drink syrup or simple syrup sold or offered for sale in the State of Arkansas;
- Twenty-one cents (21¢) per gallon for each gallon of bottled soft drinks sold or offered for sale in the State of Arkansas;
- Where a package or container of рowder or other base product, other than a syrup or simple syrup, is sold or offered for sale in Arkansas, and the powder is for the purpose of producing a liquid soft drink, then the tax on the sale of each package or container shall be equal to twenty-one cents (21¢) for each gallon of soft drink which may be produced from each package or container by following the manufacturer‘s directions. This tax applies when the sale of the powder or other base is sold to a retailer for
sale to the ultimate cоnsumer after the liquid soft drink is produced by the retailer. (b)(1) Any retailer or retail dealer who purchases bottled soft drinks, soft drink syrup, simple syrup, powder, or base product from an unlicensed distributor, manufacturer, or wholesale dealer shall be liable for the tax levied in subsection (а) of this section on those purchases.
(2) A retailer shall not be subject to this tax if the retailer purchases syrups, simple syrups, powders or base products, or soft drinks from a supplier licensed under § 26-57-909.
(Emphasis added.) Ghegan argued that section 26-57-904(a) violated the Equal Protectiоn Clause of the United States and Arkansas Constitutions because there was no rational basis for taxing soft-drink syrup at a higher rate than bottled soft drinks, powder, or other base products.1
Ghegan, a “retailer” or “retail dealer” as defined by section 26-57-902(b)(11) (Repl. 1997) of the Act, asserted that it had standing under
The sole issue on appeal is whether the trial court errеd when it ruled that Ghegan did not have standing under
Any citizen of any county, city or town may institute suit in behalf of himself and all others interested, to protect the inhabitants thereof against the enforcement of any illegal exactions whatever.
(Emphasis added.) This constitutional provision is self-executing and requires no enabling act or supplemental legislation to make its provisions effective. Hartwick v. Thorne, 300 Ark. 502, 780 S.W.2d 531 (1989).
When construing a provision of the Arkansas Constitution, we have said that when the language of the provision is plain and unambiguous, each word must be given its obvious and common meaning, and neither rules of construction nor rules of interpretation may be used to defeat the clear and certain meaning of a constitutional provision. Hoyle v. Faucher, 334 Ark. 529, 975 S.W.2d 843 (1998); Daniel v. Jones, 332 Ark. 489, 966 S.W.2d 226 (1998). The plain and unambiguous language of
To answer this question, we first turn to our cases establishing the traditional standing requirements. In numerous cases, we have held that a litigant has standing to challenge the constitutionality of a statute if the law is unconstitutional as applied to that particular litigant. Morrison v. Jennings, 328 Ark. 278, 943 S.W.2d 559 (1997); Hamilton v. Hamilton, 317 Ark. 572, 879 S.W.2d 416 (1994); Medlock v. Fort Smith Serv. Fin. Corp., 304 Ark. 652, 803 S.W.2d 930 (1991). The general rule is that one must have suffered injury or belong to a class that is prejudiced in order to have standing to challenge the validity of a law. Morrison, supra; Medlock, supra. Stated differently, plaintiffs must show that the questioned act has a prejudicial impact on them.2 Tauber v. State, 324 Ark. 47, 919 S.W.2d 196 (1996); Garrigus v. State, 321 Ark. 222, 901 S.W.2d 12 (1995).
We have no hesitancy in saying that Ghegan has asserted sufficient facts to satisfy these traditional standing requirements. First, section 26-57-904(a) is allegedly “unconstitutional as applied” to Ghegan because it must pay a higher price for syrup as opposed to bottled soft drinks, powder, or other base products. Second, Ghegan has “suffered an injury” because it must pay more money for syrup now that the tax has been imposed. Third, Ghegan “belongs to a class that is prejudiced” becаuse retailers who purchase syrup must pay more taxes than retailers who purchase bottled soft drinks, powder, or other base products.
The question then becomes whether
We have explained that citizens have standing to bring a public-funds case because they have a vested interest in ensuring thаt the tax money they have contributed to the state treasury is lawfully spent. Nelson v. Berry Petroleum, Co., 242 Ark. 273, 413 S.W.2d 46 (1967); Green v. Jones, 164 Ark. 118, 261 S.W. 43 (1924). Thus, the only standing requirements we have imposed in public-funds cases are that the plaintiff be a citizen and that he or she have contributed tax money to the general treasury. See Nelson, supra; Green, supra. We have not required the plaintiff to trace his or her individual tax contribution to the tax money that is allegedly being spent in an illegal manner, nor have we required the plaintiff to establish a significant tax contribution to the state treasury. Hence, in public-funds cases, we have given the word “interested” as used in
Thе second type of illegal-exaction case, such as the case at hand, is an “illegal-tax”
Furthermore, citing Foxsmith, Inc. v. Coca-Cola Bottling Co., 323 Ark. 13, 912 S.W.2d 923 (1996), the DFA claims that only a taxpayer that is “subject to” or directly required to return and remit the tax under the terms of the statute imposing it has standing to challenge that tax. In particular, the DFA claims that only distributors, manufacturers, or wholesale dealers have standing to challenge section 26-57-904(a) because they are the only entities “subject to” the tax imposed in the language of that section. We disagree with this interpretation of Foxsmith.
The facts of Foxsmith are very similar to the case at hand, but it was not an illegal-exaction сase nor did it involve the standing requirements imposed by
In sum, in Foxsmith, we merely held that a distributor, manufacturer, or wholesale dealer may pass on the entire amount of the soft-drink tax to the retailer, and more important to this case, that the one who actually pays the tax may be different from the entity that reports and remits that tax to the DFA. Id. In other words, we held that the Soft Drink Tax Act allows the tax “collector” to be different from the tax “payer.” In Foxsmith, we merely harmonized sections 26-57-904 and 26-57-906 of the Soft Drink Tax Act without addressing the standing requirements of
Although Ghegan is not the tax “cоllector,” because it is not required to formally remit and return the tax to the DFA under section 26-57-906, it has paid and allegedly will continue to pay the full amount of
Finally, we note that policy considerations arising under this case also favor reversal. If we adopted the DFA‘s narrow interpretation of
Reversed and remanded.
BROWN and THORNTON, JJ. concur.
BROWN, Justice, concurring. I write to emphasize that this opinion is limited to its facts. By that, I mean limited to a fact situation where it is clearly documented in writing that the taxpayer has passed on payment of the precise tаx to a third party. I underscore this because at oral argument counsel for Ghegan contended that any party in the sales chain, including the consuming public, would have standing to bring a class action illegal-exaction lawsuit by merely asserting partial or full payment of a tax by virtue of a hike in the price of the goods. That goes way too far in my opinion in determining who is “interested” for purposes of
I also take issue with the majority‘s lament that if a distributor passes on the tax, it has no incentive to contest its legality. I disagree with such an absolute conclusiоn. Once the $2.00 per gallon tax on soft-drink syrup begins to curtail a distributor‘s sales (as compared to the twenty-one cents per gallon for soft drinks produced by powder), the distributor‘s incentive to contest the disparity in tax treatment would become very real indeed. I can readily see a distributor‘s bringing an equal protection lawsuit under these circumstances, even though it has passed on the cost of the tax to a retailer.
THORNTON, J., joins.