Department of Treasury v Federated States of Micronesia Telecommunications Corporation [2000] FMSC 41; 9 FSM Intrm. 575 (App. 2000) (21 November 2000)

FEDERATED STATES OF MICRONESIA
SUPREME COURT APPELLATE DIVISION
Cite case as Department of Treasury v Federated States of Micronesia Telecommunications Corporation,
[2000] FMSC 41; 9 FSM Intrm. 575 (App. 2000)

DEPARTMENT OF THE TREASURY AND ADMINISTRATION OF THE STATE OF POHNPEI,
Appellant,

vs.

FEDERATED STATES OF MICRONESIA TELECOMMUNICATIONS CORPORATION,
Appellee.

_______________________________________________

APPEAL CASE NO. P1-2000

BEFORE:

Hon. Richard H. Benson, Associate Justice, FSM Supreme Court
Hon. Martin G. Yinug, Associate Justice, FSM Supreme Court
Hon. Wanis R. Simina, Temporary Justice, FSM Supreme Court*

*Associate Justice, Chuuk State Supreme Court, Weno, Chuuk

OPINION

Argued: September 8, 2000
Decided: November 21, 2000

APPEARANCE:

For the Appellant:
Joses Gallen, Esq.
Assistant Attorney General
Pohnpei Department of Justice
P.O. Box 1555
Kolonia, Pohnpei FM 96941

For the Appellee:
Stephen V. Finnen, Esq.
Law Offices of Saimon & Associates
P.O. Box 1450
Kolonia, Pohnpei FM 96941

* * * *

HEADNOTES

Constitutional Law - Interpretation
In the usual case, a court will not decide a question on a constitutional ground if it may be resolved on a statutory or other basis. Department of Treasury v. FSM Telecomm. Corp., [2000] FMSC 41; 9 FSM Intrm. 575, 579 (App. 2000).

Constitutional Law - Interpretation
When the tax exemption issue is implicitly a constitutional one because the statute, to the extent viewed as seeking to impose a state tax upon the national government, goes to the constitutional relationship between the state and national governments and when as between the exemption issue and the interstate commerce restriction issue, which is explicitly constitutional in character, the determination of one makes the other moot, and when if only the tax exemption issue were addressed it could resolve the dispute between the parties but would leave in place an injunction precluding all collection of the tax as unconstitutional, the court must decide the constitutional tax and commerce question in order to accord the appellant a meaningful remedy. Department of Treasury v. FSM Telecomm. Corp., [2000] FMSC 41; 9 FSM Intrm. 575, 579 (App. 2000).

Appeal and Certiorari - Standard of Review
When the question presented is one of law, it is reviewed on a de novo basis. Department of Treasury v. FSM Telecomm. Corp., [2000] FMSC 41; 9 FSM Intrm. 575, 579 (App. 2000).

Taxation - Constitutionality
Imposing taxes, duties, and tariffs based on imports is a power expressly delegated to Congress. Department of Treasury v. FSM Telecomm. Corp., [2000] FMSC 41; 9 FSM Intrm. 575, 579 (App. 2000).

Taxation - Constitutionality
When "commencement of use or consumption" equals importation as it applies to the nonexempt merchandise subject to a use tax, any semantic distinction resulting from making the tax payable upon "commencement of use or consumption" does not render it any less a tax on imports because the name given a tax by a taxing authority is not controlling and because extending the time for payment to 60 days after importation does not change the nature of the tax. The Pohnpei use tax violates the constitutional reservation to Congress of the power to tax imports. Department of Treasury v. FSM Telecomm. Corp., [2000] FMSC 41; 9 FSM Intrm. 575, 581 (App. 2000).

Constitutional Law - Interstate and Foreign Commerce; Federalism - National/State Power
Article IX, section 2(g) of the Constitution expressly delegates to Congress the power to regulate foreign and interstate commerce. A delegation of power to the national government under section 2 of Article IX is exclusive. Department of Treasury v. FSM Telecomm. Corp., [2000] FMSC 41; 9 FSM Intrm. 575, 581-82 (App. 2000).

