COLUMBUS, Ohio (CN) – The Ohio Supreme Court heard arguments Tuesday over the constitutionality of a Lake Erie island village’s tax on for-hire vehicles, in a dispute centered on municipal home-rule authority.
The village of Put-in-Bay, located on South Bass Island in Lake Erie, imposed its vehicle-for-hire tax in 1995. The ordinance applies to any “horse-driven, taxicabs, pedicabs, bicycles, self-powered trams, rental motor vehicles or towed tram car/units.”
Mark Mathys failed to pay the tax on golf carts owned by him and his business, The Islander Inn, in 2014.
In Ottawa County trial court, Mathys argued the ordinance is unconstitutional, claiming that Put-In-Bay’s tax piggybacks on state taxes. The Ohio Constitution prohibits municipalities from taxing to use public roads and state law allows anyone with an Ohio license to use public roads, including those on the island.
The court agreed with Mathys and dismissed Put-in-Bay’s case against him. However, the Ohio Court of Appeals reversed in January 2019, finding that the ordinance on rental vehicles “is a valid exercise of the village’s taxing power.”
Mathys appealed the ruling and the Ohio Supreme Court agreed to hear the case.
Representing Mathys in front of the state’s high court, attorney Andrew Mayle argued Tuesday that taxing each rental vehicle does in fact piggyback on state laws. He said Ohio is a “one license, one vehicle state,” and that wherever there is a state license, such as a car registration, there cannot be a local tax.
Mayle also made the point that allowing Put-In-Bay to tax rental vehicles opens up the possibility for every municipality to tax for every rental vehicle in a fleet.
Susan Anderson, representing Put-In-Bay, argued for the village’s home rule, which is a right guaranteed by the Ohio Constitution giving local municipalities the ability to govern themselves. She said the taxes collected from for-hire vehicles are used for road upkeep.
When asked if a municipality has the authority in Ohio to add on a tax, Anderson explained to the justices that the two were separate taxes. State vehicle registration allows a person to drive in Ohio and anyone can drive on Put-In-Bay after taking the ferry over to the island, she said. The local tax is for those that rent out vehicles on the island, the attorney said, and is used to alleviate the extra burden placed on the roads.
Anderson explained that the taxing of vehicles-for-hire is not on the operation of those vehicles, but on their rental. She pointed out that Ohio statutes on home rule expressly list what municipalities cannot tax, and vehicle rental is not on that list.
Neither lawyer responded to requests for comment after the hearing.
It is unclear when the Ohio Supreme Court will issue a decision in the case.