                 TO BE PUBLISHED IN THE OFFICIAL REPORTS



                     OFFICE OF THE ATTORNEY GENERAL


                               State of California



                             JOHN K. VAN DE KAMP


                                Attorney General



                            _________________________

                                          :
                OPINION                   :               No. 85-1001
                                          :
                    of                    :              JULY 10, 1986
                                          :


        JOHN K. VAN DE KAMP               :


           Attorney General               :


                                          :


        ANTHONY S. DA VIGO                :


        Deputy Attorney General           :


                                          :



________________________________________________________________________


          THE HONORABLE JACK C. PARNELL, DIRECTOR, DEPARTMENT
OF FISH AND GAME, has requested an opinion on the following questions:

             1.    What rate of privilege tax shall be paid by a person licensed under
section 8040 of the Fish and Game Code for imported shrimp other than the species
Pandalus jordani?

            2.    What rate of privilege tax shall be paid by a person licensed under
section 8040 of the Fish and Game Code who cold smokes salmon for human
consumption?

              3.    For purposes of computing the privilege tax prescribed by section
8045 of the Fish and Game Code, when must the fish be weighed?




                                          1


                                                                              85-1001


             4.     Does the privilege tax prescribed by section 8045 of the Fish and
Game Code apply only to the first licensed wholesale dealer or also to subsequent
licensed wholesalers?

             5.      Is the state estopped from collecting privilege taxes prescribed by
section 8045 of the Fish and Game Code for prior years which were not collected or paid
because of an erroneous administrative interpretation that such taxes were not due?

              6.     Is the state authorized to collect statutory penalties and interest on
privilege taxes prescribed by section 8045 of the Fish and Game Code for prior years
which were not collected or paid because of the taxpayer's justifiable reliance upon an
erroneous administrative interpretation that such taxes were not due?

               7.    Is the Director of Fish and Game authorized to forgive the payment
of privilege taxes prescribed by section 8045 of the Fish and Game Code for prior years
which were not collected or paid because of an erroneous administrative interpretation
that such taxes were not due?

                                    CONCLUSIONS

              1.     The rate of privilege tax which shall be paid by a person licensed
under section 8040 of the Fish and Game Code for imported shrimp other than Pandalus
jordani is $0.0125 per pound. However, such shrimp which are for human consumption
and are not thereafter canned or cooked by a licensee are not subject to such tax.

              2.     The rate of privilege tax which shall be paid by a person licensed
under section 8040 of the Fish and Game Code who cold smokes salmon for human
consumption is $0.0500 per pound, based on the weight in the round. However, salmon
imported for human consumption and which are thereafter cold smoked are subject to
such tax only if canned by a licensee.

             3.    For purposes of computing the privilege tax prescribed by section
8045 of the Fish and Game Code, the fish must be weighed when initially purchased,
received or taken by the taxpayer. However, the tax applicable to salmon, except
imported salmon offal, is based on the weight in the round.

             4.      The privilege tax prescribed by section 8045 of the Fish and Game
Code applies to the first and to subsequent licensed wholesalers.

             5.     Whether the state is estopped from collecting privilege taxes
prescribed by section 8045 of the Fish and Game Code for prior years which were not

                                            2


                                                                                   85-1001


collected or paid because of an erroneous administrative interpretation that such taxes
were not due would depend upon the determination of ultimate facts, e.g., whether the
case is "unusual," the justification "clear" and the injustice "great."

              6.     The state is not authorized to collect statutory penalties and interest
on privilege taxes prescribed by section 8045 of the Fish and Game Code for prior years
which were not collected or paid because of the taxpayer's justifiable reliance upon an
erroneous administrative interpretation that such taxes were not due.

               7.     The Director of Fish and Game is not authorized to forgive the
payment of privilege taxes prescribed by section 8045 of the Fish and Game Code for
prior years which were not collected or paid because of an erroneous administrative
interpretation that such taxes were not due.

                                         ANALYSIS

             The first inquiry concerns the rate of privilege tax owed by a person
licensed under section 80401 for imported shrimp other than the species Pandalus jordani.
Section 8040 provides:

               "Every person engaged in any of the following businesses shall
         procure a license for each plant or place of business in which he is so
         engaged:

                "(a) Canning, curing, preserving, packing, or dealing at wholesale in
         fish taken from the waters of this State or brought into this State in a fresh
         condition.

                 "(b) Manufacturing fish scraps, fish meal, fish oil, chicken feed, or
         fertilizer from fish or fish offal.

             "(c) Processing or dealing at wholesale in mollusks or crustaceans in
       compliance with the rules and regulations of the commission."
Section 8045 prescribes the rate of privilege tax:

                 "Every person operating under a license issued pursuant to this
         article, in addition to the license fee, and a fisherman as described in
         Section 8015 who sells fish, mollusks, or crustaceans in any load or lot of
         100 pounds or more to persons not licensed pursuant to Section 8040, shall
   1
       All section references herein are to the Fish and Game Code.

                                               3

                                                                                      85-1001


pay a privilege tax for each pound, or fraction thereof, of fish purchased,
received, or taken by him in accordance with the following schedule:

                                                                            Rate per
                                                                             pound
(a)    All fish, irrespective of use, except as otherwise
       specified in this section . . . . . . . . . . . . . . . . . . . . .     $0.0013
b)     Mollusks and crustaceans irrespective of use,
       excluding squid and crab . . . . . . . . . . . . . . . . . . .           0.0125
(c)    Crab and squid, irrespective of use . . . . . . . . . . . .              0.0019
(d)    Salmon, except imported salmon offal, based
       on the weight in the round, irrespective of use . . .                    0.0500
(e)    Sardines irrespective of use . . . . . . . . . . . . . . . . . .         0.0063
(f)    The following fish when used for bait or
       human consumption, except canning . . . . . . . . . . .                  0.0125
       (1) Albacore
       (2) Barracuda
       (3) Bluefin
       (4) Broadbill swordfish
       (5) Flying fish
       (6) Frogs
       (7) Giant sea bass
       (8) Halibut
       (9) Saltwater worms
       (10) White sea bass
       (11) Yellowtail
(g)    Anchovy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  0.0006
Provided, however, that when the price paid as stated on the fish receipt
required in accordance with Section 8011 is in excess of fifty dollars ($50)
per ton, the tax on anchovy shall be $0.0013 per pound.

