APPEAL from the Circuit Court of Cook County; the Hon. WALTER
P. DAHL, Judge presiding.
MR. PRESIDING JUSTICE BURKE DELIVERED THE OPINION OF THE COURT:
These cases originated as two class actions for injunctive relief and damages based on the defendants' practice of including both the 4% Illinois Use Tax and the 1% Municipal Retailers' Occupation Tax in the credit account balances to which a finance charge is applied. The trial court granted the defendants' motions to strike and dismiss the complaints, and the plaintiffs appeal.
The defendants are retailers of consumer goods in Illinois. Their sales are made both for cash and on credit. Sales on credit are made pursuant to a written agreement between the seller and purchaser. A monthly finance charge on the purchaser's outstanding balance is imposed on the total amount of such balance, which includes both the 4% and 1% taxes (for purposes of this opinion, hereinafter called sales taxes).
The narrow question is whether the trial court erred in holding that Illinois law permits the defendants to impose their finance charges on that part of the unpaid credit balances which consists of sales taxes.
The defendants contend that their practice is permitted under the clear language of the Retail Installment Sales Act. (Ill. Rev. Stat. 1971, ch. 121 1/2, par. 501-33.) Specifically, the defendants direct us to the following statement:
"Notwithstanding the provisions of any other statute, a retail charge agreement may provide for, and the seller or holder may, if the agreement does so provide, charge, collect and receive, a finance charge not exceeding 18¢ per $10 per month, computed on all amounts unpaid thereunder from month to month, which need not be a calendar month." Ill. Rev. Stat. 1971, ch. 121 1/2, par. 528.
The defendants argue that the sales taxes, as part of the amount unpaid, may be subjected to a finance charge. Further, the defendants point out that the amount financed, payment of which is deferred, includes the "cash sale price" of the item sold. (Ill. Rev. Stat. 1971, ch. 121 1/2, par. 502.10.) The cash sale price is basically the amount which would have been paid had the sale been for cash, instead of credit. As to the cash sale price, it is said:
"The cash sale price may include any taxes and the cash sale prices are accessories and their installation and for delivery, servicing, repairing, or improving the goods." (Ill. Rev. Stat. 1971, ch. 121 1/2, par. 502.8.)
• 1 The critical question is whether the sales taxes may be included in the cash sale price and, therefore, in the amount financed. The crux of the plaintiffs' argument is that the defendants extend no credit for the amount of the taxes, because they are not obligated to pay the taxes to the state until payment has been received from the purchasers. (Ill. Rev. Stat. 1971, ch. 120, par. 439.9; Ill. Rev. Stat. 1971, ch. 120, par. 442; Ill. Rev. Stat. 1971, ch. 24, par. 8-11-1.) The plaintiffs contend that the sales taxes are not includable in the cash sale price for the following reasons:
1. "Cash sale price" is essentially the same as the "selling price" as defined in the Use Tax Act (Ill. Rev. Stat. 1971, ch. 120, par. 439.1-39.22) and the Retailers' Occupation Tax Act (Ill. Rev. Stat. 1971, ch. 120, par. 440-53);
2. Language in the Retail Installment Sales Act would thereby be rendered superfluous;
3. Such a construction of the Retail Installment Sales Act would make the statute unconstitutional on its face.
Before proceeding to examine the plaintiffs' arguments, we note that plaintiffs' attempt to brand the finance charge here as usurious interest is irrelevant since we are dealing with finance charges, which are not subject to the general interest provisions. Ill. Rev. Stat. 1971, ch. 121 1/2, par. 528.
• 2-5 In support of their first argument, the plaintiffs cite the definitions of "selling price" in the Use Tax Act (Ill. Rev. Stat. 1971, ch. 120, par. 439.2) and in the Retailers' Occupation Tax Act. (Ill. Rev. Stat. 1971, ch. 120, par. 440.) The definitions contained in these complementary statutes, which are the source of the 4% sales tax, pointedly omit the sales taxes here involved from the selling price. The plaintiffs ask us to infer that the terms "selling price" and "cash sale price" are synonymous. But the defendants respond, correctly we think, that the reason for the omission of sales taxes from "selling price" under the taxing statutes is that the "selling price" is the amount upon which the percentage tax rate is imposed. Thus, there is a reason for leaving the sales taxes out of the "selling price." The question then is whether such a reason exists for leaving the taxes out of the "cash sale price." The plaintiffs seem to find ...