[217] OPINION ANNOUNCING THE JUDGMENT OF THE COURT
PAPADAKOS,* Justice.
This is the appeal of Wilsbach Distributors, Inc., Appellant, from the Opinion and Order of the Commonwealth Court vacating the judgments of sentence entered against it by the Court of Common Pleas of Dauphin County, and remanding the matter to the trial court to enable Appellant to file post-trial motions on certain matters relevant to this appeal.
Appellant is an importing distributor of malt and brewed beverages and is licensed by the Pennsylvania Liquor Control Board, pursuant to Section 439 of the Liquor Code,1 to operate a distributorship in the City of Harrisburg. On December 12, 1978, the City of Harrisburg enacted a Business Privilege Mercantile Tax Ordinance which imposed a tax on the privilege of doing business in the City of Harrisburg equal to one and one-half mills per $1,000.00 of gross volume of business conducted within the territorial limits of the City of Harrisburg, subject to a maximum tax of $3,000.00. Appellant did not pay the Business Privilege and Mercantile Tax for 1979 and 1980 claiming that it was exempt from the payment of the City imposed tax.
On October 13, 1981, Appellant was served with citations for failure to pay the City taxes, and was found guilty of failing to pay the taxes by a district justice on March 30, 1982. An appeal to the Court of Common Pleas of Dauphin County was timely taken. Prior to the de novo trial, Appellant and the City stipulated that the tax due for 1979 would be $1,522.48 and $1,685.00 for 1980, plus penalties for late payment. Following a hearing before the Honorable [218] John C. Dowling, Appellant was found guilty of not paying the taxes, a summary offense.
An appeal followed to Commonwealth Court. There, Appellant argued 1) that the Pennsylvania Liquor Code is such a comprehensive legislative regulation of the liquor industry that the City is prohibited from taxing Appellant, under the doctrine of pre-emption; 2) that the Local Tax Enabling Act prohibits the City from taxing Appellant, since the Commonwealth has already imposed a tax and license fee on the same subject matter; and 3) that the trial court erred in directing that Appellant pay back taxes and penalties as a part of its sentence imposed pursuant to a summary offense conviction. The Honorable Francis A. Barry, writing for an unanimous seven member en banc court, rejected Appellant’s first two arguments, but remanded on the third issue to give Appellant an opportunity to file nunc pro tunc post-trial motions before the trial court on this issue pursuant to Pa.R.Crim.P. 1123(a). Wilsbach Distributors, Inc. v. Commonwealth, 81 Pa.Commonwealth Ct. 244, 473 A.2d 1123 (1984).
We granted Appellant’s Petition for Allowance of Appeal to examine the interesting question of whether the legislation regulating the liquor industry is so comprehensive in itself, or in conjunction with the taxes and fees imposed by the Commonwealth over the liquor industry, as to prohibit the City from levying its own tax on the same subject.
In reviewing legislation to resolve the question of whether pre-emption arises, we are guided by the standard articulated by this Court in Western Pennsylvania Restaurant Association v. Pittsburgh, 366 Pa. 374, 380-81, 77 A.2d 616, 619-20 (1951):
There are statutes which expressly provide that nothing contained therein should be construed as prohibiting municipalities from adopting appropriate ordinances, not inconsistent with the provisions of the act or the rules and regulations adopted thereunder, as might be deemed necessary to promote the purpose of the legislation. On the other hand there are statutes which expressly provide [219] that municipal legislation in regard to the subject covered by the state act is forbidden. Then there is a third class of statutes which, regulating some industry or occupation, are silent as to whether municipalities are or are not permitted to enact supplementary legislation or to impinge in any manner upon the field entered upon by the state; in such cases the question whether municipal action is permissible must be determined by an analysis of the provisions of the act itself in order to ascertain the probable intention of the legislature in that regard. It is, of course, self-evident that a municipal ordinance cannot be sustained to the extent that it is contradictory to, or inconsistent with, a state statute____ [Municipalities in the exercise of the police power may regulate certain occupations by imposing restrictions which are in addition to, and not in conflict with, statutory regulations ... but if the general tenor of the statute indicates an intention on the part of the legislature that it should not be supplemented by municipal bodies, that intention must be given effect and the attempted local legislation held invalid ____ (Citations omitted.)
Appellant admits that the Liquor Code is silent on the question of pre-emption and argues that we are required to analyze the provisions of the various acts involved in order to ascertain the probable intention of the legislature in regard to pre-emption. We agree.
