Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2013
 

Sales And Use Tax Court Decisions


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Monterey Peninsula Taxpayers Association v. County of Monterey . . . (1992)

The Imposition of a Sales Tax by the Monterey County Public Repair and Improvement Authority after Approval of the Tax by a Simple Majority of the Voters Violated Proposition 13

Revenue and Taxation Code section 7285.5 authorizes rural counties to create agencies that can impose sales taxes for specific purposes with the approval of two-thirds of the agencies' members and a simple majority of the voters. Pursuant to this law, the Monterey County Board of Supervisors created the Monterey County Public Repair and Improvement Projects Authority.

On August 9, 1989, the Authority passed a sales tax ordinance to become effective upon approval by a majority of the voters. Under the ordinance, the Authority would collect and deposit tax revenues in its general fund and then use specified amounts on 27 improvement and repair projects previously enumerated by the County Board of Supervisors. The tax ordinance was approved by a simple majority of the voters.

The tax was challenged by the Monterey Peninsula Taxpayers Association. Relying upon Rider v. County of San Diego (1991) 1 Cal.4th 1, the court of appeal held that the tax violated article XIII A, section 4 of the California Constitution, commonly known as Proposition 13, which allows the imposition of special taxes by special districts only if the tax is approved by at least two-thirds of the voters. The court of appeal also held that its ruling would be applied retroactively, not prospectively. Monterey Peninsula Taxpayers Association v. County of Monterey (1992) 8 Cal.App.4th 1520.