        "All fish, except shrimp (Pandalus jordani) and crab (Cancer
magister), imported into California from another state or country, and
which are for human consumption and are not thereafter canned or cooked
by a licensee, shall not be subject to such a privilege tax.

       "Shrimp (Pandalus jordani) and crab (Cancer magister) imported
into California from another state or country, irrespective of use, shall not
be subject to such privilege tax."



                                          4

                                                                                     85-1001


             The exemptions provided in the last two paragraphs are of primary concern.
Prior to 1971, the exemption, then contained as part of section 8045.5, provided as
follows:

                 "Fish imported into California from another state or country, and
         which are for human consumption and are not thereafter canned or cooked
         by a licensee, shall not be subject to such a privilege tax."

The purpose of the exemption was to afford protection to importers of "fish, mollusks, or
crustaceans"2 from double taxation. (Stats. 1970, ch. 549, § 2 [the second section of that
number].)

               In 1971, section 8045.5 was amended to exclude from its limited exemption
(i.e., that applicable only to those imported fish which are (1) for human consumption
and (2) not thereafter canned or cooked by a licensee) "shrimp (Pandalus jordani) and
crab (Cancer magister)" and to add a second paragraph exempting those specified
crustaceans3 categorically, i.e., "irrespective of use." (Stats. 1971, ch. 1171, § 5.) By the
Statutes of 1974, chapter 1207, sections 10 and 11, section 8045.5 was repealed and the
two exemption paragraphs were added unchanged to section 8045 as set forth above.

               The specific statutory reference is to a particular genus (Pandalus) and
species (jordani) of Pacific Ocean shrimp. Technical words and phrases are to be
construed according to such peculiar and appropriate meaning or definition. (Code Civ.
Proc., § 16; 66 Ops.Cal.Atty.Gen. 152, 153 (1983).) We are advised that Pandalus
jordani is the major variety of Pacific Ocean edible prawns taken from the most extensive
range from Alaska to central California. Other species are commercially taken, e.g.,
Pandalus platyceros, from waters off the coast of Santa Barbara. A wide variety of
species and genera are imported from various locations throughout the world, e.g., the
European Pandalus annulicornis. In the context of commercial fishing, numerous species
have been the subject of legislative cognizance. Section 8590 provides:

                 "For the purposes of this article, 'prawns' or 'shrimp', or both, include
         all of the following species:

         "(a) Spot prawn (Pandalus platyceros).


   2
       The term "fish" includes mollusks and crustaceans. (§ 45.)
   3
     Shrimp and crab are classified as crustaceans. (50 Ops.Cal.Atty.Gen. 131, 133
(1967).)

                                                5


                                                                                         85-1001


       "(b) Ridgeback prawn (Sicyonia ingentis).

       "(c) Coonstrip prawn (Pandalus danae).

       "(d) Pacific ocean shrimp (Pandalus jordani).

       "(e) Bay shrimp (Crangon franciscorum and Crago sp.).

       "(f) Red rock shrimp (Lysmata californica)."

Thus, it is manifest that the Legislature is aware of the peculiar and appropriate
significance of a specified genus and species. It is recognized that the report of the
Senate Committee on Natural Resources and Wildlife on Assembly Bill 608 (Stats. 1971,
ch. 1171) refers to the newly exempted categories generally as "imported shrimp" and
"imported crab" without reference to the scientific designations "Pandalus jordani" and
"Cancer magister," respectively. However, the use of the terms "shrimp" and "crab,"
even without further designation, has been officially recognized as an alternative means
of reference to the particular respective genera and species in question. (Title 14, Cal.
Admin. Code, § 103, subd. (b)(1); cf. § 8023.)

              We find no basis upon which to attribute to the Legislature an intent to
exempt categorically from taxation any species other than that specifically designated.
When the term "shrimp (Pandalus jordani)" first appeared in the Statutes of 1971, chapter
1171, section 5, the Legislative Counsel's Digest indicated in part that the amendment
"[p]rovides that no privilege tax is applicable to specified shrimp and crab imported from
another state or country, irrespective of use." (Emphasis added.) Conversely, shrimp
other than the specified genus and species were not excluded from the limited exemption
of the penultimate paragraph of section 8045.4

             Consequently, only those shrimp are subject to tax which are (1) taken
domestically, (2) other than Pandalus jordani and not for human consumption, or (3)
   4
     We are not asked nor do we consider any issue concerning the constitutional validity
of a tax upon imports. (U.S. Const., art. 1, § 10, cl. 2; 24 Ops.Cal.Atty.Gen. 287 (1955);
compare South Coast Fisheries, Inc. v. Department of Fish & Game (1963) 213
Cal.App.2d 325, 331-332; Alaska v. Arctic Maid (1961) 366 U.S. 199, 203-204; Schettler
v. County of Santa Clara (1977) 74 Cal.App.3d 990.) It is assumed for purposes of this
analysis that the tax is imposed upon a legitimate local taxable event. (Cf. 50 Ops.
Cal.Atty.Gen. 131, 134 (1967); 43 Ops.Cal.Atty.Gen. 206, 208, (1964).) In any event,
section 8045 has not been declared unconstitutional by an appellate court within the
meaning of California Constitution, article III, section 3.5.