Before embarking on a review of the Liquor Code and taxing provisions, however, one important digression is in order. Commonwealth Court, in reviewing Appellant’s preemption claims, chose to reject them by relying on this Court’s decision in United Tavern Owners of Philadelphia v. Philadelphia School District, 441 Pa. 274, 272 A.2d 868 (1971). In that case, Mr. Justice O’Brien, speaking for himself, argued that his review of the Liquor Code and tax scheme imposed on the liquor industry indicated that the Legislature chose to take the field and pre-empt local taxation on the liquor industry. No member of the Court joined that opinion. Mr. Chief Justice Bell and Mr. Justice Rob[220] erts only concurred in the result. Mr. Justice Pomeroy dissented and was joined by Mr. Justice Eagen, who both felt that the Liquor Code regulations and tax schemes were not so comprehensive as to prevent local municipalities from taxing the liquor industry. Justices Cohen and Jones did not participate in the consideration or disposition of the case. Three members of the Court (O’Brien, Pomeroy and Eagen, JJ.) did agree that the Liquor Code, by itself, was not a sufficiently comprehensive regulatory statute to prevent local taxation on the liquor industry. Three other members of that Court (O’Brien, Bell, Roberts, JJ.), however, agreed that the result reached in striking down the local tax was correct, albeit for unrevealed reasons.
Free access — add to your briefcase to read the full text and ask questions with AI
[217] OPINION ANNOUNCING THE JUDGMENT OF THE COURT
PAPADAKOS,* Justice.
This is the appeal of Wilsbach Distributors, Inc., Appellant, from the Opinion and Order of the Commonwealth Court vacating the judgments of sentence entered against it by the Court of Common Pleas of Dauphin County, and remanding the matter to the trial court to enable Appellant to file post-trial motions on certain matters relevant to this appeal.
Appellant is an importing distributor of malt and brewed beverages and is licensed by the Pennsylvania Liquor Control Board, pursuant to Section 439 of the Liquor Code,1 to operate a distributorship in the City of Harrisburg. On December 12, 1978, the City of Harrisburg enacted a Business Privilege Mercantile Tax Ordinance which imposed a tax on the privilege of doing business in the City of Harrisburg equal to one and one-half mills per $1,000.00 of gross volume of business conducted within the territorial limits of the City of Harrisburg, subject to a maximum tax of $3,000.00. Appellant did not pay the Business Privilege and Mercantile Tax for 1979 and 1980 claiming that it was exempt from the payment of the City imposed tax.
On October 13, 1981, Appellant was served with citations for failure to pay the City taxes, and was found guilty of failing to pay the taxes by a district justice on March 30, 1982. An appeal to the Court of Common Pleas of Dauphin County was timely taken. Prior to the de novo trial, Appellant and the City stipulated that the tax due for 1979 would be $1,522.48 and $1,685.00 for 1980, plus penalties for late payment. Following a hearing before the Honorable [218] John C. Dowling, Appellant was found guilty of not paying the taxes, a summary offense.
An appeal followed to Commonwealth Court. There, Appellant argued 1) that the Pennsylvania Liquor Code is such a comprehensive legislative regulation of the liquor industry that the City is prohibited from taxing Appellant, under the doctrine of pre-emption; 2) that the Local Tax Enabling Act prohibits the City from taxing Appellant, since the Commonwealth has already imposed a tax and license fee on the same subject matter; and 3) that the trial court erred in directing that Appellant pay back taxes and penalties as a part of its sentence imposed pursuant to a summary offense conviction. The Honorable Francis A. Barry, writing for an unanimous seven member en banc court, rejected Appellant’s first two arguments, but remanded on the third issue to give Appellant an opportunity to file nunc pro tunc post-trial motions before the trial court on this issue pursuant to Pa.R.Crim.P. 1123(a). Wilsbach Distributors, Inc. v. Commonwealth, 81 Pa.Commonwealth Ct. 244, 473 A.2d 1123 (1984).
We granted Appellant’s Petition for Allowance of Appeal to examine the interesting question of whether the legislation regulating the liquor industry is so comprehensive in itself, or in conjunction with the taxes and fees imposed by the Commonwealth over the liquor industry, as to prohibit the City from levying its own tax on the same subject.
In reviewing legislation to resolve the question of whether pre-emption arises, we are guided by the standard articulated by this Court in Western Pennsylvania Restaurant Association v. Pittsburgh, 366 Pa. 374, 380-81, 77 A.2d 616, 619-20 (1951):
There are statutes which expressly provide that nothing contained therein should be construed as prohibiting municipalities from adopting appropriate ordinances, not inconsistent with the provisions of the act or the rules and regulations adopted thereunder, as might be deemed necessary to promote the purpose of the legislation. On the other hand there are statutes which expressly provide [219] that municipal legislation in regard to the subject covered by the state act is forbidden. Then there is a third class of statutes which, regulating some industry or occupation, are silent as to whether municipalities are or are not permitted to enact supplementary legislation or to impinge in any manner upon the field entered upon by the state; in such cases the question whether municipal action is permissible must be determined by an analysis of the provisions of the act itself in order to ascertain the probable intention of the legislature in that regard. It is, of course, self-evident that a municipal ordinance cannot be sustained to the extent that it is contradictory to, or inconsistent with, a state statute____ [Municipalities in the exercise of the police power may regulate certain occupations by imposing restrictions which are in addition to, and not in conflict with, statutory regulations ... but if the general tenor of the statute indicates an intention on the part of the legislature that it should not be supplemented by municipal bodies, that intention must be given effect and the attempted local legislation held invalid ____ (Citations omitted.)
