As expected , by a vote of 6-1, the Ohio Supreme Court today ruled that the Ohio Commercial Activities Tax (CAT), a tax levied on a firm's gross receipts, is not a sales tax, and thus not in violation of the state constitutional prohibition against sales taxes on food.

Writing for the Court in today’s decision, Justice O’Connor noted that laws duly enacted by the General Assembly are entitled to a strong presumption of constitutionality, and also observed that when a party sues the state seeking a tax exemption, courts are required to strictly construe the laws cited by the plaintiff. She wrote: “These precepts require us to uphold the CAT if it may plausibly be interpreted as permissible under Sections 3(C) and 13 (of the Ohio Constitution).

"The actual wording of Sections 3(C) and 13 does not prohibit the state from using gross receipts to compute the amount of a privilege-of-doing-business tax, even if those gross receipts include proceeds from the sale of food. And ... interpreting Sections 3(C) and 13 to allow such a tax is not only faithful to the text, it is (1) consonant with long-settled legal principles governing the taxation of the privilege of doing business, (2) implied by the structure of Sections 3(C) and 13, and (3) confirmed by the history both preceding and succeeding the enactment of those provisions. And when the CAT’s practical operation is considered, it becomes evident that it is what it purports to be: a permissible tax on the privilege of doing business, not a proscribed tax upon the sale or purchase of food. For these reasons, we reverse the judgment of the court of appeals.

Got that? "consonant with..." "implied by..." "confirmed by..." Gotta love lawyers.

Justice Paul E. Pfeifer entered a dissent stating that in his view collection of the CAT from grocers and other businesses based on their gross receipts from the sale of food is “an excise tax upon the sale or purchase of food” and is therefore prohibited by Sections 3(C) and 13 of the state constitution.

He wrote: “It is an incontrovertible fact that if a retailer has sales over $1 million and he sells an additional 40 gallons of milk at $2.50 per gallon, for a total of $100, a tax of 26 cents is levied upon him and the state collects 26 cents. Is this not a tax ‘levied or collected upon the sale or purchase of food?’ That 26 cents per $100 is a small sum does not mean that this tax is de minumus, as the majority suggests as to the $150 flat fee. Though there are more than 11 million Ohio residents, assume that only ten million people actually live in Ohio. Further assume that they each consume exactly one gallon of milk per month, that milk costs $2.50 per gallon, and that all of the milk is purchased from a retailer with sales in excess of $1 million – that is, any milk purchased from Kroger, UDF, Giant Eagle, Meijer, Target, Whole Foods, Sam’s Club, Costco, and the like. The excise tax levied and collected by the state based on the sale of ten million gallons of milk would be $65,000. Would this not be a tax ‘levied or collected upon the sale or purchase of food?’”

Justice Pfeifer, that would be EXACTLY the same as a 0.26% sales tax on milk. You get an A in my class, sir.