Opinion
No. 30230
Decided July 25, 1945.
Taxation — Admissions tax — Municipally- operated swimming pool, exempt, when — Sections 5544-1, 5544-2, 5544-3 and 5544-5 General Code.
A municipality is exempt, under Sections 5544-1, 5544-2, 5544-3 and 5544-5, General Code, from the payment of the admissions tax on the amounts received for admission to a swimming pool operated and maintained by the municipality in a public park for the use of the public without any part of the earnings inuring to the benefit of any individual or organization.
APPEAL from the Board of Tax Appeals.
This cause is an appeal from the decision of the Board of Tax Appeals sustaining the validity of admissions-tax assessments made against the city of East Cleveland by the Tax Commissioner, for the years 1935 to 1942, inclusive, in the sum of $1,342.63, which includes penalty and interest.
The evidence adduced before the board discloses the following state of facts:
During the years in question the city of East Cleveland had and maintained an outdoor swimming pool open to the public generally as a part of a public community center in Shaw park. In addition to the pool the city had at this community center basketball courts, tennis courts, baseball diamonds, playground apparatus and a stadium. To those using the pool there was a service fee, per person, of five cents in the morning and ten cents in the afternoon and evening for the years 1935 to 1938 inclusive; five cents in the morning, ten cents in the afternoon and fifteen cents in the evening for the years 1939 to 1941 inclusive; and ten cents in the morning and fifteen cents in the afternoon and evening for the year 1942. No extra charge was made for lockers or other accommodations. The amount of these service fees collected was not sufficient to meet the operating expenses of the pool. The main purpose of making the charge was to regulate the admissions to the pool, and the secondary purpose was to pay some part of the expense of the operation, such as resulted from employing guards and locker attendants and the cleaning of the pool. Incidentally the requirement of a service fee gave some control over the patrons. These service fees went into the city treasury, and no individual or organization received financial benefits from the operation of the pool.
After the Board of Tax Appeals had sustained the validity of the assessments and affirmed the action of the Tax Commissioner, the city of East Cleveland appealed to this court and the matter is here for determination.
Mr. E.A. Binyon, director of law, for appellant.
Mr. Hugh S. Jenkins, attorney general, and Mr. A.A. Cartwright, for appellee.
The sole question is whether the appellant, the city of East Cleveland, is liable for an admissions tax of three per cent upon the service fees collected for the use of the swimming pool in Shaw park.
The admissions tax during the period for which the tax is sought to be collected was regulated by the following provisions of the General Code:
Section 5544-1. "As used in this act:
" 'Person' includes individuals, firms, partnerships, associations, corporations, municipalities and other political subdivisions of the state. * * *"
Section 5544-2. "For the purpose of providing revenues * * * there is hereby levied:
"(1) A tax of three per centum on the amounts received for admission to any place, including admission by season ticket or subscription. * * *"
Section 5544-3. "No tax shall be levied under this act with respect to:
"(1) Any admissions, all the proceeds of which inure
"(a) Exclusively to the benefit of religious, educational or charitable institutions, societies or organizations, societies or organizations for the prevention of cruelty to children or animals or societies or organizations conducted for the sole purpose of maintaining symphony orchestras and receiving substantial support from voluntary contributions, or of improving any municipal corporation or of maintaining a cooperative or community center moving picture theatre, or swimming pool — if no part of the net earnings thereof inures to the benefit of any private stockholder or individual * * *."
Section 5544-5, General Code, requires "every person receiving any payments for admissions, dues or fees taxable under this act" to make and file returns and pay the admissions tax.
There can be no doubt that the service fees received for entrance into and use of the swimming pool were admissions within the meaning of the statutes, and that the amount of such admissions is subject to an admissions tax of three per cent, unless exempted. It has been stated as a generally accepted rule that "municipal ownership of property offers no impediment to taxation if that is provided for by law." City of Cincinnati v. Lewis, Aud., 66 Ohio St. 49, 63 N.E. 588. An excise may be imposed upon a municipality by statute in the absence of a constitutional inhibition. In this respect an admissions tax, which is an excise, is like a property tax.
Section 5544-3 makes provision for the exemption of societies and organizations under certain circumstances, but does not mention a municipality as such. Yet, a municipality is an organization as much as any individual, combination of individuals or entity coming within the term "person," as defined in Section 5544-1. If the construction put upon the statutes by the Board of Tax Appeals is to prevail, a private organization that operates a swimming pool under such circumstances as to be exempt from payment of the tax would be favored over a municipality that maintains a pool under the same circumstances. A classification of that character would have no rational basis and would result in a palpable absurdity — the exemption of the private organization and the taxation of the municipality. Such a construction would work an unjust discrimination and deny the equal protection of the laws to which the municipality as a "person" is entitled.
It is an accepted canon of construction that, where a statute is susceptible of two interpretations, one of which will preserve its constitutionality and the other not, the courts will construe the enactment so as to save its validity. The construction which the taxing authorities approved and adopted herein followed the letter of the law regardless of consequences. There is another construction of the statute which will effect its purpose, preserve its constitutionality and avoid any absurd result. This construction follows the spirit of the law and recognizes that a municipality is an organization entitled, by virtue of Section 5544-3 to exemption from payment of the admissions tax in the operation of a swimming pool to the same extent as any other organization. This court adopts this construction.
Since the material facts are uncontroverted and no conflicting inferences arise therefrom, a question of law only is presented. The appellant, the city of East Cleveland, is entitled to exemption from payment of the admissions tax of three per cent on the amounts received for admission to the swimming pool. Accordingly, the decision of the Board of Tax Appeals is reversed and final judgment entered in favor of the appellant.
Decision reversed and final judgment for appellant.
WEYGANDT, C.J., ZIMMERMAN and TURNER, JJ., concur.
BELL, MATTHIAS and HART, JJ., concur in the judgment.
I concur in the judgment but not in the syllabus as its basis. In my opinion, the charge made for the use of the swimming pool is not an admission fee but a service charge, and therefore not subject to an admissions tax for reasons given in the opinion in the case of Board of Park Commrs. of Youngstown Twp. Park Dist. v. Evatt, Tax Commr., 145 Ohio St. 297.
The charge, not being subject to tax in the first instance on the basis of an admission, its nontaxability is not based upon exemption.
BELL and MATTHIAS, JJ., concur in the foregoing concurring opinion.