                                            6

                                                                                  85-1001


other than Pandalus jordani and canned or cooked by a licensee. With respect to these,
the rate of tax specifically applicable under section 8045, subdivision (b) ("crustaceans
irrespective of use") is $0.0125 per pound.

              The second inquiry concerns the application of a privilege tax to a person
licensed under section 8040 who cold smokes salmon for human consumption. The rate
of tax applicable to "salmon, except imported salmon offal, based on the weight in the
round, irrespective of use," is prescribed in subdivision (d) of section 8045 as $0.0500 per
pound. This tax would apply to a licensee who cold smokes salmon for human
consumption. The significant issue arises with respect to salmon which are imported
from another state or country, and which are for human consumption and are not
thereafter canned or cooked by a licensee. Such fish are, by virtue of the penultimate
paragraph of section 8045, not subject to a privilege tax. Thus, if cold smoked salmon
are "cooked," they are subject to tax under subdivision (d). If not, they are subject to
such tax only if canned, but are otherwise exempt.

               It may be argued that the term "cooked" refers to fish other than in its fresh
state. Prior to the amendment to section 8045.5 (Stats. 1970, ch. 549, § 2) which first
added the exemption for fish imported for human consumption and not thereafter canned
or cooked by a licensee, the exemption, then contained in section 8045 (Stats. 1957, ch.
456, § 8045), applied, and had so applied since the statute's inception (Stats. 1917, ch.
687, § 7), to "Fish so taken or received . . . for human consumption in a fresh state . . . ."
It is suggested, based upon this legislative history, that "canned or cooked" is simply the
antithesis of "fresh state." The issue, then, would be whether cold smoked salmon is
other than fresh. We are advised in this regard that cold smoking is used to prepare lox, a
delicacy for human consumption, having a consistency similar, if not identical, to raw
fish. The Legislature has characterized smoking, along with freezing, coldpacking,
drying, salting and pickling, as common methods of preserving fish. (§ 8042, subd. (b).)

              In any event, the legislative change of terminology must be viewed as
deliberate. In the absence of some contrary indication, words used in a statute must be
construed in accordance with their usual and ordinary significance. (Moyer v. Workmen's
Comp. App. Bd. (1973) 10 Cal.3d 222, 230.) The usual and ordinary import of the word
"cook" involves the preparation of food for eating by a heating process such as boiling,
roasting or baking. (Webster's Third New Internat. Dict. (1961), p. 500; Union Pacific
Railroad Co. v. Ore-Ida Potato Products (9th Cir. 1958) 252 F.2d 505, 508.) According
to information provided to this office, the process of cold smoking is essentially as
follows: the fish is cleaned, split and placed in a curing solution consisting of salt and
sugar. The fish is then stored in a curing room at a temperature of 38F. for approximately
10 to 14 days. Once cured, the fish is moved to a drying room where the moisture is
extracted from the fish. The temperature in the drying room is maintained at

                                              7


                                                                                     85-1001


approximately 75F.-80F. for no more than a few minutes in order to "sweat" the excess
brine and moisture from the fish. The fish is then placed in either a manual smokehouse
or an electronic smoker where it is exposed to cold smoke for a few seconds. No heat is
applied during the smoking process. Based on this description, the fish are not "cooked"
within the meaning of section 8045. Consequently, salmon which are imported for
human consumption and thereafter cold smoked are subject to the tax prescribed in
subdivision (d) of that section only if canned by a licensee. Otherwise, they are exempt.

               The third inquiry concerns the point at which the fish must be weighed for
purposes of applying the appropriate rate of tax per pound. Section 8045 provides simply
that the specified rate of tax shall be paid ". . . for each pound, or fraction thereof, of fish
purchased, received, or taken . . . ." The statute does not otherwise specify the time of
weighing, whether in the round, headed, gutted, dressed, fileted, processed or cooked,
with one exception: subdivision (e) of the rate schedule provides that salmon, except
imported salmon offal,5 shall be weighed in the round.6

              Prior to 1935 (Stats. 1935, ch. 456, § 1), the statute, then section 1015
(based on Stats. 1917, ch. 687, § 7, as amended by Stats. 1931, ch. 1163, § 3), contained
no specific reference to salmon, but provided as follows:

               "Every person operating under a license as provided in this article
       shall, in addition to the license fee, pay a privilege tax of two and one-half
       cents for each one hundred pounds, or fraction thereof, of fish purchased,
       received, or taken by him. Fish, excepting mollusks and crustaceans, so
       taken or received, which are utilized for human consumption in a fresh
       state, shall not be subject to such tax."

By the 1935 statute, specific reference was added to those "who receive salmon from
fishermen," prescribing a rate of tax "based on the weight of the salmon in the round":

              "Except as otherwise provided herein, every person operating under
       a license as provided in this article shall, in addition to the license fee, pay a
       privilege tax of two and one-half cents for each one hundred pounds, or
       fraction thereof, of fish, other than salmon, purchased, received or taken by

   5
     "Fish offal" means the heads, viscera and other parts of fish taken off in preparing
for canning, preserving, packing and preparing for consumption in a fresh state. (§ 7700,
subd. (c).)
   6
    Fish "in the round" refers to their natural state. (South Coast Fisheries, Inc. v.
Department of Fish and Game (1963) 213 Cal.App.2d 325, 328.)

                                               8

                                                                                        85-1001


       him. Persons who receive salmon from fishermen shall, in addition to any
       other license fee imposed by this code, pay a privilege tax of one-half cent
       per pound, based on the weight of the salmon in the round.

