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Kennedy Wholesale, Inc. v. State Bd. of Equalization

Supreme Court of California

April 1, 1991

No. S013840


 [*248]  [**1362]  [***327]    We granted review in this case to consider plaintiff's constitutional challenges to Proposition 99, the Tobacco Tax and Health Protection Act of 1988 (codified at Rev. & Tax. Code, § 30121 et seq.). Proposition 99,  [****2]  which the voters approved on November 8, 1988, increases the tax on cigarettes and other tobacco products and allocates the resulting revenue to various tobacco-related problems. The superior court and the Court of Appeal rejected plaintiff's challenges. We affirm.


In 1988 plaintiff Kennedy Wholesale, Inc., a distributor of tobacco products, paid an increased tax of $ 50,510.49 in compliance with Proposition 99. Having paid under protest, plaintiff applied to the State Board of Equalization (Board) for a refund. When the Board denied the claim, plaintiff filed this action. The superior court granted the Board's motion for judgment on the pleadings, and the Court of Appeal affirmed.


A. Article XIII A, Section 3

 CA(1a)(1a) Plaintiff first contends that Proposition 99 violates article XIII A, section 3, of the California Constitution (hereafter section 3). ] Under section 3, "any changes in State taxes enacted for the purpose of increasing revenues . . . must be imposed by an Act passed by not less than two-thirds of all members elected to each of the two houses of the Legislature . . . ."  [*249]  Section 3 was added to the Constitution on June 6, 1978, by Proposition [****3]  13, the Jarvis-Gann initiative. (See generally Amador Valley Joint Union High Sch. Dist. v. State Bd. of Equalization (1978) 22 Cal.3d 208 [149 Cal.Rptr. 239, 583 P.2d 1281] [upholding Prop. 13] (Amador Valley).)

Plaintiff reads section 3 to mean that only the Legislature can raise taxes. The section, if interpreted in this way, would implicitly limit the expressly reserved power of initiative. 1 Respondent, in contrast, interprets section 3 to impose a supermajority voting requirement on the Legislature while leaving the people's power of initiative unchanged.

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53 Cal. 3d 245 *; 806 P.2d 1360 **; 279 Cal. Rptr. 325 ***; 1991 Cal. LEXIS 1214 ****; 91 Cal. Daily Op. Service 2275; 91 Cal. Daily Op. Service 2375; 91 Daily Journal DAR 3770

KENNEDY WHOLESALE, INC., Plaintiff and Appellant, v. STATE BOARD OF EQUALIZATION, Defendant and Respondent

Prior History:  [****1]  Superior Court of Sacramento County, No. 506474, Anthony DeCristoforo, Jr., Judge.

Disposition: The decision of the Court of Appeal is affirmed.


voters, single-subject, tobacco, tobacco-related, two-thirds, italics

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