Montana Attorney General Opinion 15-494

Opinion No. 494. Ta;xation-State Pl'operty-Oil and Gas-Royalties-Oil Royalties of State, Taxation of. HI~LD: It is always presumed, when there is a quei>tion, that it is not the intent of the state to tax its own property. The privilege and license tax of three-eighths of one cent per barrel on erude· petroleum leYieel and assessed under Section 14, Chapter 18, Laws of the Extraordinary Session, 1988. is n(lt to be collected on crude petroleum or the income from crude petroleum be- lonbring to the State of Montana. March 14, 1984. Does the privHege and license tax of three-eights of one cent per barrel on crude petroleum levied and assessed under Section 14, Chapter 18, Laws of the Extraordinar~' Session of the Twenty-Third Legislative Assembly of the State of :M:ontana, apply to the State's royalty in such oil? "The property of * * * the state, " • * shall be exempt from taxation: * * ." (Section 2, Article XII, Con- stitution.) Section 1998, R. C. M., 1921. as amended hy Chapter 98, Laws of 1931, provides: "The property of • * * the state * * * are exempt from taxa- tion, * " *." Therefore, if this is a tax upon property it cannot be collect- ed on crude petroleum belonging to the State. Section 19!)6, R. C. M., 1921, defines propert5' for the purposes of taxation and prm'ides, so far as pertinent, as follows: "Whenever the terms mentioned in this section are employed in dealing with the suhject of taxation, they are employed in the sense hereafter af- fixed to them. "First-The term "property" in- cludes moneys, credits, bonds, stocks, franchises, and all other rna tters and things, real, personal, and mixed, ca- pable of prh-ate ownership; but this must not be construed so as to author- ize the taxation uf the stocks of any cumpany or corpora tion when the property of such company or corpora- tion represented by such stocks is within the state and has been taxed." Under this provision the tax might he deemed to be a tax upon property. It prubahly is more properly to be clas- sified as a privilege or license tax tax which is enacted in lieu of a prop- erty tax. The pro"isions e,f Section 2, Article XII, of the Constitution, declaring what property shall be exempt from taxation, is mandatory in character and self executing, anel elenies the leg- islature authol'ity to tax any property of the class therein speCified. (Cruse '". Fischl, 55 ;)iont. 258, 268.) It is always presumed, when there iR a question, that it is not the intent of the State to tax its own property. (Cooley on Taxation, Fourth Edition,. Sec. 71, Sec. 91, Sec. 621; 26 It. C. L page 881, par. 289; 61 C. J. par. 359, page 366.) These authorities clearlr show that statutes of the character of Chapter 18, Sllpra, nre not inteneled to be taxes on state property or on the '.ncome from state property. 'Ve. therefore, conclude that this tax is not to be collected on crude petrole- um or the income from crude petroleum belonging to the State of Montana.