               "Fish, excepting salmon, and excepting mollusks and crustaceans, so
       taken or received, which are utilized for human consumption in a fresh
       state, shall not be subject to a privilege tax."

               Inasmuch as the special reference to salmon did not appear until 18 years
following the enactment of the original 1917 version, we perceive no negative inference
of legislative intent respecting the point at which fish other than salmon must be weighed.
In the absence of any contrary indication, it is our view that the Legislature intended the
rate of tax to be applied to the weight of fish in its condition when initially purchased,
received or taken by the taxpayer. This view is consistent with record keeping
requirements. Section 8043 provides:

               "Every person operating under a license issued pursuant to this
       article, and every other person dealing in fresh fish, shall keep a book or
       books in which shall be entered:

              "(a) A full and correct record, in the English language, of all fresh
       fish purchased or received by him from fishermen or taken by himself.

              "(b) The names of the different species.

              "(c) The number of pounds so received or caught of each different
       species.

              "(d) The name and address of the person from whom such fish were
       received.

             "The books shall be open at all times for inspection by the
       department." (Emphasis added; see also §§ 8011 through 8024.)

              The fourth inquiry is whether the privilege tax applies to the first or to all
wholesalers in the commercial chain. The assumption is that a tax has been paid by a
first-tier wholesaler who purchased and received fish from a fisherman and sold to a
second-tier wholesaler. Generally, a wholesaler is a merchant middleman who sells
chiefly to retailers, other merchants or industrial, institutional and commercial users
mainly for resale or business use. (Webster's Third New Internat. Dict. (1961), p. 2611.)
Every person who deals at wholesale in fish taken from the waters of this state or

                                             9


                                                                                    85-1001


imported in a fresh condition, or in mollusks or crustaceans must procure a license.
(§ 8040.)

                Section 8045 provides in part that "Every person operating under [such] a
license . . . shall pay a privilege tax . . . ." (Emphasis added.) The character of a tax must
be determined by its incidents, object, purpose and effect, rather than by nomenclature,
title or legislative assertion. (Flynn v. City etc. of San Francisco (1941) 18 Cal.2d 210,
214-215.) While the tax is denominated a "privilege" tax, its measurement in proportion
to weight may suggest an ad valorem property tax. (See Cal. Const., art. XIII, § 1; cf.
Pacific Gas & Elec. Co. v. Roberts (1914) 168 Cal. 420.) Although the state constitution
does not expressly prohibit double taxation, the requirement of article XIII, section 1, that
property shall be taxed in proportion to its value has been construed as such a prohibition.
(Flynn v. City etc. of San Francisco, supra, 18 Cal.2d at p. 215; and see, Rev. & Tax.
Code, § 102.)

              The tax prescribed by section 8045 is not a property tax but a tax on the
privilege of conducting the business of dealing in fish. (50 Ops.Cal.Atty.Gen., supra,
133.) In South Coast Fisheries, Inc. v. Department of Fish and Game, supra, 213
Cal.App.2d at p. 330, the court stated:

               "The tax here before us is denominated by the Legislature as a
       'privilege tax,' and it is imposed upon those who would conduct the
       business activity of packing and processing fish in California. This is made
       clear by the fact that it is applied to those persons who already have
       obtained licenses to engage in the specified businesses and section 8045
       specifically provides that it is not applicable to fish 'which are utilized for
       human consumption in a fresh state.'"

Further, the measurement of the tax by the weight, quantity or value of the fish
purchased, received or taken by a processor or dealer at wholesale is not inconsistent with
its nature as a privilege tax. In South Coast Fisheries, supra, the court continued:

              "Appellants . . . base their arguments upon the premise that such a
       tax cannot be applied if measured by the quantity of raw materials used in
       their business where such materials are in part composed of imports that
       remain, per se, free from taxation at the moment of measurement. They
       appear thus to confuse the nature of the tax with the mode adopted for
       ascertaining its amount.

             "As our California Supreme Court stated in dealing with an
       analogous situation in Ingels v. Riley [(1936) 5 Cal.2d 154, 160]: 'We are

                                             10

                                                                                     85-1001


      of the opinion that if a tax in its nature is a privilege tax, it does not become
      a property tax simply because it is proportioned in amount to the value of
      the property used in connection with the privilege which is taxed.
      [Citations.] . . . "The character of the imposition is not determined by the
      mode adopted in fixing its amount."'"

As stated in Alaska v. Arctic Maid, supra, 366 U.S. at p. 202, regarding a tax imposed by
the State of Alaska upon the business of freezing salmon conducted upon freezer ships
operating in Alaskan waters measured by the value of salmon received for freezing and
transportation to another state:

             "To be sure, the tax is computed on the 'value' of the fish 'bought or
      otherwise obtained for processing through freezing.' That, however, is the
      measure of the tax, not the taxable event. The taxable event is 'prosecuting'
      the 'business' of 'Freezer ships and other floating cold storages.'"

              Thus, we find no basis for ignoring the plain meaning of section 8045;
"[e]very person" includes every licensed wholesaler. Thus, we are not presented with a
constitutional issue which might otherwise arise by virtue of a tax imposed upon one but
not all members of the same class.

              The fifth inquiry is whether the state is estopped from collecting unpaid
privilege taxes for prior years because of an erroneous determination by an officer of the
Department of Fish and Game that such taxes were not due. The basic doctrine of
equitable estoppel requires the presence of four factors:

             "(1) the party to be estopped must be apprised of the facts; (2) he
      must intend that his conduct shall be acted upon, or must so act that the
      party asserting the estoppel had a right to believe it was so intended; (3) the
      other party must be ignorant of the true state of facts; and (4) he must rely
      upon the conduct to his injury." (City of Long Beach v. Mansell (1970) 3
      Cal.3d 462, 489; Penn-Co v. Bd. of Supervisors (1984) 158 Cal.App.3d
      1072, 1080.)

