Today’s Newswire reports that the Federal Court has intervened in a tax issue involving Alabama and CSX. The State of Alabama has been imposing a 4 per cent sales tax on CSX’s fuel purchases. However, no sales tax is charged to water transportation or motor truck transportation although trucks do pay a 19¢ per gallon excise tax on motor fuel. The court has ruled this is unjust discrimination; CSX will no longer have to pay the sales tax.
What strikes me is that in this case one branch of government is relieving a railroad company from an unjust burden imposed by another branch of government. The point is that government is with us and always will be. To call for government to absent itself from railroad affairs or any other affairs is simply not realistic. That is not to say government policy is always desirable or wise; in this case Alabama’s policy was not. However, the courts relieved CSX from a burdensome and unjust tax.
This decision is a proper action on the part of the court and shouldn’t strike anybody as unusual. The judiciary often reviews actions of the legislative and executive branches.
The story on the TRAINSNewswire of this date 9 July2013 :
FTA:"…BIRMINGHAM, Ala. – A federal appeals court has ruled that the state of Alabama discriminated against railroads by forcing them to pay a sales tax on fuel when it exempts its competitors – trucking and barge companies, the Birmingham Times reports.
The U.S. 11th Court of Criminal Appeals issued its opinion in CSX Transportation’s appeal of its 2008 lawsuit against the Alabama Department of Revenue. CSX pays a four percent sales tax whenever it purchases diesel fuel in the state, according to the appeals court opinion. “CSX’s main competitors in the state – interstate motor and water carriers – do not,” according to the opinion. “We conclude that the sal
State governments have very broad power to levy taxes. Taxes fund services provided for the general good and there is a broad public interest in having those services. Therefore, the states do not usually have to show that the taxes levied are in proportion to benefits received. The 11th Circuit Court originally ruled the State of Alabama had the right to levy this sales tax on the railroads even though other forms of transportation were not subject to sales tax.
CSX appealed to the Supreme Court and, while the Supreme Court agreed that generally states have broad powers to levy taxes, their powers are not broad enough to tax some entities while excluding other entities from that burden. The Supreme Court then remanded the case to the Circuit Court and directed the Court to revise its findings.
If I remember correctly the principle is the equal protection clause of an amendment to the constitution. Basically you are entitled to be equally taxed for government services. Many states used to exempt agricultural users from fuel taxes. In a number of cases because farmers were using public roads this was found to be unequal. If CSX does not have to pay sales tax on diesel fuel for off highway uses them neither should NS. I am not a lawyer so do not quote me on this (legal disclaimer) . From what I remember about fuel taxes for trucks the rulings on this subject have been all over the map, and it has not gotten to the US Supreme Court. Generally as I understand it the rulings on this have been in state courts on equal protection. Rgds IGN
If it’s anything like what happened in Colorado, the answer is no. (Couldn’t get the $$$ out of the general fund, highway fund or earmark the funds for x-ing improvements)