Appeal from the Circuit Court of Cook County; the Hon. Harold
A. Siegan, Judge, presiding.
JUSTICE STAMOS DELIVERED THE OPINION OF THE COURT:
Plaintiffs' class action challenging the application of the Chicago transaction tax ordinance as an invalid occupation tax was dismissed by the circuit court which held, as a matter of law, that the transaction tax was not an occupation tax. On appeal plaintiffs contend (1) the Chicago transaction tax ordinance constitutes an invalid occupation tax as applied to lessee cabdrivers; (2) a statute enacted prior to the adoption of the 1970 Illinois Constitution cannot constitutionally provide home rule units with the authority necessary to tax occupations; and (3) plaintiffs' complaint sufficiently alleged that their payment of the transaction tax was involuntary and under duress.
Plaintiffs are drivers of leased taxicabs and holders of valid public chauffeur's licenses. Amici curiae, Yellow Cab and Checker Cab, are the holders of over 3,600 of 4,600 available taxi licenses in Chicago. Taxis may only be operated by persons holding valid public passenger vehicle licenses. (Municipal Code of Chicago, ch. 28, sec. 2. (1984).) Plaintiffs allege that they have each entered into 50 or more taxi leases with Checker Cab, Yellow Cab, or other cab companies.
Chicago, as a home rule unit, has enacted a transaction tax ordinance which, in part, imposes a tax on all leases and rentals of personal property. (Municipal Code of Chicago, ch. 200.1. (1981).) The ordinance imposes a tax at the rate of 6% of the lease price. (Municipal Code of Chicago, ch. 200.1, sec. 2.A.1. (1981).) Plaintiffs have paid the tax as applied to their taxi leases. They allege that their payments have been made involuntarily and under duress.
Plaintiffs filed a class action seeking declaratory and injunctive relief and an accounting. Plaintiffs' complaint alleged that the transaction tax, as applied to them, constitutes an invalid occupation tax. Additionally, plaintiffs sought certification of a class of lessee cabdrivers with themselves as representatives.
On February 1, 1985, the circuit court dismissed plaintiffs' complaint pursuant to defendants' motion, finding, as a matter of law, that the Chicago transaction tax is not an occupation tax as applied to the plaintiffs. No class had at that time been certified.
• 1 The Chicago transaction tax ordinance has previously been challenged and upheld in Williams v. City of Chicago (1977), 66 Ill.2d 423, 362 N.E.2d 1030, cert. denied (1977), 434 U.S. 924, 54 L.Ed.2d 282, 98 S.Ct. 402, and Webster v. City of Chicago (1985), 132 Ill. App.3d 666, 478 N.E.2d 446. In Williams the ordinance was upheld on equal protection and due process grounds (William v. City of Chicago (1977), 66 Ill.2d 423, 432, 362 N.E.2d 1030, cert. denied (1977), 434 U.S. 924, 54 L.Ed.2d 282, 98 S.Ct. 402) while in Webster the statute was upheld against a claim that it imposed an occupation tax upon lessors (Webster v. City of Chicago (1985), 132 Ill. App.3d 666, 669, 478 N.E.2d 446). The Webster court characterized the tax here in dispute as one where the consumer pays for the "use and temporary transfer of possession of tangible property" and stated unequivocably that the leasing tax is not a tax on occupations. (132 Ill. App.3d 666, 669, 478 N.E.2d 446.) However, insofar as the Webster lessee plaintiffs alleged that the tax was upon their lessors' occupations, not on their own occupations, Webster does not resolve the case at hand without further discussion.
The 1970 Illinois Constitution provides:
"(a) * * * Except as limited by this Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs including, but not limited to, the power to regulate for the protection of the public health, safety, morals and welfare; to license; to tax; and to incur debt.
(e) A home rule unit shall have only the power that the General Assembly may provide by law * * *
to license for revenue or [to] impose taxes upon or measured by income or earnings or upon occupations.
(g) The General Assembly by a law approved by the vote of three-fifths of the members elected to each house may deny or limit the power to tax and any other power or function of a home rule unit * * *.
(m) Powers and functions of home rule units shall be construed liberally." Ill. Const. 1970, art. VII, sec. 6.
This constitutional section established municipal home rule authority in Illinois. One of the major restrictions on home rule power is the limitation upon occupation taxes. (Ill. Const. 1970, art. VII, sec. 6(e).) Home rule units may only impose taxes by occupation to the extent that the General Assembly specifically authorizes. A tax "upon occupations" is essentially identical to the term "occupation tax." (Paper Supply Co. v. City of Chicago (1974), 57 Ill.2d 553, 566, 317 N.E.2d 3.) An occupation tax is a tax which has "one of two missions: either to regulate and control a given business or occupation, or to impose a ...