Tax and revenue increases are piling up on Californians–passed by voters, approved by legislators, and now the courts are getting into the act.

On the same day that the legislature passed the $52 billion gas tax, California’s Third District Court of Appeal on a 2 to 1 vote upheld a lower court ruling that businesses paying for auction allowances in the cap-and-trade program were not being subjected to an illegal tax. The California Chamber of Commerce and others filed the lawsuit claiming the cap and trade allowance cost amounted to a tax, which required a two-thirds vote, something the law that created cap-and-trade did not achieve.

The court reasoned that businesses voluntarily took part in the program and were not compelled by government to do so. However, the decision goes deeper than the cap-and-trade program and potentially opens the door to getting around the tax vote requirements demanded by Proposition 13.

According to Rob Laplsey, president of the California Business Roundtable, if the court’s reasoning holds, “This ruling gives more than 150 state agencies unchecked authority to establish or increase fees simply by justifying them as a voluntary component of a regulatory or legislative program, even if payment of the fees isn’t voluntary at all.”

While the Appellate Court disagreed with plaintiffs’ assertion that similar schemes, such as creating a cap-and-trade program for vehicle mileage, would definitely be considered a tax, the court majority moved pass such concerns by declaring, “We can confront such hypothetical situations if and when they arise.”

When does an act become voluntary so that a government mandated charge is no longer considered a tax?

Pacific Legal Foundation attorneys representing another business plaintiff in the case, Morning Star Packing Company, argued in a statement, “Under the majority’s reasoning, California’s gasoline taxes are not really taxes, because the state does not compel you to buy gasoline.”

Writing in dissent of the majority opinion, Judge Harry Hull, stated that if a business must increase costs to continue to do business in California then the charge is compulsory and not voluntary unless one opts to voluntarily close their business. The judge noted that the majority’s conclusion was no different than saying an increase in income tax is not compulsory because an individual can choose to leave the state.

If the Lapsley and Hull assessments of the court decision are proved correct, then there might be no agonizing watch to see if a revenue-raising bill receives a two-thirds vote to pass a tax. Agencies could declare charges voluntary and attach fees on to any number of actions.

The plaintiffs in the case are considering whether to appeal to the California Supreme Court.