It also fits with a discussion in some classes about how laws in Texas favor large businesses over small ones.
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A state tax that imposes a 55-cent fee on each pack of cigarettes produced by small tobacco manufacturers is constitutional, even though larger tobacco manufacturers do not pay the tax, the Texas Supreme Court ruled Friday.
In a ruling that overturned the 3rd Court of Appeals in Austin, the justices said that the tax law, written by State Rep. John Otto, R-Dayton, and passed in 2013, was sound.
In December, lawyers for a coalition of companies known as "Small Tobacco" had argued that the tax, introduced by House Bill 3536, violated Texas’ “Equal and Uniform Clause,” which they interpreted to mean that taxes must be uniform on all items similar to each other. In other words, they claimed it was unfair to tax producers of certain cigarettes without also taxing the producers of essentially identical cigarettes from other companies.
The ruling Friday, written by Justice Don Willett, concluded the clause pertains to the entities being taxed, not the products themselves – and therefore, it was legitimate for the Legislature to draw a distinction between various classes of cigarette manufacturers.
“No reasonable person would dispute that an ice cream manufacturer could be classified differently than a computer manufacturer,” Willett wrote. In the same way, he explained, it is legitimate for the Legislature to make different “rational” classifications based on methods of conducting business, among other distinctions.