Appellant admits that the Liquor Code is silent on the question of pre-emption and argues that we are required to analyze the provisions of the various acts involved in order to ascertain the probable intention of the legislature in regard to pre-emption. We agree.
Before embarking on a review of the Liquor Code and taxing provisions, however, one important digression is in order. Commonwealth Court, in reviewing Appellant’s preemption claims, chose to reject them by relying on this Court’s decision in United Tavern Owners of Philadelphia v. Philadelphia School District, 441 Pa. 274, 272 A.2d 868 (1971). In that case, Mr. Justice O’Brien, speaking for himself, argued that his review of the Liquor Code and tax scheme imposed on the liquor industry indicated that the Legislature chose to take the field and pre-empt local taxation on the liquor industry. No member of the Court joined that opinion. Mr. Chief Justice Bell and Mr. Justice Rob[220] erts only concurred in the result. Mr. Justice Pomeroy dissented and was joined by Mr. Justice Eagen, who both felt that the Liquor Code regulations and tax schemes were not so comprehensive as to prevent local municipalities from taxing the liquor industry. Justices Cohen and Jones did not participate in the consideration or disposition of the case. Three members of the Court (O’Brien, Pomeroy and Eagen, JJ.) did agree that the Liquor Code, by itself, was not a sufficiently comprehensive regulatory statute to prevent local taxation on the liquor industry. Three other members of that Court (O’Brien, Bell, Roberts, JJ.), however, agreed that the result reached in striking down the local tax was correct, albeit for unrevealed reasons.
Given the splintered voting pattern of United Taverns, Commonwealth Court’s cautious reliance on United Taverns to dispose of Appellant’s argument of pre-emption may well have been misplaced, and we feel it appropriate to re-examine the issue especially in light of our more recent decision in City of Pittsburgh v. Allegheny Valley Bank, 488 Pa. 544, 412 A.2d 1366 (1980), where a clear majority of the Court found the Banking Code and the Department of Banking Code sufficiently comprehensive regulatory schemes to pre-empt local taxation and since a full compliment of this Court is participating in the consideration and disposition of the issues being raised.
Our review of the Liquor Code and regulations promulgated thereunder indicate the legislature’s clear intent to regulate in plenary fashion every aspect of the alcoholic beverage industry. Every phase, from manufacture to sale and disposition is subject to the exclusive control of the State through its designated arm of enforcement, the Liquor Control Board.2
[221] As our decisions have made clear, there is perhaps no other area of permissible state action within which the exercise of the police power of a state is more plenary than in the regulation and control of the use and sale of alcoholic beverages. V.J.R. Bar Corp. v. Liquor Control Board, 480 Pa. 322, 390 A.2d 163 (1978); In re: Tahiti Bar, Inc., 395 Pa. 355, 150 A.2d 112 (1959); Commonwealth v. Koczwara, 397 Pa. 575, 155 A.2d 825 (1959). The state is vested with the sole authority to determine whether alcoholic beverages, their manufacture, gift, purchase, sale, possession or transportation shall be permitted or prohibited within its borders.3
The power of prohibition includes the lesser power of regulation and a state may adopt such measures as are reasonably appropriate or needful to render the exercise of that power effective. In view of the virtually absolute control over the business of dispensing alcoholic beverages, it is clear that the conduct of such business is lawful only to the extent that it is made so by the Liquor Code. Tahiti Bar; Cavanaugh v. Gelder, 364 Pa. 361, 72 A.2d 85 (1950).
In the exercise of its legitimate state interest, the Commonwealth, through the Liquor Control Board, directly controls what beverages may be bought or sold in the Commonwealth,4 who may sell on the retail and wholesale level,5 for what prices beverages may be sold and bought from the State,6 and to issue licenses to distributors and wholesalers so that they may sell to consumers through its Board.7 The Commonwealth controls not only the geographical location of all its licensees,8 but also the physical structures in which [222] beverages may be kept and sold.9 The site of every licensed premise in the Commonwealth is exclusively within the discretion of the Board.10 The only concessions to municipalities is their right to exclude any or all classes of licensees (i.e., dry municipalities), 47 P.S. § 4-472, and to exercise appropriate zoning controls.
