Opinion No. ( 1987 )

The Honorable Allen Gordon State Senator #7 Fairway Drive Morrilton, AR 72110

The Honorable Rodger Langster State Representative 39 Colonial Heights Heber Springs, AR 72543

Mr. Harvey Adcock Cleburne County Judge Heber Springs, AR 72543

Re: Cleburne County One Cent Sales Tax

Dear Gentlemen:

In response to the request for an official Attorney General's opinion received from Judge Adcock concerning the following questions:

Question 1: If a propane gas company from a different county delivers propane gas to Cleburne County, does such propane gas company charge the Cleburne County customer the one cent tax?

Question 2: If the answer to the above question is no, is this constitutional?

The answer to your first question is no. Cleburne County Ordinance No. 86-38, 7, specifies that all of the taxes will be collected on "sales of items and services sold by a business located in Cleburne County." In this respect, the ordinance is consistent with the Arkansas law which delegated to the counties the power to levy a sales tax. Ark. Stat. Ann. 17-2027 provides that counties may levy a tax upon sales by businesses located within the levying county, but the tax shall not apply to sales by businesses located in a county which levies no sales tax, "regardless of the place of residence of the purchase." Clearly, neither the state statute nor the county ordinance would permit Cleburne County to levy a tax upon a sale by a company located outside the county.

In my judgment, the answer to your second question is yes. The general rule that legislation should be presumed to be constitutional is of peculiar force with respect to taxing statutes. 71 Am.Jur.2d, State and Local Taxation 96. Taxes should be levied with equality and uniformity in accordance with some system designed to match the tax burden with the benefits accrued. Whaley v. Northern Road Improvement District, 152 Ark. 573,577, 240 S.W. 1 (1933). The theory supporting taxation for construction of local improvements is that benefits will accrue in a value corresponding to the tax burden suffered. Id. The Arkansas General Assembly could reasonably have found that the benefits resulting from the county sales tax would accrue mainly to the businesses located within the county. Consequently, the requirement to apply the tax burden only to sales by businesses located within the county is constitutional.

The foregoing opinion, which I hereby approve, was prepared by Deputy Attorney General Mary B. Stallcup.