Request By:
Mr. Jerry L. Foster
Foster & Weddle
Attorneys at Law
118 Middleburg Street
P.O. Box 635
Liberty, Kentucky 42539
Opinion
Opinion By: Steven L. Beshear, Attorney General; By Alex W. Rose, Assistant Attorney General
In your recent letter to the Attorney General's Office you requested an opinion regarding taxation of coin-operated amusement machines such as electronic video games, pinball machines and other amusement machines.
QUESTION 1. In the absence of a comprehensive occupational and/or business license tax ordinance, may a city of the fifth class impose a flat rate tax upon amusement machines such as electronic video games, pinball machines, etc.?
ANSWER: No.
QUESTION 2. In the absence of a comprehensive occupational and/or business license tax ordinance, may a city of the fifth class impose a flat rate license fee upon amusement machines such as electronic video games, pinball machines, etc.?
ANSWER: Yes.
KRS 137.410 provides:
"Every municipal corporation of the commonwealth is hereby authorized and empowered to levy a tax on coin machines as defined and provided in KRS 137.010 and 137.340 to 137.400, provided, however that any license tax so imposed by a municipal corporation shall not exceed in amount the taxes provided for state purposes, except that cities of the first class may levy taxes equal to twice the amount of the state taxes."
The state tax rate pursuant to KRS 137.360 is $10.00 per machine.
Therefore, the City of Liberty may impose a license tax not to exceed $10.00 per machine on coin operated amusement machines such as electronic video games, pinball machines and other coin operated amusement machines.
QUESTION 3. If your answer to the second question is in the affirmative, must the license fee be related to actual cost of regulation or any other criteria to be observed by the city?
ANSWER: No.
We are of the opinion that the legislature has established the maximum municipal rate for the license tax on coin operated amusement machines. Even though the actual cost of regulation of such machines should exceed $10.00 per machine in a city of the second class and smaller, the applicable statute prohibits a rate in excess of $10.00 per machine.