Enforcement of the Code and its regulations is vested in the Board. The Board and its investigative staff are vested with the full police power to enter any licensed establishment and check for violations of the Code, and, if necessary, to arrest violators of the Code and its regulations, and to seize unlawfully obtained beverages in plain view, without warrant.11
As part of the legislature’s regulatory scheme, fees are imposed for the privilege of obtaining and keeping licenses issued by the Board (47 P.S. § 8-801). These fees are collected for the benefit of the municipalities in which the licensed establishments are located and are rebated by the Commonwealth to those municipalities.
Finally, indicative of the Commonwealth’s plenary exercise of control over the alcoholic beverage industry are the extensive taxes imposed on all sales of alcohol on the local and retail levels. Considerable revenues are generated for the Commonwealth by its operation of the State Liquor Stores and the additional taxes imposed on purchases and sales of alcoholic beverages. In addition to the revenues generated by the operation of the State Liquor Stores and license fees collected pursuant to the provisions of the Code, the Commonwealth also raises revenue by its imposition of four other taxes on all sales and purchases of alcoholic beverages. (Spirituous and Vinous Liquor Tax Law, Act of December 5, 1933, P.L. 38, 47 P.S. § 745 et seq.; Emergency Liquor Tax, Act of June 9, 1936, Ex. Sess, P.L. 13, as amended, 47 P.S. § 794 et seq.; Malt Beverage Tax Law, Act of May 5, 1933, P.L. 284, as amended, 47 P.S. § 103 et [223] seq.; Sales Tax Act, Act of March 4, 1971, P.L. 6, Article II, as amended 72 P.S. § 7201.)
Our decision in City of Pittsburgh v. Allegheny Valley Bank, 488 Pa. 544, 412 A.2d 1366 (1980), is not inapposite to the result we reach here. In Allegheny Valley Bank, we reviewed the Banking Code12 and the Department of Banking Code13 to determine whether the legislation was so comprehensive as to indicate the legislature’s intention to reserve regulation and taxation of the banking industry exclusively to the Commonwealth. After review, we found that the statutes under consideration demonstrated the implementation of a comprehensive regulatory scheme over a private industry which needed state protection for the economic security of the public economy and the financial soundness of the banking institutions. The local taxing scheme was found to be an impermissible intrusion in the Commonwealth’s statewide regulation of the banking industry and was struck down.
Allegheny Valley Bank does not stand for the proposition that the state’s regulation over an industry will preempt local regulation or taxation only when the nature of the industry regulated involves its financial soundness. Fiscal stability is only one of the considerations which may motivate the state to enact pre-emptive regulations in its desire to protect the industry’s financial soundness for the health, welfare or safety of the citizens and the economy. We are still required to examine all relevant legislation in order to ascertain the extent of the regulation over an industry and the legislature’s purpose in regulating the industry. West. Pa. Restaurant Association v. Pittsburgh, 366 Pa. 374, 77 A.2d 616 (1951).
The regulatory scheme now under review controls a public, state-run monopoly, maintained for the health, welfare and safety of the citizens of this Commonwealth and upon [224] which the Commonwealth depends for substantial revenues. Such pervasive control over all phases of the liquor industry, along with the extensive taxation and fees imposed, indicates the legislature’s intent to control this industry and to receive all the benefits inherent by regulating the industry, including raising revenues through regulation to the exclusion of all local attempts to interfere with the state regulation by imposing taxes on a local level.
We conclude that the legislature has adopted a scheme of regulation so pervasive over the entire alcoholic beverage industry, that it has “pre-empted the field” to the exclusion of all interference from subordinate legislative bodies. Such pre-emption by the legislature bars local legislative control by regulation or taxation.
The Business Privilege and Mercantile Tax imposed on Appellant is a tax on its privilege to conduct a distributorship within the City of Harrisburg. This privilege is granted by the State, is absolutely controlled by the State, and not the City of Harrisburg, through fees, regulations and taxes, and is, thus, an improper subject for the City to tax. Since the taxation of Appellant’s privilege of doing business is pre-empted by the Commonwealth, the Business Privilege Tax impermissibly “impinges” upon this area and the Harrisburg tax is invalid as applied to Appellant.14
The Order of the Commonwealth Court is reversed and the citations filed against Appellant are dismissed.
JUDGMENT
ON CONSIDERATION WHEREOF, it is now hereby ordered and adjudged by this Court that the Order of the Commonwealth Court is reversed and the citations filed against appellant are dismissed.
NIX, C.J., files a concurring opinion.
[225] ZAPPALA, J., files a concurring opinion, joined by McDermott, j.
FLAHERTY, J., files a dissenting opinion, joined by HUTCHINSON, J.