In this direct appeal by the city of Kansas City, we are presented with the question whether the city can constitutionally make a distinction between the way it arrives at the occupational license tax for a new business starting during the year and the way it arrives at it for an existing business.
The city filed suit against respondent John Deere Company, classified as a merchant, to collect alleged occupational license tax deficiencies for the years 1966 to 1970, inclusive. The city’s occupational license tax ordinance in force during those years fixed the annual license tax for already *634established merchants at the rate of $1.00 per $1,000 of annual gross receipts in the preceding year. As to new merchants (those commencing business during the year), it provided for a preliminary license issued as of the date of beginning business and valid for the remainder of the calendar year, at the same $1.00 rate, but calculated, through adjustments at the end of the preliminary license period, on the basis of the actual gross receipts during the balance of the year. Then, for the first full year’s license of the new merchant, the city used a formula of multiplying by twelve the average monthly gross receipts for the time during which the new merchant operated in the prior year. Thereafter, the annual license for the “new” merchant is computed on the annual gross receipts for the preceding calendar year.
John Deere filed a motion for summary judgment, contending that under the ordinance the tax was not uniform on all merchants in Kansas City, thus violating Mo. Const, art. X, § 3, which provides, in part, that “[tjaxes may be levied and collected for public purposes only, and shall be uniform upon the same class of subjects within the territorial limits of the authority levying the tax”. The trial court agreed and entered judgment for defendant, relying on City of Cape Girardeau v. Fred A. Groves Motor Co., 346 Mo. 762, 142 S.W.2d 1040 (1940).
The city maintains the ordinance does not violate the uniformity requirements of the constitution; rather, it makes a subclassifi-cation of merchants into those which are newly starting into business and those already in business and the tax imposed on each subclass is uniform within itself. The former are issued preliminary licenses, with the final tax being calculated at the end of the year on the gross receipts for the portion of the year for which they were in business, with the next year’s license being based on annualization of the monthly average gross receipts for the partial year. The latter are issued annual licenses based on the gross receipts for the preceding year. The general rule regarding the classification of subjects for taxation is stated in 84 C.J.S. Taxation § 36:
“[Wjithin constitutional limitations, the state has power to classify persons or property for purposes of taxation, and the exercise of such power is not forbidden by the constitutional requirement that taxation be uniform and equal. So the legislature may arrange and divide the various subjects of taxation into distinct classes and impose different rates on the several classes, or tax one class to the exclusion of the others, without violating the requirement of equality and uniformity, and it may exercise wide discretion in selecting and classifying the subjects of taxation, providing the tax is uniform on all members of the same class, and providing the classification of the subjects of taxation is reasonable and provided the classification of the subjects of the taxation, as has been held, is not arbitrary . . . [T]he legislature, in making a classification for tax purpose, is not required to make meticulous adjustments in an effort to avoid incidental hardships . . . [A]ny substantial and reasonable basis of classification is allowable and a classification will be held valid if not palpably arbitrary . . . ”
In Springfield City Water Co. v. City of Springfield, 353 Mo. 445, 182 S.W.2d 613, 617 (1944), we said: “We think it clear under Sec. 3, Art. X of the State Constitution that a City has the power to sub-classify by ordinance the subjects of taxation enumerated in a general taxing statute if there is a reasonable basis for doing it and nothing in the statute forbids.”
And in Ex parte Asotsky, 319 Mo. 310, 5 S.W.2d 22, 27 (banc 1928): “The question of the propriety of a classification, measured by section 3, art. 10, is largely one for the Legislature. The courts may not declare a particular classification unreasonable and violative of said section . . . unless the classification made cannot be justified on any reasonable grounds . . . ”
And in Barhorst v. City of St. Louis, 423 S.W.2d 843, 846 (Mo. banc 1968): “It is not *635necessary that the court perceive the precise legislative reason for the classification, and the legislature is not required to preamble or label its classification for tax purposes, or disclose the principles on which they are made. It is sufficient if the court, on review, may find them supported by ‘justifiable reasoning.’ ”
We think that the ordinance is supported by justifiable reasoning.