The doctrine may be applied against a public agency

              ". . . when the elements requisite to such an estoppel . . . are present
      and, in the considered view of a court of equity, the injustice which would
      result from a failure to uphold an estoppel is of sufficient dimension to
      justify any effect upon public interest or policy which would result from the
      raising of an estoppel." (City of Long Beach v. Mansell, supra, at pp. 496-

                                             11

                                                                                      85-1001


       497; Penn-Co v. Bd. of Supervisors, supra; see also, County of San Diego
       v. Cal. Water etc. Co. (1947) 30 Cal.2d 817, 826.)

It has been held in this regard that equitable estoppel shall not operate against a
government agency unless the resulting injustice is "grave" (County of San Diego v. Cal.
Water etc. Co., supra) or "manifest" (City of Long Beach v. Mansell, supra, at pp. 498-
499; see Penn-Co v. Bd. of Supervisors, supra, at p. 1081.)

                Further, the party invoking the doctrine of equitable estoppel against the
government must show extensive reliance; this usually involves many individuals, or a
plaintiff whose reliance consisted in giving up some fundamental right, or both these
factors. (Id. at p. 1081; see, e.g., City of Long Beach v. Mansell, supra, at p. 499; Killian
v. City etc. of San Francisco (1978) 77 Cal.App.3d 1.) Even when sufficient reliance has
been established, estoppel will not operate to defeat the effective operation of a policy
adopted to protect the public. (Strong v. County of Santa Cruz (1975) 15 Cal.3d 720,
725; Fullerton Union High Sch. Dist. v. Riles (1983) 139 Cal.App.3d 369, 378.)

             In Fullerton, the court summarized the factors enunciated in Driscoll v.
City of Los Angeles (1967) 67 Cal.2d 297 to determine whether the public agency's
conduct was sufficiently culpable to warrant estoppel:

              "'[W]hether . . . the inaccurate advice or information is negligently
       ascertained, whether or to what extent the agency is certain of the
       information it dispenses, whether the agency purports to advise and direct
       or merely to inform and respond to inquiries, whether the agency acts in
       bad faith, whether the claimant is one who purports to have no knowledge
       or training which would aid him in determining his rights and the public
       agency purports to be informed and knowledgeable, whether the right of
       which the claimant is being deprived is significant, and whether a
       confidential relationship exists between the claimant and the public entity.'"
       (Fullerton Union High Sch. Dist. v. Riles, supra, at p. 380; see also
       Fredrichsen v. City of Lakewood (1971) 6 Cal.3d 353, 358; State of
       California v. Haslett Co. (1975) 45 Cal.App.3d 252, 256-257.)

              With respect to the inquiry presented, it is noted that the "erroneous
administrative interpretation" as to tax liability constituted a mistake of law and, insofar
as it was relied upon by a taxpayer, the mistake was bilateral. Ordinarily, equitable
estoppel presents a question of fact. (Shoban v. Board of Trustees (1969) 276
Cal.App.2d 534, 546; Shamrock Development Co. v. City of Concord (1981) 656 F.2d
1380, 1386.) Acts performed in reliance upon a mutual mistake of law do not create an
estoppel. (Henry v. City of Los Angeles (1962) 201 Cal.App.2d 299; Shamrock

                                             12


                                                                                     85-1001


Development Co. v. City of Concord, supra.) "An expression of opinion as to a matter of
law is not a basis for estoppel, at least in the absence of actual or professed special
knowledge or confidential relationship." (Gilbert v. City of Martinez (1957) 152
Cal.App.2d 374.)

              Nevertheless, we turn to those cases dealing specifically with the collection
of taxes. The rationale of those cases is summarized in Fischback & Moore, Inc. v. State
Bd. of Equal. (1981) 117 Cal.App.3d 627, 632:

              "The board argues, and we agree, that the state is not estopped from
       collecting a tax which was due and owing, even though the state's
       representatives may have previously adopted an incorrect interpretation of
       the law and advised the public that no taxes would become due on a
       particular transaction or transactions. (Market St. Ry. Co. v. Cal. St. Bd.
       Equal. (1955) 137 Cal.App.2d 87, 100, 103.) Under well-settled rules of
       law state officers and state agencies have no power to estop the state from
       collecting a validly owed tax. The reasons behind such a rule are deeply
       imbedded in our governmental structure, which is designed to discourage
       corrupt collusion between government officers and taxpayers to the
       prejudice of the state's revenues. We, therefore, reject plaintiffs' argument
       that the board is estopped from collecting the tax, even though its
       representatives had previously advised plaintiffs no tax would become
       due."

In Market St. Ry. Co. v. Cal. St. Bd. Equal. (1955) 137 Cal.App.2d 87, 100-102, the court
stated:

              "The state board cites many cases from this and other jurisdictions to
       the effect that an estoppel based on reliance upon an erroneous construction
       of the statute by an administrative ruling will not lie against the
       government, particularly in tax matters. As a general proposition this is
       sound law. Obviously, a tax administrator should not be permitted by an
       erroneous ruling to exempt a taxpayer from the obligation to pay taxes."

The court quoted La Societe Francaise v. California Emp. Com. (1943) 56 Cal.App.2d
534, 553:

             "'It is the general rule that the government does not lose its revenues
       because of an erroneous ruling of an administrative official as to the
       meaning of a tax law. [Numerous citations.] An administrative regulation
       which is in conflict with the statute is invalid and the government is not

                                            13

                                                                                   85-1001


      bound thereby. [Citations.] The duty of the tax officials is to collect taxes
      imposed by law . . . it is generally no defense that taxes were not paid when
      due in reliance on an official ruling of nonliability. The taxpayer is deemed
      to act with knowledge that administrative officials cannot bind the
      government by their erroneous interpretation of tax statutes.'"