Constitutional Law - Interstate and Foreign Commerce; Taxation - Constitutionality
As to interstate commerce, Article VIII, section 3 contains the negative counterpart to Article IX, section 2(g)'s positive grant of power by prohibiting state and local governments from imposing taxes which restrict interstate commerce. Department of Treasury v. FSM Telecomm. Corp., [2000] FMSC 41; 9 FSM Intrm. 575, 582 (App. 2000).

Constitutional Law - Interstate and Foreign Commerce; Taxation - Constitutionality
Since the event triggering the Pohnpei use tax is the unqualified "use or consumption" in Pohnpei of nonexempt goods, the statute applies to goods brought into Pohnpei from Yap, Chuuk, and Kosrae, as well as from locations outside the FSM. It is thus clear that the statute directly regulates or restricts interstate commerce in the same way it does imports. Department of Treasury v. FSM Telecomm. Corp., [2000] FMSC 41; 9 FSM Intrm. 575, 582 (App. 2000).

Constitutional Law - Interstate and Foreign Commerce; Taxation - Constitutionality
As to goods making their way from any of the other three states into Pohnpei, the direct nexus between the simultaneous arrival of the goods and imposition of the Pohnpei use tax points to direct regulation of interstate commerce. Department of Treasury v. FSM Telecomm. Corp., [2000] FMSC 41; 9 FSM Intrm. 575, 582 (App. 2000).

Constitutional Law - Interstate and Foreign Commerce; Taxation - Constitutionality
Even assuming that the Pohnpei use tax apportionment clause could be interpreted to remedy concerns about discrimination against interstate commerce, the fact remains that the use tax is indissolubly linked to the event of importation, and no semantic calisthenics liberate the tax from this inherent defect. Department of Treasury v. FSM Telecomm. Corp., [2000] FMSC 41; 9 FSM Intrm. 575, 583 (App. 2000).

Constitutional Law - Interstate and Foreign Commerce; Taxation - Constitutionality
A state tax that is unconstitutional as an import tax, if applied to interstate commerce, is also restrictive of interstate commerce. The Constitution does not permit a state to erect tax barriers to the free movement of goods among the states. Department of Treasury v. FSM Telecomm. Corp., [2000] FMSC 41; 9 FSM Intrm. 575, 583 (App. 2000).

Taxation - Constitutionality
A state use tax that is a tax on imports in violation of Article IX, section 2(d); and that regulates and restricts interstate commerce in violation of Article IX, Section 2(g), and Article VIII, section 3, respectively of the FSM Constitution contravenes the Constitution. Department of Treasury v. FSM Telecomm. Corp., [2000] FMSC 41; 9 FSM Intrm. 575, 583 (App. 2000).

* * * *

COURT'S OPINION

MARTIN G. YINUG, Associate Justice:

Appellee FSM Telecommunications Corporation ("Telecom") on motion for summary judgment successfully challenged the Pohnpei state use tax. Appellant the Department of the Treasury and Administration of the State of Pohnpei ("the Department") appealed. We affirm the trial court.

I. Facts and Procedural History

The parties agree that the facts are not in dispute. In 1997, Telecom imported telephone equipment and a Toyota pick-up truck into Pohnpei from outside the FSM. The cost plus shipping of the former was $19,152.92, while for the latter $13,480.00. Pursuant to the Pohnpei use tax statute, which is Subdivision^[1] XIV of the Pohnpei Comprehensive Taxation Reform Act of 1997 (Pohnpei State Law No. 4L-35-97), Pohnpei taxed the cost of the goods and the shipping charges. The tax rate for the equipment was one percent of total value; for the truck, seven percent. The amount assessed, including penalty and interest, was $1,378.76. Under the Pohnpei statute, those bringing goods into Pohnpei for their actual use - goods for resale are exempt - were required to fill out a declaration form to obtain release of their goods from the point of entry. The tax was due within 60 days after the "commencement of the use or consumption of the merchandise within the state." Pon. S.L. No. 4L-35-97, § 14-7.

