Appeal from the Circuit Court for Prince George's County; Powers, J.
Brune, C. J., and Henderson, Hammond, Prescott and Marbury, JJ. Hammond, J., delivered the opinion of the Court.
This appeal presents for decision the constitutionality of the Maryland use tax, imposed by Code (1957), Art. 81, Secs. 372-393 (as amended by Code (1961 Supp.)). In 1959 Lane
Construction Corporation, the appellant, brought into this State to use in construction work at Andrews Air Force Base various pieces of heavy equipment, most of which had been purchased outside Maryland and used for some time on jobs in other states. The comptroller assessed on this latter equipment a use tax measured by the purchase price of each item of equipment less an allowance of 10% of the price a year for each full year after its purchase (as provided by Sec. 373 (e) of Art. 81 of the Code (1961 Supp.)) and an allowance for excise taxes on the item paid another state (as required by Sec. 375 (c) of Art. 81 of the Code (1961 Supp.)).
Claiming that the value placed on the property by the comptroller under the statutory formula greatly exceeded its fair market value and that, therefore, the tax imposed on it exceeded the sales tax a purchaser in Maryland of similar equipment would pay (since the in-state purchaser would be taxed on the purchase price, which Lane equates to fair market value), Lane protested to the comptroller that the use tax imposed an unconstitutional burden on interstate commerce and violated the equal protection provision of the Constitution of the United States. After a formal hearing the assessment was affirmed by the comptroller, and then by the Circuit Court. Lane appeals to this Court from the order of the Circuit Court for Prince George's County.
Maryland first enacted a retail sales and use tax in 1947. Comp. of Treas. v. Thompson Trailer Corp., 209 Md. 490, and Comptroller v. Julian, 215 Md. 406, held that the use tax statutes as they then read showed a clear legislative intent to tax the use, storage or consumption of property in Maryland only if the property had been purchased with the specific intent to use, store or consume it here. By Ch. 332 of the Acts of 1955, the statute was amended to make use tax liability depend on actual use, storage or consumption in Maryland, rather than on purchase with intent to use, store or consume in the state. Thus, goods were taxed on their purchase price no matter how long after the purchase they were first used, stored or consumed in Maryland. In 1958, in order to soften the impact of the use tax in situations where goods first became
taxable in Maryland after long use elsewhere, the legislature by Ch. 91 of the Acts of 1958 (now Code (1961 Supp.), Art. 81, Sec. 373 (e)) provided that in computing the assessable basis, 10% of the purchase price be deducted for each full year of use outside the state. The same year the sales and use taxes were both raised from 2% to 3% on each sale where the price is in excess of one dollar.
Lane concedes that the use tax was a valid compensating tax complementary to the sales tax before its amendment in 1955,*fn1 but contends that by eliminating the requirement of intent to use the purchased goods in Maryland the legislature "disturbed the traditional purpose of the tax" and changed its concept from a tax complementary to the sales tax to an independent revenue tax which does not afford equal treatment to in-state and out-of-state purchases and is not, therefore, entitled to the judicial approval accorded the traditional and customary use tax.*fn2
We do not agree. The general plan and purpose of the use tax remains as it was before the 1955 amendment. The change was made then to insure accomplishment of its purpose, to subject property brought into the state after it had been first used elsewhere to the same tax its purchaser would have borne if it had been bought in the state, and the obvious effort of the 1958 amendment was to make the taxable measure of a used article brought into Maryland the approximate equivalent of its taxable measure if it had been bought in the State at the time it was imported -- that is, its purchase price. In the words of Mr. Justice Cardozo, in approving for the Supreme Court
the use tax of the State of Washington in Henneford v. Silas Mason Co., 300 U.S. 577, 584, 81 L. ed. 814, the present purpose and design of the Maryland use tax is, as it has been since its enactment, to make sure that "when the account is made up, the stranger from afar is subject to no greater burdens as a consequence of ownership than the dweller within the gates." He said also what we think ...