Dickson Campers, Inc. v City of Mobile
Class Action Lawsuit Against City of Mobile Moves Forward
Dickson Campers alleges that the city of Mobile violated state law by collecting more taxes inside its 3-mile-wide police jurisdiction, which extends west and south of the city, than the services it provides there. The city also has not, as it should, justified the amount it collects.
Mobile County Circuit Judge James Wood has ruled that Dickson Campers can move forward with its claim that the city collects too much money from businesses inside its police jurisdiction.
In the police jurisdiction, the city collects half its regular tax rate on goods and services and half the cost of a business license. The largest revenue source targeted by the lawsuit was the 2 percent gross receipts tax levied by the city until it switched to a sales tax in 2003.
In exchange for the money collected, the city offers police and fire protection to the area. The city collected $24.8 million in taxes and fees last fiscal year in the police jurisdiction, said the city's budget director.
In his ruling, Wood noted that Dickson Campers, along with most other businesses, passes on to customers taxes on gross receipts, lodging, liquor, gasoline, cigarettes and leased goods. The city, in a March hearing, had argued that businesses could unjustly benefit if they won money that had been paid by their customers.
The ruling suggests that the businesses can seek to recoup business license fees collected since 2001. Clements said that amounts to a total of about $15 million, including interest.