              In Illinois Commercial Men's Assn. v. State Bd. of Equal. (1983) 34 Cal.3d
839, 855, the California Supreme Court appeared to leave unresolved a significant issue:

              "U.S. Fid. & Guar. Co. v. State Bd. of Equal. (1956) 47 Cal.2d 384,
      sets forth the general rules applicable to estoppel of the government in tax
      matters. Estoppel is available only in the 'unusual case' in which its
      justification is 'clear and the injustice great.' The failure to collect the tax
      authorized by a statute is insufficient to justify estoppel, even if the
      taxpayer relies on an erroneous construction of a statute by an official. (Id.
      at pp. 389-390.) Nevertheless, the opinion proceeds to discuss whether
      certain conduct of the Insurance Commissioner constituted a 'clear
      representation' that a portion of the insurer's premiums in that case would
      not be taxed. It concludes that the commissioner's conduct was not such 'as
      would satisfy an estoppel in connection with taxes.' (Id. at p. 392.) We
      need not decide whether even a 'clear representation' by a public official
      that a tax is not payable can immunize a taxpayer from the duty to pay a tax
      authorized by law, because we determine that such representation was not
      made in the present case."

While one subsequent appellate case has acknowledged the "clear representation" test as
one of the prerequisites for estoppel in a tax matter (Interinsurance Exchange v. State Bd.
of Equal. (1984) 156 Cal.App.3d 606, 615), it is not our prerogative here to declare such
a representation an independently sufficient basis for equitable relief where no appellate
court in a long line of cases has done so. Nor are we disposed within the context of an
advisory opinion to engage in evidentiary investigation which would underlie a
categorical determination of ultimate facts in connection with the inquiry presented, e.g.,
whether this is an "unusual case" in which the justification is "clear and the injustice
great." (Id. at p. 615.) While we have been presented with no facts which would suggest
a basis for such a finding, and while we are aware of no case or circumstances in which
estoppel has been or might be applied against the government in direct contravention of a
statutory duty to collect taxes (see People ex rel. Franchise Tax Bd. v. Superior Court
(1985) 164 Cal.App.3d 526, 551-554), the determination as to whether this is such an
"unusual" case falls, of course, within the peculiar province of a judicial proceeding.



                                            14


                                                                                     85-1001


               The sixth inquiry is whether the state may collect statutory penalties and
interest on unpaid privilege taxes for prior years because of the taxpayer's justifiable
reliance upon an erroneous determination by an officer of the Department of Fish and
Game that such taxes were not due. With respect to such interest and penalties on unpaid
taxes, section 8047 provides:

            "Privilege taxes imposed by this article shall be paid monthly to the
      department within 30 days after the close of each month.

            "If any tax is not paid within 60 days after the close of the month for
      which it is due, a penalty equal to 10 percent of the tax shall be added to it."

              Section 8048, subdivision (a) provides:

               "If any person operating under a license issued pursuant to this
       article fails to pay any privilege tax imposed under this article at the time
       that it becomes due and payable, the amount thereof, including penalties
       and interest, together with any costs in addition thereto, shall thereupon be
       a perfected and enforceable state tax lien. Such a lien is subject to Chapter
       14 (commencing with Section 7150) of Division 7 of Title 1 of the
       Government Code." (Emphasis added.)

              Nevertheless, while the state, except in an "unusual" case, is not estopped
from collecting a tax which was due and owing, even though the state's representatives
have previously adopted an erroneous interpretation of the law and advised the taxpayer
that no taxes would become due on a particular event or transaction, it may be estopped
from collecting penalties and interest where the taxpayer justifiably relied on such advice
and failed to pay the tax. (Fischback & Moore, Inc. v. State Bd. of Equal., supra, 117
Cal.App.3d at p. 632; Market St. Ry. Co. v. Cal. St. Bd. Equal., supra, 137 Cal.App.2d at
pp. 99-103; La Societe Francaise v. California Emp. Com., supra, 56 Cal.App.2d at pp.
552, 555.) In Fischback, supra, at p. 633, the court concluded:

               ". . . we deduce a general rule that a taxpayer is not required at its
       peril to know that a state's administrative rulings are erroneous. Although
       the taxpayer's liability for the original tax remains, its liability for penalties
       and interest may be excused. . . . We think collection of interest on an
       unpaid tax whose existence the board itself failed to recognize was
       inequitable and unjustifiable and that the taxpayer is entitled to recover
       amounts paid as interest."



                                              15

                                                                                        85-1001


It is concluded that the state may not collect statutory penalties and interest on unpaid
privilege taxes for prior years because of the taxpayer's justifiable reliance upon an
erroneous administrative interpretation.

               The final inquiry is whether the state may forgive the payment of unpaid
privilege taxes for prior years because of an erroneous administrative interpretation that
such taxes were not due. As previously noted, if a licensee fails to pay a privilege tax
when due, the amount thereof "shall thereupon be a perfected and enforceable state tax
lien," subject to the provisions of section 7150 et seq. of the Government Code. (§ 8048,
subd. (a), supra.)

              Article XVI, section 6 of the California Constitution prohibits the
Legislature from making a gift of public funds or property7/ A transfer of property
without consideration is a gift. (Civ. Code, § 1146.) Consequently, the release of a tax
lien, which is public property, without consideration would violate the constitutional
prohibition. (Community Television of So. Cal. v. County of Los Angeles (1975) 44
Cal.App.3d 990, 996.) However, the benefit to the state from an expenditure for a
"public purpose" is in the nature of consideration and the funds expended are therefore
not a gift even though private persons are benefited therefrom. (Id. at p. 997; County of
Alameda v. Janssen (1940) 16 Cal.2d 276, 281; Calif. Emp. etc. Com. v. Payne (1947) 31
Cal.2d 210, 216.)