[2] The Department appealed this order by a timely notice of appeal filed on February 4, 2000.

On February 18, 2000, the Department filed a motion for stay pending appeal, and represented that it would not appeal the trial court's ruling that Telecom was exempt as part of the FSM government. In response to the motion for stay, Telecom took the position that it was not clear what issues the Department would be raising on appeal. In its request for transcript filed on February 8, 2000, the Department ordered the entire transcript of the hearing on the motion for summary judgment. FSM Rule of Appellate Procedure 10(b)(3) provides that "[u]nless the entire transcript is to be included, the appellant . . . shall, within . . . 10 [afte fili filing of t of the notice of appeal] file a statement of the issues the appellant intends to present on the appeal." After the Department filed its brief on July 28, 2000,hich ised xemption issn issue alue along wong with the constitutionality question, Telecom moved to strike the exemption portion of the Department's brief on the basis of waiver - that in its motion to stay pending appeal, the Department had represented that it would not appeal the exemption issue. The single justice appointed to hear motions under FSM Appellate Rule 27(c), denied the motion, noting that the Department had ordered the entire transcript, and that Telecom had previously stated that it was not clear what issues the Department intended to raise on appeal. Telecom then moved for reconsideration, but addressed the exemption issue in its brief. We asked the parties also to address the motion for reconsideration at oral argument.

Because we decide the case on the grounds that the Pohnpei use tax is a tax on imports and restricts interstate commerce in contravention of the FSM Constitution, the exemption issue is moot. Similarly, reconsideration of the court's ruling on the motion to strike the exemption portion of the Department's brief is moot as well.

II. Issue

The trial court in its December 30, 1999, order held that Telecom, as part of the national government, was exempt from the Pohnpei use tax under 21 F.S.M.C. 208 as well as under the use tax statute itself. Noting that the issues involved were ones "of special public concern," FSM Telecomm. Corp. v. Department of Treasury, [1999] FMSC 40; 9 FSM Intrm. 292, 294 (Pon. 1999), the trial court also found that the use tax violated the FSM Constitution because it taxed imports, and restricted interstate commerce.

In the usual case, we do not decide a question on a constitutional ground if it may be resolved on a statutory or other basis. FSM v. Edward, [1988] FMKSC 6; 3 FSM Intrm. 224, 230 (Pon. 1987). At first blush, the exemption issue might be characterized as statutory, if viewed as turning on an interpretation of 21 F.S.M.C. 208 and Section 14-4(4) of Pohnpei State Law No. 4L-35-97.^[3] But the rationale for Telecom's exemption from the tax is that it is part of the national government. We think it a given that it lies within the province of the national government alone to determine whether it is simultaneously a tax payer and a tax collector. The Pohnpei statute, to the extent viewed as seeking to impose a state tax upon the national government, goes to the relationship between the Pohnpei state government and the national government as defined by our Constitution. Thus, the exemption issue is implicitly a constitutional one. It is also the case that as between the exemption issue and the interstate commerce restriction issue, which is explicitly constitutional in character, the determination of one moots the other. However, the trial court determined both issues adverse to the Department, and enjoined collection of the tax based on its constitutional infirmity under Article VIII, Section 3, and Article IX, Sections 2(d) and (g). Were we to address only the exemption issue, we would resolve the dispute between the parties but would leave the injunction, which precludes collection of the tax from all putative taxpayers, in place. In order to accord the Department a meaningful remedy, and where the constitutionality of the Pohnpei use tax as implicated by the constitutional prohibition against state imposition of an import tax and state regulation of interstate commerce is of wide public interest and significance, we decide the tax and commerce question. In so doing we add to the body of law in this area. See generally Weno v. Stinnett, [1999] FMSC 34; 9 FSM Intrm. 200 (App. 1999); Truk Continental Hotel, Inc. v. Chuuk[1995] FMSC 19; , 7 FSM Intrm. 117 (App. 1995); Innocenti v. Wainit, [1986] FMSC 3; 2 FSM Intrm. 173 (App. 1986); Stinnett v. Weno, [1996] FMSC 8; 7 FSM Intrm. 560 (Chk. 1996); Stinnett v. Weno, [1994] FMSC 36; 6 FSM Intrm. 312 (Chk. 1994); Bruton v. Moen, 5 FSM Intrm. 9 (Chk. 1991); Gimnang v. Yap, [1990] FMSC 25; 4 FSM Intrm. 212 (Yap 1990); Wainit v. Truk (II), 2 FSM Intrm. 86 (Truk 1985).

