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Business Taxes Law Guide—Revision 2024
Uniform Local Sales and Use Tax Court Decisions
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Century Plaza Hotel Company v. City of Los Angeles … (1970)
Localities Banned From Imposing Excise Tax on Alcoholic Beverages
Plaintiff hotel company brought an action to enjoin the City of Los Angeles from enforcing a municipal ordinance, a so-called "tipplers' tax," which imposed an excise tax of five percent upon the purchase price of alcoholic beverages sold by a retailer for consumption on the premises where sold. Plaintiff argued that because there was no limit upon the amount of tax which could be imposed, the tax infringed upon the state’s constitutional right to regulate alcoholic beverage sales.
The court found that the ordinance violated Revenue and Taxation Code section 32010, which provides that the taxes imposed by the Alcoholic Beverage Tax Law are in lieu of all county, municipal, or district taxes on the sale of beer, wine, or distilled spirits. In doing so, the court rejected the City’s argument that the ordinance only taxed the "purchase" of alcoholic beverages, rather than the "sale." The court concluded that the statute and ordinance were in irreconcilable conflict, and that section 32010 clearly indicated the Legislature's intention to preempt the field of taxation on transactions in alcoholic beverages. The court acknowledged that taxation for municipal purposes was ordinarily a "municipal affair"; however, given the historical context of the regulation of alcohol, the court found that there was no purely municipal affair to consider, but a matter of statewide significance. Century Plaza Hotel Company v. City of Los Angeles (1970) 7 Cal.App.3d 616.