              In Community Television, it was held that Revenue and Taxation Code
section 271, subdivision (a)(3), authorizing a proportionate refund with respect to taxes
on property acquired after taxes had become a lien by an organization qualified for the
welfare exemption, was in furtherance of that exemption as provided in section 214 of
said code, and not in violation of the constitutional prohibition. In Schettler v. County of
Santa Clara (1977) 74 Cal.App.3d 990, escape assessments were levied on imported
inventory for prior years which had not been collected or paid because of the county's and
taxpayer's reliance upon judicial interpretation, later overruled, that such goods were
immune from local taxation. The Legislature then enacted Revenue and Taxation Code
section 226 (repealed, Stats. 1984, ch. 678, § 13) providing that the validity of the ad
valorem property tax assessments on goods imported prior to 1976 must be determined
pursuant to law as it existed before the superseding decision in Michelin Tire Corp. v.
Wages (1976) 423 U.S. 276. It was contended that the Legislature was not empowered


   7
     California Constitution, article XVI, section 6, provides in pertinent part that "The
Legislature shall have no power . . . to make any gift or authorize the making of any gift,
of any public money or thing of value to any individual, municipal or other corporation
whatever. . . ." (Cf. 67 Ops.Cal.Atty.Gen. 31, 33-36 (1984).)

                                            16

                                                                                    85-1001


by subsequent enactment to remit or surrender the tax which had become due on the lien
date. The court stated (id. at pp. 1003-1006):

              "Of course, we have no quarrel with respondent's argument that the
      tax lien is a vested right of the taxing body; . . . that as a general proposition
      the Legislature cannot by a subsequent act increase or decrease the rate,
      remit the tax or in any way surrender, impair or limit rights that have
      become fixed and vested (Estate of Skinker, supra). To this general rule,
      however, there is a well recognized exception. It has been consistently held
      that expenditures of public funds or property which involve a benefit to
      private persons are not gifts within the meaning of the constitutional
      prohibition if those funds are expended for a public purpose (California
      Emp. etc. Com. v. Payne (1947) 31 Cal.2d 210, 216; County of San
      Bernardino v. Way (1941) 18 Cal.2d 647, 653; County of Alameda v.
      Janssen (1940) 16 Cal.2d 276, 281; County of Riverside v. Whitlock (1972)
      22 Cal.App.3d 863, 877; Winkelman v. City of Tiburon (1973) 32
      Cal.App.3d 834, 844-846). As stated in City of Oakland v. Garrison
      (1924) 194 Cal. 298, 302: '[W]here the question arises as to whether or not
      a proposed application of public funds is to be deemed a gift within the
      meaning of that term as used in the constitution, the primary and
      fundamental subject of inquiry is as to whether the money is to be used for
      a public or a private purpose. If it is for a public purpose within the
      jurisdiction of the appropriating board or body, it is not, generally speaking,
      to be regarded as a gift.' (Italics added. Accord: Doctors General
      Hospital v. County of Santa Clara, supra, 188 Cal.App.2d at p. 286.) It is
      likewise settled that if a public purpose is served by the expenditure of
      public funds, the constitutional prohibition is not violated even though there
      may be incidental benefits to private persons (Board of Supervisors v.
      Dolan (1975) 45 Cal.App.3d 237, 243; see also: People v. City of Long
      Beach (1959) 51 Cal.2d 875; County of San Diego v. Hammond (1936) 6
      Cal.2d 709; City of Oakland v. Williams (1929) 206 Cal. 315). Even more
      importantly, under an unbroken line of cases the determination of what
      constitutes a public purpose is primarily a matter for the Legislature, and its
      discretion will not be disturbed by the courts so long as that determination
      has a reasonable basis (County of Alameda v. Carleson (1971) 5 Cal.3d
      730, 746; County of Alameda v. Janssen, supra, 16 Cal.2d 276, 281; The
      Housing Authority v. Dockweiler, supra, 14 Cal.2d at pp. 449-450;
      Veterans' Welfare Board v. Jordan, supra, 189 Cal. 124, 145; Community
      Television of So. Cal. v. County of Los Angeles (1975) 44 Cal.App.3d 990,
      997; Board of Supervisors v. Dolan, supra, 45 Cal.App.3d 237, 243).


                                             17

                                                                                       85-1001


       "As noted earlier, in the instant case the Legislature expressly found
on the one hand that public policy would be served by the enactment
providing relief from retroactive legislation and on the other that the
potential retroactive application of Michelin would be manifestly unfair,
inequitable and unjust and would cause severe economic hardship. In
support of the latter finding the Legislature pointed out that importers had
reasonably relied on the previous law and could not reasonably foresee the
change of law; that as a result of the unexpected tax burden many importers
would become insolvent and be driven out of business; finally and even
more importantly, that the adverse effect of retroactive taxes on the
importing business community would result in a further deterioration of the
California labor market.

