Request By:
Mr. Frederick G. Neikirk
Pulaski County Attorney
104 W. Columbia Street
Somerset, Kentucky 42501
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
You have a problem in Pulaski County, "wherein itinerant merchants come into the community with truck loads of cheap goods, selling them from the back end of their trucks. " The local merchants cannot compete with those individuals, who offer their goods at a cost much less than the merchants are asking.
The city of Somerset has a general occupational license tax which includes itinerant merchants. Pulaski County has no general occupational license tax.
Your question reads:
"Short of inacting a general occupational license tax for the county, which would include itinerant merchants, what can the county pass in the way of an ordinance to either limit or prohibit these itinerant merchants from setting up outside the Somerset city limits, where the county can protect the merchants. "
Ad valorem taxes and license taxes are the only kinds of taxes that a county may levy. See § 181,
Kentucky Constitution, and Driver v. Sawyer, Ky., 392 S.W.2d 52 (1965) 53.
Cf. KRS 137.115, which permits fiscal courts in all counties to impose a license tax on certain types of businesses. However, the language does not embrace sales by itinerant sellers.
We understand that the 1980 federal census indicated 42,000 as the population of Pulaski County.
KRS 67.083(2) provides that the fiscal court of any county is authorized to levy all taxes not in conflict with the constitution and statutes of this state now or hereafter enacted. However, KRS 68.197(1) provides that a fiscal court of each county having a population of thirty thousand (30,000) or more may by order or resolution impose license fees for licensing any business, trade, occupation or profession. The statute imposes restrictions as to the precise formula for computing the license fee. In subsection (3) the fiscal court imposing license fees pursuant to subsection (1) must submit the question of the license fee to the voters of the county at the next general election. If the license fee is rejected by a majority of those voting in the election, the license fee shall be repealed effective December 31 of the same year.
Thus the fiscal court can, under KRS 68.197, impose a general occupational license tax. But your question is whether it can impose an occupational license tax on these itinerant merchants, without imposing a general occupational license tax.
As relates to an occupational license tax, the specific provisions of KRS 68.197 would govern over the general statement of KRS 67.083(2).
City of Bowling Green v. Board of Education, Ky., 443 S.W.2d 243 (1969) 247.
The fiscal court of Pulaski County may, under KRS 68.197, impose an occupational license tax on these itinerant businesses. However, such tax must be integrated with a general county occupational license tax applying to occupations, trades, and professions generally. Such an overall occupational license tax must be based upon reasonable classifications, must not be discriminatory, and must not be arbitrary or confiscatory. Such an overall license tax must be uniform as applied to each classification.
City of Lexington v. Motel Developers, Inc., Ky., 465 S.W.2d 253 (1971) 257; and
Jahr v. City of Radclicliffe, Ky., 503 S.W.2d 743 (1973). Section 171, Constitution, requires uniformity in imposing ad valorem or license taxes. Thus it would not be constitutional to single out these itinerant merchants with the tax and let the remaining businesses and occupations of Pulaski go scot free. Such a move would violate the uniformity provisions of § 171, Constitution, and the prohibition against arbitrary action in § 2, Constitution.
A general county occupational license tax may be applied to the entire county area, including the corporate territory within the boundaries of Pulaski County. There would be no double taxation involved. In
Second Street Prop. v. Fiscal Court of Jefferson County, Ky., 445 S.W.2d 709 (1969) 715, the court wrote that "To constitute double taxation the two taxes must be imposed on the same property by the same governing body during the same taxing period for the same taxing purpose."
In connection with including the subject itinerant merchants under a county occupational license tax, the case of
Jellico Grocery Co. v. City of Whitesburg, 286 Ky. 470, 151 S.W.2d 35 (1941), involved the application of a city license tax upon a wholesaler who, without owning any property or having a residence in the city, solicited business from resident retailers on a regular basis. The court held that there were no statutory limitations, territorial or otherwise in imposing a city occupational license tax. The court said that such license taxes must not be discriminatory, must be based upon reasonable classifications, and that they must not be confiscatory. It is important that such an occupational license tax can only be applied to those regularly engaged in carrying on a trade or occupation within county boundaries. Such a tax cannot be applied to an isolated or single transaction.
Karnes v. City of Benton, 258 Ky. 425, 80 S.W2d 558 (1935); and
West v. City of Mt. Sterling, Ky., 65 S.W. 120 (1901) 122.
CONCLUSION
The Fiscal Court of Pulaski County may, under KRS 68.197, impose an occupational license tax on itinerant businesses, provided they are regularly engaged in such retail business activity within county boundaries, and provided that such tax is integrated with a general county occupational license tax applying to occupations, trades, and professions generally, throughout all of the county, and which may include municipal territory. We pointed out above that a general county tax covering all county territory (including municipal territory within the county) would not constitute double taxation. See KRS 68.197 for specific application of tax rate formula. Since your county does not presently have in effect an occupational license tax, the county has no present authority to require these itinerant merchants to register and pay a tax, even though they are regularly engaged in such retail business.