We agree with the trial court that the Pohnpei use tax violates the FSM Constitution because it constitutes a tax on imports in violation of Article IX, Section 2(d). It also contravenes Article IX, Section 2(g), and Article VIII, Section 3, because it restricts interstate commerce. For the reasons below, we affirm the December 30, 1999, order of the trial court.

III. Discussion

Because the question presented is one of law, we review it on a de novo basis. Nanpei v. Kihara, [1995] FMSC 49; 7 FSM Intrm. 319, 323-24 (App. 1995). We consider the import tax and interstate commerce challenges to the constitutionality of the Pohnpei use tax in turn.

A. Tax on imports

"[T]o impose taxes, duties, and tariffs based on imports" is a power expressly delegated to Congress. FSM Const. art. IX, § 2(g). We have previoconsidensidered a tax similar to the one at issue here in Innocenti v. Wainit, [1986] FMSC 3; 2 FSM Intrm. 173 (App. 1996). Innocentiinvolved imposition of an "excise" tax on all goods brought into Chuuk. The tax was imposedposed at the port of entry, and had to be paid before the goods were released from the port of entry. On those facts, the Innocenti court found "[t]he language of the Constitution leaves no doubt that the power to impose taxes based on imports lies exclusively with the national government may not be exercised by the states." Id. at 182.

Subsequently, the trial division of this court, in reviewing a Yap state statute virtually identical to the Chuuk statute at issue in Innocenti statute, reached the same conclusion. The Yap statute, like the Chuuk statute, imposed an "excise" tax. After noting that the Yap statute was "the pattern" for the Chuuk statute, the trial division found that the Yap state statute imposed a tax on imports in violation of Article IX, Section 2(d) of the FSM Constitution. Gimnang v. Yap, [1990] FMSC 25; 4 FSM Intrm. 212, 214, 215 (Yap 1990). Unlike the Chuuk and Yap "excise" statutes, the Pohnpei tax is styled a "use" tax.^[4] Although the statute avoids the word "import" or any variant thereof, the statute's impact falls on imported goods, since the tax is applicable to all nonexempt "merchandise," which is defined under Section 14-1(2) - by reference to Section 11-1(3) - as "tangible personal property." The Department concedes that "nearly all tangible property within the FSM [comes] from somewhere else." Appellant's Brief at 22. Other import centric features are that the tax basis includes transportation costs, Pon. S.L. No. 4L-35-97, § 14-1(1), and good not to beto be released from "any port of entry" until the buyer completes a declaration form, id. § 14-1(6)).her, ax must be pabe paid within 60 days following commencement of use or consumption, i id. § 14-7, while "use osumptis d is defined as "the exercise of any right or power over merchandise incident to owto ownership or possession of that merchan including transfer thereof in any transaction where possession is given," id. §§ 14-1(7).

