Wild World, Inc. v. Comptroller of Treasury

WILNER, Judge. We have before us a simple, but important, question of statutory interpretation. It concerns the admission and amusement tax, which, for convenience, we shall refer to as the admissions tax, authorized by Md.Code Ann. art. 81, §§ 402-411 and imposed by local ordinance. In particular, the question is whether and to what extent the “additional” admissions tax authorized by § 402(c) is to be counted for purposes of the maximum “rate of tax” set by § 403.

At one time, the answer to that question was very clear; unfortunately, in an attempt to clarify other provisions in ¹⁶³ the admissions tax law, the General Assembly, in 1972, made it unclear. We can frame the question by examining pertinent parts of three provisions. Sections 402(a) and (b), respectively, allow counties and incorporated municipalities to levy a tax “on the gross receipts of every person ... obtained from sources within the county [or municipality] derived from the amounts charged for” admission to certain types of places described in those subsections. 1 The tax, though imposed locally, is to be collected by the Comptroller. Section 402(c) authorizes the counties and incorporated cities and towns to levy “an additional tax of five cent[s] (5$) for each person provided with an admission without charge or at reduced rates whenever a charge for admission is made to any other person not in excess of fifty cents (50$); and a tax of ten cents (10$) whenever a charge [f]or admission to such other persons is in excess of fifty cents (50$), but not in excess of one dollar ($1.00); and a tax of fifteen cents (15$) whenever a charge for admission to such other person is in excess of one dollar ($1.00).” That tax also is to be collected by the Comptroller.

Finally, § 403(a) provides, in relevant part, that: “The rate of tax imposed under § 402 shall not exceed ten percent (10%) of the gross receipts of every person, firm or corporation subject to the tax____” Prince George’s County has imposed a tax under § 402(a) at the rate of 10%. It has also imposed the “additional” tax authorized by § 402(c). Appellant Wild World, Inc. operates a water amusement park in Prince George’s County. To enter the park, a patron must buy an admission ticket that has a fixed price of more than $1.00.

Not everyone pays the full fixed price, ¹⁶⁴ however. Through the use of coupons issued by appellant and made generally available to the public, if one person pays the full admission price, other persons, in his or her group may enter the park at a reduced price. Indeed, the record indicates that some 60-70% of the tickets actually sold are at a reduced price. Appellant collected from patrons and remitted to the Comptroller 10% of the gross receipts it received from all ticket sales, including 10% of the revenue from reduced price admissions.

It did not collect or remit, however, the additional 15$/ticket imposed pursuant to § 402(c), arguing that the collection of that additional tax would cause the total tax to exceed the 10% maximum rate established by § 403(a). Appellant’s argument was rejected by the Comptroller, by the Maryland Tax Court, and by the Circuit Court for Prince George’s County. The issue, as we said at the outset, is purely a legal one of statutory interpretation; there is no dispute of underlying fact, no contest over the Comptroller’s arithmetic, and no issue requiring any administrative expertise. Appellant looks at the language of § 403(a)—that “[t]he rate of tax imposed under § 402 shall not exceed [10%] of the gross receipts,” points out that the “additional” tax is imposed under § 402, and concludes, ergo, that it is subject to the 10% limitation.

The Comptroller counters with what is essentially a two-part argument. First, he says, the limitation in § 403(a) is on the “rate of tax” imposed under § 402; the tax authorized by § 402(a) and (b) is a rate applied to gross receipts, but the tax under § 402(c) is a “flat” tax on specific amounts and therefore not a “rate.” Second, he urges that, to the extent there is any ambiguity, we should consider the general legislative intent which, he claims, supports his reading of the statutes. We agree with the Comptroller in both respects. Section 402(c) is hardly a model of clarity, and so, in approaching the issue, it might be helpful to examine, in some more concrete fashion, how these provisions operate (or at least how the Comptroller urges they should operate). ¹⁶⁵ If an amusement operator—a park owner such as appellant—had a fixed admission price for adults of $5.00 and a separate fixed price for children of $2.00 and the $2.00 reduced price for children was not dependent upon an adult admission, the total tax would be under § 402(a) or (b).

