Illinois Appellate Court Upholds Push Tax Ordinance
In Illinois Gaming Machine Operators v. The City of Waukegan, the Illinois Gaming Machine Operators Association (IGMOA) and a group of plaintiffs sued the City to challenge an ordinance that imposed a one cent tax per push (push tax) on players of video game terminals. The City’s push tax ordinance required every terminal operator (a company that leases video gaming machines to bars or restaurants) to register as a tax collector and imposed a duty to secure the tax from their customers. The trial court upheld the ordinance and ruled that it was a permissible use of municipal authority.
On appeal, the Appellate Court upheld the City's ordinance, rejecting the terminal operators' challenge.
First, the Appellate Court ruled that the push tax ordinance
did not impose an unconstitutional occupation tax because the tax burden rested
solely on the player and could not be transferred to the terminal operator.
Second, the Court ruled the push tax ordinance was not a
license for revenue because enforcement provisions only imposed penalties and
merely ensured compliance.
Third, the Court ruled that the ordinance did not contradict the uniformity clause of the Illinois constitution that requires taxes to be uniformly imposed across classes of goods. The terminal operators had argued that because the ordinance only imposed taxes on push machines, and not on automatic machines, the ordinance violated this clause. The court rejected that argument, finding that the City had provided sufficient justification for the ordinance and imposition of the push tax.
Finally, the Court ruled that the tax collection mechanism
did not exceed the City’s home-rule authority. The terminal operators had argued the funds
inserted into the gaming machines were outside of the City’s grasp because they
did not pertain to the City’s government and affairs. The Court discussed the
different ways the tax could be collected and ultimately ruled that there are
permissible mechanisms for the City to collect the tax funds.
Post Authored by Alexis Carter & Julie Tappendorf, Ancel Glink
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