Since virtually all tangible goods in the FSM come from outside the FSM, "commencement of use or consumption" equals importation as it ap to the nonexempt merchandise subject to the tax. On the facts before us, any semantic dist distinction resulting from making the tax payable upon "commencement of use or consumption" does not render it any less a tax on imports. Truk Continental Hotel, 7 FSM Intrm. at 119 ("Obviously, the name given a tax by a taxing authority is not necessarily controlling.") Nor does the fact that the time for payment extends to 60 days after importation change the nature of the tax. As the court in Gimnang, 4 FSM Intrm. at 215, noted, an amendment to the Yap statute permitting payment of the tax ten days after release of the goods from the dock versus the pre-amendment requirement of payment to secure release of the goods did not affect the nature of the tax, since "only the manner of tax payment is changed."

Accordingly, we affirm the trial court's finding that the Pohnpei use tax violates the constitutional reservation to Congress of the power to tax imports under Article IX, Section 2(d).

B. Regulation of interstate commerce

Article IX, Section 2(g) of the FSM Constitution "expressly delegate[s] to Congress" the power "to regulate ..... foreign and interstate commerce."^[5] A delegation of power to the national government under Section 2 of Article IX is exclusive. Truk Continental Hotel, 7 FSM Intrm. at 118. As to interstate commerce, Article VIII, Section 3 contains the negative counterpart to Article IX, Section 2(g)'s positive grant of power by prohibiting "[s]tate and local governments . . . from imposaxes which rest restrict interstate commerce."

The Pohnpei use tax regulates interstate commerce under Article IX, Section 2(g), and restricts inter commwithin the meaning of Article VIII, Section 3. Si3. Since tnce the event triggering the tax as to nonexempt goods is the unqualified "use or consumption" in Pohnpei of those goods, the statute applies to goods brought into Pohnpei from Yap, Chuuk, and Kosrae, as well as from locations outside the FSM. We think it clear that the statute directly regulates or restricts interstate commerce in the same way it does imports. See supra note 5. Whether the taxed goods come from within or without the FSM, the increased price of the goods is directly linked to their being brought into Pohnpei. As to goods making their way from any of the other three states into Pohnpei, the direct nexus between the simultaneous arrival of the goods and imposition of the Pohnpei tax points to direct regulation of interstate commerce. The United States Supreme Court has stated that "[w]hen a state statute directly regulates . . . itate rce .&#e . .�. . we haverally struck down down the statute without further inquiry." Brown-Forman Distillers v. N.Y. Liquor Auth., [1986] USSC 116; 476 U.S. 573, 579[1986] USSC 116; , 106 S. Ct. 2080, 2084[1986] USSC 116; , 90 L. Ed. 2d 552, 559 (1986) (citinghilada v. New Jersey, 4u>[1978] USSC 131; , 437 U.S. 617, 98 S. Ct. 2531, 57 L. Ed. 2d 475 (1978); Shafer v. Farmers Grain Co., [1925] USSC 126; 268 U.S. 189, 45 S. Ct. 481, 69 L. Ed. 909 (1925); Edgar v. MITE Corp., [1982] USSC 135; 457 U.S. 624, 640-43[1982] USSC 135; , 102 S. Ct. 2629, 73 L. Ed. 2d 269 (1982) (plurality opinion)).

Here, however, we take the inquiry further to address the Department's contention that the Pohnpei "use tax does not discriminate against interstate commerce since it is identical to Pohnpei's sales tax in amount, and, thus, both intrastate sales and goods brought into Pohnpei have the same tax burden." Appellant's Opening Brief (adopting as part of its brief on appeal its Response to Plaintiff's Motion for Summary Judgment and Counter-Motion for Summary Judgment, dated February 2, 1998) at 24. In this regard, the Department cites a case from the United States, D.H. Holmes Co. v. McNamara, [1988] USSC 84; 486 U.S. 24, 108 S. Ct. 1619, 100 L. Ed. 2d 21 (1988). D.H. Holmes relies on Complete Auto Transit, Inc. v. Brady, 430 U.S. 264, 287[1977] USSC 54; , 97 S. Ct. 1076, 1083[1977] USSC 54; , 51 L. Ed. 2d 326, 336 (1977), which sets out a four part test to determine whether a state taxing statute withstands scrutiny under the Commerce Clause of the United States Constitution: 1) the taxed activity must be a substantial connection with the state; 2) the tax must be fairly apportioned; 3) the tax must not discriminate against interstate commerce; and 4) the tax must be fairly related to state provided benefits.