If an adult and one child entered under that arrangement, the tax would be 70c—50c on the adult ticket and 20c on the child’s ticket, assuming a 10% rate. No tax would be imposed under § 402(c) because the reduced price for the child’s ticket was not dependent upon the admission of any other person. That would be true as well if the child were admitted free; in that event, the total tax would be 50 for the adult’s ticket. If, however, the $2.00 admission price for children was dependent upon an adult paying the $5.00 charge, both taxes would be imposed.

In that event, under § 402(a) or (b), 50c would be collected on the adult’s ticket and 20c would be collected on the child’s; in addition, another 15c would be collected on the child’s reduced price admission based on the fact that the price of the adult admission exceeded $1.00. 2 If the child was admitted free, a 50c tax under § 402(a) or (b) would be collected on the adult’s ticket and 15c would be collected under § 402(c) on the child’s admission. Using these examples, one can see that the tax under § 402(c) is truly an “additional” tax. If the tax rate imposed pursuant to § 402(a) or (b) is at the maximum 10% permitted under § 403(a), the effect of imposing the tax under § 402(c) would, in virtually every case, result in a gross tax in excess of 10% of appellant’s gross receipts. Only if the tax rate imposed under § 402(a) or (b) were less than the maximum allowed rate of 10% could the tax under § 402(c) be collected without the combined tax exceeding ¹⁶⁶ 10% of gross receipts.

Whether § 403(a) permits the counties and incorporated municipalities to impose the full 10% under § 402(a) or (b) and impose and collect the “additional” tax under § 402(c) is the issue before us. The primary canon of statutory construction has always been to give effect to the intention of the Legislature. State v. Fabritz, 276 Md. 416, 421 , 348 A.2d 275 (1975); Haskell v. Carey, 294 Md. 550, 556 , 451 A.2d 658 (1982). In Kaczorowski v. City of Baltimore, 309 Md. 505, 525 A.2d 628 (1987), the Court explained that, while a court should follow the plain meaning of the words used by the Legislature, the “rule is not rigid.” A statute must be read,, not in isolation, but to give effect to the purpose intended by the Legislature.

At 514-15, 525 A.2d 628 , the Court observed: “When we pursue the context of statutory language, we are not limited to the words of the statute as they are printed in the Annotated Code. We may and often must consider other ‘external manifestations’ or ‘persuasive evidence,’ including a bill’s title and function paragraphs, amendments that occurred as it passed through the legislature, its relationship to earlier and subsequent legisla-' tion, and other material that fairly bears on the fundamental issue of legislative purpose or goal, which becomes the context within which we read the particular language before us in a given case.” Under this view, a construing court appears to be limited to the precise words of the statute only when they are “clearly consistent with [the] apparent purpose (and not productive of any absurd result)____” Id. at 515 , 525 A.2d 628 . In order to gain a full appreciation of the legislative purpose behind §§ 402 and 403, one must examine some of the legislative history of those provisions. Although these provisions, or their precursors, have been part of the Maryland law since 1936, we may begin with 1968.

The law at that time provided for both a State and a local tax on admissions. Md.Code Ann. art. 81, § 402 (1965 Repl.Vol., 1968 Supp.) imposed a State tax of one-half of one ¹⁶⁷ percent on gross receipts from admissions. Section 403 authorized Baltimore City, 13 of the counties, and the incorporated municipalities in those 13 counties to levy their own tax on such receipts. Although any local tax was to be levied “to the same extent and in the same manner as that levied by the State,” the “rate of tax which may be levied” by the subdivisions “need not be the same as that imposed by the State.” Section 403(a).

The Comptroller was to collect both the State and the local tax. Section 404 levied an “additional”