The end the ordinance seeks is the raising of revenue based on gross receipts. The gross receipts system of licensing and taxing merchants is a workable method of raising municipal revenue, in wide use among Missouri towns and cities, as we see from the briefs of amici curiae herein. When it is used there necessarily must be a way devised to apply it to the new businesses, which have start-up expenses and do not have a prior history of gross receipts, as well as to the existing business or merchant. There are several ways to do this and the method used by Kansas City is one.
What Kansas City has done is to make a subclassification of its merchants: one subclass consists of the established merchants, the other subclass consists of the merchants newly starting into business. Calculating an occupational license tax at a rate of $1.00 per $1,000.00 of gross receipts, but using the gross receipts for the preceding calendar year for established businesses and gross receipts for the balance of the current year for newly starting businesses may well have been considered by the city council a logical way to treat the two fairly and equitably; it allows the established business to know exactly at the beginning of the year what its current license will cost, it puts the new merchant in that position at an early date, and it is a reasonable and sensible method of assuring that there will be no unlicensed merchant in the city and that no merchant, new or old, will be able to avoid some fee based upon gross receipts.
There has to be a starting point for every business. No new business has a record of gross receipts for the preceding calendar year, but this ought not to prevent the city from basing the amount of the license tax on gross receipts for new as well as for old businesses. The treatment of the new merchant is the same as that given the established merchant when he first began operations. One new merchant is treated the same as another new merchant. One established merchant is treated the same as another established merchant. The ordinance thus applies equally to merchants in like conditions and there is an equality of burden among the members of each subclass.
We thus conclude that the subclassification which Kansas City used is a legitimate exercise of the legislative prerogative in determining how best to raise and collect revenue. The classification is reasonably and rationally designed fairly to capture a percentage of gross receipts as license fees and distinguishes between the subclasses of new versus old businesses only to the extent required by the differences between these classes.
We are unable to agree with the trial court’s conclusion that City of Cape Girardeau v. Fred A. Groves Motor Co., 346 Mo. 762, 142 S.W.2d 1040 (1940) is controlling. In the Cape Girardeau case, the city adopted an ordinance which listed some forty-odd occupations and businesses upon which would be levied a license tax for the privilege of engaging therein within the city limits. One such business was “Automobile Dealers.” No distinction or classification in the definition of “Automobile Dealer” was made between automobile dealers already in business and those who commenced business during the year. The license fee was set on a graduated scale — where the gross receipts of the applicant for the preceding calendar year from the business exceeded $5,000, the tax was $11.25 for the first $5,000 and $2.25 per $1,000 thereafter.
To obtain a license the applicant was required to file a verified statement showing the amount of his gross receipts during the preceding year. But as to any applicant who had not been engaged in business during the preceding calendar year, the city clerk was to estimate the annual gross business for the applicant during the first fiscal year and set the license fee accordingly. *636Then, at the end of the year for which the license was issued, the licensee was required to furnish the sworn statement called for by the ordinance and a readjustment of the license tax for the year would be made on the basis of the actual gross receipts.
The court pointed out that the first section of the ordinance specifically defined the classes of subjects affected. Among these were “Automobile Dealers.” The court further pointed out that in the section which listed the forty-odd occupations or businesses to be licensed and taxed, there was no subclassification into those who had been and those who had not been “ ‘engaged in such business during the preceding calendar year’ in said city; but so far as any classification provisions of the ordinance are concerned, placed all in the same class for license tax purposes irrespective of the time they first engaged in such business within said city.” Id. at 1043.
The court stated that “[ejonsistent therewith Sec. 2-A of Art. 2 imposed a graduated rate or measure of the license tax upon all subject to the tax. Section 6, however, prescribed a different rate or measure of the license tax for those specifically named in Sec. 1 of Art. 2 who had not been engaged in such business within the city ‘during the preceding calendar year.’ ” Id.
