382 Mass. 354 | Mass. | 1981
In August, 1976, Westinghouse Broadcasting Company, Inc., an Indiana corporation which owns and operates a television and radio station in Boston (WBZ-TV; WBZ, AM and FM) found itself on the Commissioner of Revenue’s list of the corporations liable to taxation as of January 1,1976, but not classified thereon as a manufacturing corporation. The company applied to the State Tax Commission under G. L. c. 58, § 2, for manufacturing classification, so that it would then qualify under the provisions of G. L. c. 63, § 42B, and G. L. c. 59, § 5, Sixteenth, for exemption of its machinery, of an estimated value of $1.3 mil
1. The record made before the Board consisted of a “joint stipulation of facts” (dated in October, 1979) and brief additional evidence. Emerging from the record was a picture of operations that is apparently familiar in television and radio broadcast.
We sketch the television side, which accounted for 80% of the company’s combined television and radio income. Some 33 % of air time consisted of programs produced by the company — a miscellany of news, sports, and other material largely of a local character. The balance of time was given over to material supplied by the network and others. Ninety-four per cent of TV income was derived from the sale of advertising displayed during the broadcasts;
With respect to the technique of accomplishing the broadcast of the visual element of the programs, the stipulation found it convenient to mention five chief sources or components, (i) Live programs. TV cameras receive light waves reflected from the studio subjects; these are transformed by the cameras into electrical impulses. (ii) Films or slides. Light is projected through these transparencies and similarly transformed into electrical impulses, (iii) Video tapes. Magnetic impulses (themselves resulting from transformation of electrical impulses derived from light) are stored on the tapes; these are transformed back into electrical impulses. The electrical signal from sources (i), (ii),
The handling of sound for radio broadcast may be taken as comparable to the treatment of the element of sound for TV broadcast and is sketched briefly in the record thus. Sound — live or from records or audio tapes — is “shaped” and converted into electrical impulses which are sent over telephone lines to a transmitter. Through a process of modulation similar to that for the TV visual element, WBZ’s radio signal is impressed on its carrier wave for transmission to the receiving sets. As to the company’s radio operations, the stipulation adds that 98 % of the programming was produced by the company, and 95% of the income was derived from advertising aired during that programming.
The names of the company’s departments are indicative of the range of work, from preparing programs to the final broadcasts, carried out by the 317 company employees: news, technical, programming, prop, art, retail production, sales, administrative.
We quote from First Data Corp. v. State Tax Comm’n, 371 Mass. 444 (1976): “As the statute does not itself effectively define ‘manufacturing, ’ we have said that the Legislature should be supposed to have adopted the common meaning of the word, as assisted by a consideration of the historical origins of the enactment.” Id. at 447. Popular understanding, we suggest, is approximated by the expression in Commissioner of Corps. & Taxation v. Assessors of Boston, 321 Mass. 90, 94 (1947): “Manufacture ordinarily and commonly denotes the process of transforming raw or finished materials by hand or machinery, and through human skill and knowledge, into something possessing a new nature and name and adapted to a new use.” This statement can apply to the broadcasting process only by a considerable distortion of the meaning; the process is more naturally and more aptly described, in distinction to manufacture, as a transmission of intelligence. That is how we characterized the operation of the “commercial on-line,
As to the historical origin of the legislation, we have pointed out that the exemption arose from an attempt to save the factories that had fallen into a distressed condition in the Commonwealth around 1936. Broadcasting is outside this matrix of intention and expectation. Cf. Charles River Breeding Laboratories, Inc. v. State Tax Comm’n, 374 Mass. 333, 336 (1978).
Decisions of other jurisdictions are not likely to have direct bearing because of peculiarities of the various taxing schemes. Yet it may be recorded as suggestive that Pennsylvania has lately held that the same company, in respect to its television and radio broadcasting in Pittsburgh through station KDKA, was not exempted by a provision of a “local tax enabling act” which barred municipalities from levying tax “on any privilege, act or transaction related to the business of manufacturing.” Golden Triangle Broadcasting, Inc. v. Pittsburgh, 483 Pa. 525 (1979). See also Commonwealth ex rel. Luckettv. WLEX-TV, Inc., 438 S.W.2d 520 (Ky. 1968);
The company attempts a constitutional argument based on the fact that two corporations publishing newspapers in Boston, with which the company competes for advertising, were classified by the Commissioner as manufacturing corporations. This is said to involve a breach of the guaranty of equal protection of the laws, the guaranty being perhaps the more sensitive here, it is suggested, because broadcasting and newspaper publishing are First Amendment activities. That the company is engaged in communication as a business of course does not exempt it constitutionally from local or other taxation. See Opinion of the Justices, 378 Mass. 816, 820-821 (1979). As to the claim of invidious discrimination because certain corporations publishing newspapers received the manufacturing classification while the company did not, we are unable on the present record to make any judgment because what, precisely, the entire business of the publisher corporations consisted of was not presented in any detail. Tax statutes customarily make narrow distinctions without running into trouble on a constitutional level, and application of a concept like “manufacture” necessarily involves close line-drawing.
We add, what we have had occasion to say before,
The decision of the Appellate Tax Board is affirmed.
So ordered.
For the similar exemption for domestic manufacturing corporations, see G. L. c. 63, § 38C, and G. L. c. 59, § 5, Sixteenth.
The step of an application to the State Tax Commission was eliminated by St. 1978, c. 514, § 35, amending G. L. c. 58, § 2 (and the State Tax Commission was reorganized under the name Department of Revenue by St. 1978, c. 514, § 5).
The record indicates that 67% of the 94% came from advertising aired during the company-produced programs.
A sixth source or component is “character generator,” a machine with a keyboard on which text is typed. As converted into electrical impulses, the text is mixed into the relevant transmissions.
The company fabricates stage sets, and so forth, on which it mounts the programs it produces, but this kind of activity is no more “manufac
This case uses an interesting image: “In the last analysis, the function of television is to transmit a message or communication. It manufactures
Golden Triangle Broadcasting, Inc. v. Pittsburgh, cited in text, affirmed a judgment of the Pennsylvania Commonwealth Court, 31 Pa. Commw. Ct. 547 (1977). The opinion of the latter court reconciled its denial of exemption to the company, engaged in broadcasting, with its previous decision in Pittsburgh v. Pittsburgh Press Co., 14 Pa. Commw. Ct. 551 (1974), allowing exemption to the publisher of a newspaper using its own presses and other machinery. See Federal Communication Comm’n v. Pacifica Foundation, 438 U.S. 726, 748 (1978). Cf. Assessors of Boston v. Commissioner of Corps. & Taxation, 323 Mass. 730, 739 (1949); Hearst Corp. (News American Div.) v. State Dep’t of Assessments & Taxation, 269 Md. 625 (1973).
See First Data Corp. v. State Tax Comm’n, 371 Mass. 444, 448 (1976); Charles River Breeding Laboratories, Inc. v. State Tax Comm’n, 374 Mass. 333, 336 (1978).