Without opining whether any analysis of the Pohnpei use tax under this test squares with the first, second, and fourth criteria, we briefly consider the third, nondiscrimination against interstate commerce. Telecom in both its brief and at oral argument posited the example where Telecom takes delivery of equipment at its headquarters in Pohnpei, transfers that equipment to one of the other states for temporary use in its operations there, and then brings that equipment back to Pohnpei. Under our reading of the Pohnpei use tax statute, the equipment would be subject to the use tax when it first entered Pohnpei, as well as upon its re-entry. Goods which enter and remain in Pohnpei are not subject to a second application of the statute. Section 14-3's apportionment clause does not address this disparity, nor does the statute provide for any refund where the tax is paid in full, but where an appreciable portion of an item's useful life is subsequently spent in one of the other three states after initial entry into Pohnpei.

But assuming for the sake of discussion that Section 14-3 could be interpreted to remedy these concerns, the fact remains that the use tax is indissolubly linked to the event of importation, and as previously noted, no semantic calisthenics liberate the tax from this inherent defect. It should be apparent that a state tax that is unconstitutional as an import tax, if applied to interstate commerce, is also restrictive of interstate commerce. In sum, the Constitution does not permit a state to erect tax barriers to the free movement of goods among the states.

Accordingly, we hold that Pohnpei use tax regulates and restricts interstate commerce within the meaning of Article VIII, Section 3, and Article IX, Section 2(g) of the FSM Constitution.

IV. Conclusion

We hold that Subdivision XIV of Pohnpei State Law No. 4L-35-97 contravenes the FSM Constitution because it is a tax on imports in violation of Article IX, Section 2(d); and regulates and restricts interstate commerce in violation of Article IX, Section 2(g), and Article VIII, Section 3, respectively of the FSM Constitution.

The order of the trial court entered on December 30, 1999, is affirmed, Telecom to recover its costs on appeal.

---

^[1] We supply the denotation "Subdivision" for reference, since the heading is "XIV. USE TAXES."

^[2] As previously noted, the use tax portion of Pohnpei State Law No. 4L-35-97 is Subdivision XIV. The trial court's December 30, 1999, order enjoined only the "accepting or collecting [of] any use taxes." FSM Telecomm. Corp. v. Department of Treasury, [1999] FMSC 40; 9 FSM Intrm. 292, 294 (Pon. 1999). We find the use tax portion of the statute to be severable from the rest of the law, which addresses other issues and therefore remains operable. I.N.S. v. Chadha, [1983] USSC 143; 462 U.S. 919, 934[1983] USSC 143; , 103 S. Ct. 2764, 2775[1983] USSC 143; , 77 L. Ed. 2d 317, 334 (1983) (holding that a statutory provision is presumed severable if what remains if fully operable). Our holding therefore applies only to Subdivision XIV of Pohnpei State Law No. 4L-35-97.

^[3] Section 208 of 21 F.S.M.C. provides in pertinent part that "[t]he Corporation [i.e., Telecom] . . . shall be exfrom any taxestaxes or assessments on any of its property," while Section 14-4(4) of Pohnpei State Law No. 4L-35-97 provides in pertinent part that "[t]he use taxes imposed by Section 14-3 of this act shall not apply to: . .&#164) Merchandise purchasrchased outside of the state and brought into Pohnpei State for use and consumption by . . . theNatioovernment."
^[4] The statute, Subdivibdivision XIV of S. L. No. 4L-35-97, provin pert part as follows:

XIV. USE TAXES

Section 14-1. .....<....

