First Posted: 3/6/2012

LUMBERTON — A Robeson County Superior Court judge’s ruling that upholds Lumberton’s privilege license fees for four Internet cafes has been upheld by the state Court of Appeals, according to James Bryan, the city attorney.

Superior Court Judge Robert Frank Floyd’s decision that the city can charge a business providing video gaming a privilege license fee of $5,000, plus $2,500 per machine, was upheld by state Appeals Court Judges Robert N. Hunter Jr. and Martha A. Geer. Appeals Court Judge Robert C. Hunter opposed the decision on the basis that Floyd had issued his ruling through a summary judgment rather than by trial.

Hunter, in his dissenting opinion, said that because of “grossly dissimilar tax rates,” he would have sent the case to trial.

Four Internet cafes, including The Internet Business Center, G&M Co., Sweep-Net Business Center, and EZ Access of North Carolina, had appealed the Superior Court ruling on the basis that the licensing fees are set high to destroy video gaming businesses and are therefore unconstitutional.

The city in 2010 upped its privilege license from $12.50 to the present level of $5,000 per business and $2,500 per gaming terminal within the business. The increase is credited with causing many of the city businesses offering sweepstakes gaming to close their doors or leave the city limits.

Lonnie Player Jr., the attorney representing the four businesses, has said his clients plan to appeal the recent ruling to the state Supreme Court. An appeal to the Supreme Court is permitted because the Appeals Court ruling was not unanimous.

Player said the “power to tax is the power to destroy,” according to a report in The Fayetteville Observer. He contends the city imposed the fee increase to drive the stores out of business.

If Floyd’s ruling is upheld again, the city could receive about $225,000 in taxes and penalties from the businesses.