115 N.H. 306 | N.H. | 1975
To the House of Representatives:
The question referred to this court is whether the legislature may constitutionally limit the definition of “business organization” under
Senate bill No. 138 would narrow the scope of the term “business organization” as used in RSA 77-A: 1 I by providing that “[f]or the purpose of this paragraph, the phrase ‘property within the state’ does not include spirits and wines which are brought into the state for purpose of sale to the State liquor commission under the express direction of or under an agreement with said commission.” Limiting the statutory definition of “business organization” in this fashion would relieve from taxation the otherwise taxable net income derived from the sale of spirits and wines to the State liquor commission.
The New Hampshire constitution entrusts the legislature with broad discretion to selectively classify property for the purpose of taxation. Opinion of the Justices, 106 N.H. 202, 206, 208 A.2d 458, 461 (1965); Opinion of the Justices, 97 N.H. 533, 536, 81 A.2d 845, 848-49 (1951); Opinion of the Justices, 95 N.H. 548, 550, 65 A.2d 700, 701 (1949); Havens v. Attorney-General, 91 N.H. 115, 118, 14 A.2d 636, 638 (1940); N.H. Const. pt. II, arts. 5 and 6. “Inequality of taxes laid is forbidden, but inequality caused by taxing some property and not taxing other is permitted.” Opinion of the Justices, 82 N.H. 561, 574, 138 A. 284, 291 (1927). Legislative classifications of property for purposes of taxation will be sustained so long as “just reasons” for the selections exist. Opinion of the Justices, 106 N.H. 202, 206, 208 A.2d 458, 461 (1965); Opinion of the Justices, 94 N.H. 506, 508, 52 A.2d 294, 296 (1947); Opinion of the Court, 4 N.H. 565, 568 (1829).
While the legislature’s discretion to classify property is broad, the constitution prohibits it from classifying taxpayers for purposes of taxation. Opinion of the Justices, 106 N.H. 202, 205, 208 A.2d 458, 461
Whether Senate bill No. 138 as presently drafted seeks to classify taxpayers or only property is not clear. “[T]he constitutionality of a statute is to be decided by an examination of its real purpose and its actual effect.” Opinion of the Justices, 87 N.H. 496, 497, 179 A. 409 (1935). If the effect of the proposal is to exempt certain taxpayers, i.e. those who sell “spirits and wines” to the State liquor commission, from this State’s general business profits tax, it is unconstitutional. If, however, Senate bill No. 138 merely classifies net income from the sale of “spirits and wines” to the State liquor commission as property exempt from taxation and if a “just reason” can be found for doing so, it is constitutional. Opinion of the Justices, 114 N.H. 174, 177-78, 317 A.2d 568, 570 (1974).
June 20, 1975