Taxes in the Back

Last October I wrote about operators of the Napa Valley Casino refusing to pay a $2 card room admissions tax. The city of American Canyon, CA, approved the measure in 2010, yet it has delivered exactly $0 in tax dollars to date, as Napa Valley Casino is the only entity subject to the tax.

The parties ended up in court after the city filed a criminal complaint against the casino’s operators, and the operators countered with a civil suit of their own.

Earlier this month a Napa County Superior Court panel decided in favor of the city, according to the Times-Herald. The operators are seeking review of the decision by the state Supreme Court, but the court is not obligated to hear the case.

The Superior Court panel upheld the constitutionality of the tax, noting that local governments have broad powers to regulate gaming establishments located within their jurisdictions.

I don’t see a reversal here. The operators are asserting that the tax is on private citizens entering into a private business. Problem is, it’s not that straightforward.

One possible problem resulting from enacting a tax that applies to only one entity is that if that taxpayer refuses to pay it, then there’s no revenue stream. The Times-Herald is reporting that city officials of American Canyon, California are learning this from the Napa Valley Casino, which operates the city’s only card room.

About a year ago, city voters approved a $2 card room admission tax. To date, the casino has refused to pay the tax on the grounds that the tax is unconstitutional. The casino believes fewer patrons would frequent the card room. Because of $2? I’m not so sure.

The City Council issued a resolution directing the City Attorney to compel the casino to pay the tax. Will authorities padlock the casino if it doesn’t pay up? I doubt it will come to that. If history is any indication, I suspect the sides to negotiate an agreement so the casino doesn’t take a hit in expected profits and the city receives its desired revenue stream.