(1) "Cost price" means the actual cost . . . withou dedus ions therefrerefrom on account of the cost of . . . transtion es,rges, or anyr any expenses whatsoever, including the cost of freight . . . .

(2) "Merchandise"dise" is as defined in Subsection ( Sect1-1 of this act.

.......

>

(6) (6) "Terminal operator" means an individual or entity who is designated b Divi[of Re and Tand Taxatiaxation] ton] to hold merchandise subject to the use tax, at any port of entry into the state, until the purchaser has filled the appropriate declaration forms necessary to release the merchandise. . .&.

(7) >(7) "Use oUse or consumption" means the exercise of any right or power over merchandise incident to ownership or possession of that merchandise, ding fer thereof in any transaction where possession iion is givs given.

Section 14-2. Imposition of use tax. There is hereby levied and imposed, in addition to all other taxes and fees of every kind, a license or privilege tax upon every person for the use or consumption of all merchandise . . .&#

Sect>Section 14-n 14-3. Alternate valuation for used merchandise. Merchandise which has been acquired for use outside Pohnpei State and subsequently becomes subject to the taxsed hder shall be taxe taxed on d on the basis of cost price if such merchandise is brought within Pohnpei State within six months of its acquisition; but, if so brought within Pohnpei State more than six months after its acquisition, the merchandise shall be taxed on the basis of the current fair market value of the merchandise at the time of ifs first use within Pohnpei State; PROVIDED that the tax shall be based on such proportion of the cost price or current fair market value as the duration of time the merchandise remains in Pohnpei State, but it shall be presumed in all cases that the merchandise will remain in Pohnpei State for the remainder of its useful life unless convincing evidence, pursuant to rules and regulations, is provided to the contrary.

Section 14-4. Exemptions and exclusions. The use taxes imposed by Section 14-3 of this act shall not apply to:
.......

(2) Merchandise brought into the state by or for a licensed dealer, wholesaler, or retailer solely for purposes of resale;
.......

Section 14-7. Collection and due-date payment. The tax imposed by Section 14-2 of this act shall be collected by the Division [of Taxation and Revenue] from the user or consumer and shall be due and payable no more than 60 days following the commencement of the use or consumption of the merchandise within the state. When applicable, before the release of the merchandise from the terminal operator, the user or consumer shall complete such declaration forms as may be required.
Subsection (3) of Section 11-1 is as follows:

(3) "Merchandise" means tangible personal property which may be seen, weighed, measured, felt, or touched, or in any other manner perceptible to the senses, including any tangible personal property which may become a fixture or part of the real estate, but not including stocks, bonds, notes, insurance, or other obligations or securities.
^[5] We digress briefly to consider the use tax as it serves to regulate foreign commerce, a point not touched upon by the trial court's December 30, 1999, order, but which Telecom addresses in passing in its brief at 21.

Except for an outright ban on - or regulations limiting - imports, we are hard pressed to think of a more direct regulation of foreign commerce as it relates to nonexempt imported goods than an import tax. Commercial reality dictates that in general purchases are price driven. As prices rise, some buyers are excluded from the market, and fewer purchases result. In the case at bar, imports are a function of purchases, since people import what they have bought or will buy, depending on the terms of payment between the exporting seller and the importing buyer. To regulate is "to fix the . . . amount, degrr rate of." f." WEBSTER'S THIRD NEW INTERNATIONAL DICTIONARY 1913 (1965). Because a tax levied on imports fixes the total price ultimately paid by the importer, it regulates imports. While an import tax that is small in relation to the total value of an imported good may result in a proportionally small regulatory effect, that fact goes to the quantitative aspect of the tax, not its essential or qualitative nature, which is regulatory. In short, an import tax regulates imports, which are themselves a defining element of foreign commerce. It follows that an import tax regulates foreign commerce.