       "That the prevention of undue hardship on employers and the
correlative deterioration of the employment situation may constitute a valid
public purpose which duly exempts the legislation from the constitutional
prohibition against donation of public funds is well illustrated by California
Emp. etc. Com. v. Payne, supra, 31 Cal.2d 210. In Payne, the plaintiff was
attempting to collect unemployment contributions from defendant
employer. Defendant, believing he had less than the minimum number of
employees, had not filed returns. The applicable statute of limitations was
suspended if no returns were filed. However, six months prior to the filing
of the action by the plaintiff, the statute of limitations was changed to
provide that it was tolled only if the failure to file returns was intentional.
Although moneys were due and owing and debts had accrued, the court
determined that the legislative intent was to provide relief for employers
and it upheld the statute against an attack that it constituted a gift of public
funds. The court stated, inter alia, as follows: 'The question remains
whether the retroactive application of the amended statute would conflict
with the constitutional prohibition against gifts of public money or property
to private persons. (Cal. Const., art. IV, §§ 22, 31.) It has been held that a
retroactive amendment to the inheritance tax laws releasing the tax liability
of an estate was within the constitutional inhibition. [Citations.]

        "'It is well settled, however, that expenditures of public funds or
property which involve a benefit to private persons are not gifts within the
meaning of sections 22 and 31 of article IV of the Constitution if those
funds are expended for a public purpose, which is a matter primarily for
legislative discretion. [Citation.] It would appear that any incidental
benefit to the employer in applying this section to existing causes of action
so as to cut off the commission's right to sue for the contributions where no

                                      18


                                                                               85-1001


       intent to evade the act is present, may well be outweighed by the public
       benefit which would result if enforcement officers spent their time on fresh
       claims rather than stale ones. An additional element of public benefit is
       present where, as here, the statutory scheme is not purely a revenue
       measure but is enacted as part of a broad social program involving
       continuing contributions and benefits. Whether the employer would be able
       to pay a large assessment, based upon many years of innocent
       delinquencies, becomes important. It is possible that an employer who has
       not made collections from his employees or set aside a fund for the payment
       of the assessments, would be rendered insolvent or bankrupt if compelled to
       pay the amount of the accumulated assessments, plus interest and penalties.
       Under such circumstances, the result would be to force the employer out of
       business, thereby depriving his employees of work and, to that extent,
       defeating the primary object of the legislation which is to protect employees
       against unemployment.' (California Emp. etc. Com. v. Payne, supra, at pp.
       216-217; italics added.)

              "Based upon Payne and the long line of cases cited above, we must
       conclude that the Legislature supplied sufficient reasons in support of its
       conclusion that by the prospective application of Michelin a valid and well
       recognized public purpose is served, and also that this determination of the
       Legislature does have the requisite reasonable basis. Under these
       circumstances, section 226 squarely falls within the exception to the
       general rule prohibiting donation of public funds and its constitutional
       validity must be upheld even though as an incidental matter the importers
       as private individuals also benefit from its provisions."

              Again, a categorical determination of ultimate facts in any case, e.g.,
whether a public purpose would be served, the existence and effect of undue economic
hardship, etc., must depend upon an evidentiary analysis within the province of an
essentially judicial proceeding. As noted in Schettler, the court will give primary
deference to legislative discretion so long as it has a reasonable basis. (Id. at p. 1004;
Community Television of So. Cal. v. County of Los Angeles, supra, 44 Cal.App.3d at p.
997.)

              With respect to the inquiry presented, the lack of any such legislative
pronouncement or indication underscores the absence of any underlying statutory
authorization8 to forego the collection of taxes for prior years. With respect to an
   8
     We are advised that such authorization was proposed as an amendment to Assembly
Bill 1766 (1985-86 reg. ses.) which died in committee.

                                            19

                                                                                   85-1001


administrative agency, the court stated in Ferdig v. State Personnel Board (1969) 71
Cal.2d 96, 103-104:

              "'It is settled principle that administrative agencies have only such
       powers as have been conferred on them, expressly or by implication, by
       constitution or statute. [Citations.] An administrative agency, therefore,
       must act within the powers conferred upon it by law and may not validly
       act in excess of such powers. [Citations.] In accordance with these
       principles, it has been held in this state . . . that when an administrative
       agency acts in excess of, or in violation, of the powers conferred upon it, its
       action thus taken is void. [Citations.]' (See also 66 Ops.Cal.Atty.Gen. 17,
       24 (1983); 63 Ops.Cal.Atty.Gen. 840, 841 (1980).)'"

With respect to those powers which may be implied, the court expounded in Addison v.
Department of Motor Vehicles (1977) 69 Cal.App.3d 486, 498:

              "'"But the doctrine of implied powers is not without limitations. It
       cannot be invoked where the grant of express powers clearly excludes the
       exercise of others, or where the claimed power is incompatible with, or
       outside the scope of, the express powers. For a power to be justified under
       the doctrine, it must be essential to the declared objects and purposes of the
       enabling act -- not simply convenient, but indispensable. Any reasonable
       doubt concerning the existence of the power is to be resolved against the
       agency." [Citation.]'" (See also 67 Ops.Cal.Atty.Gen. 325, 330 (1984.)

              Similarly, a public officer has only such powers as have been conferred by
law, expressly or by implication. (65 Ops.Cal.Atty.Gen. 321, 325 (1982) -- county
recorder; 65 Ops.Cal.Atty.Gen. 467, 468 (1982) -- Governor; 63 Ops. Cal.Atty.Gen. 840,
841 (1980) -- State Treasurer without authority and therefore precluded from borrowing
against time deposits even for purposes of reinvestment at higher rates without increase
in attendant risk.) We have reached similar conclusions with regard to the authority of
tax collectors. (68 Ops.Cal.Atty.Gen. 223, 224 (1985); 62 Ops.Cal. Atty.Gen. 504, 508
(1979).) Hence, it is concluded on purely statutory grounds that the state may not forgive
the payment of unpaid privilege taxes for prior years.9

                                           ****


   9
     In view of the conclusion reached herein, it is not necessary to discuss the
application of California Constitution, article XIII, section 31: "The power to tax may
not be surrendered or suspended by grant or contract."

                                             20

                                                                                     85-1001