The court declined to make its own sub-classification of the forty-odd subjects named in the section listing the businesses and occupations to be taxed, saying to do so “smacks of judicial legislation and classification.”1 Id. Since the city council had placed all automobile dealers in one class for the purpose of the license tax, the section which prescribed a rate or measure of the tax for some automobile dealers differing from that prescribed for other automobile dealers violated the uniformity clause of the constitution. This, of course, was sufficient to decide the ease and made further discussion unnecessary.
However, the court in Cape Girardeau went on to add, in dicta, that even if there were a subclassification of the class into those who had been and those who had not been “engaged in such business during the preceding calendar year”, the subclassification could not be sustained, that the difference between the ordinance provisions and the hypothesized subclassification was one of degree and not principle under the uniformity requirement, that there is no natural and substantial difference inhering in the subject matter between dealers who have been engaged in business for a number of years and those who have been engaged in such business for less than a year which would justify any distinction for purposes of taxation for revenue. It compared such classification to a classification of men by color of their hair or other individual peculiarities.
In support of the foregoing the court cited four cases: Ex parte French, 315 Mo. 75, 285 S.W. 513, 514 (banc 1926); Lige v. Chicago, B. & Q. R. Co., 275 Mo. 249, 204 S.W. 508, 510 (1918); State v. Julow, 129 Mo. 163, 31 S.W. 781, 783 (1895); State v. Miksicek, 225 Mo. 561, 125 S.W. 507, 510 (1910).
While these cases contain statements of well settled principles that classification for legislative purposes must be reasonable, not arbitrary, and must bear a just relation to the act or class in respect to which the classification is proposed, they do not, in our opinion, support the proposition that a sub-classification of the type made in the case at bar is void for lack of uniformity. Ex parte French involved a statute which made it a misdemeanor for the bank commissioner or any of his deputies to disclose information obtained in the examination of a bank to any person, except that they could, without penalty, reveal such information to federal examiners or state clearing house examiners. This classification was held to be irrational and unconstitutional. In the Lige case, the statute made it a misdemean- or for any person to enter a passenger train in an intoxicated condition and also made it the duty of the conductor under penalty of a misdemeanor to report to the prosecuting *637attorney the name of any such person and also the witnesses. The statute provided, however, that it did not apply to dining cars or private cars. This was held to be unconstitutional as an unreasonable classification. In the Miksicek case, the defendant was charged with violation of a statute prescribing the ventilating conditions for bakeries. This was ruled unconstitutional because it applied only to biscuit, bread or cake bakeries, but did not apply to bakeries making pies, pastry, crackers or confection-aries and thus was said to be an arbitrary classification. In the Julow case, defendant was convicted of violating a statute making it unlawful for an employer to prohibit an employee from joining, or to require an employee to withdraw from, a labor union. This was held to be an arbitrary classification, as it did not relate to all working men as a class, so that a non-union man could be discharged for any reason, but a union man could not be if his discharge rested on his being a member of the union.
We do not believe that the cases relied upon by the court in the Cape Girardeau case to support its dicta about the invalidity of a subclassification into those who had or had not done business during the preceding calendar year are analogous to the situation in the case at bar, because as we have discussed, supra, the city had a valid and logical reason for distinguishing between old and new businesses. Additionally, the Cape Girardeau ordinance used a calendar year basis for old dealers and a fiscal year basis for new dealers and then called for a readjustment on the basis of actual gross receipts “[a]t the end of the year for which [the] license was issued”, so that old dealers were using the preceding calendar year and the new dealers a fiscal year, a confusing and illogical basis for comparison which is not found in the Kansas City ordinance.
We hold that the Kansas City ordinance is valid. To the extent that City of Cape Girardeau v. Fred A. Groves Motor Co. is inconsistent herewith, it is no longer to be followed.
Judgment is reversed and the cause remanded for further proceedings consistent herewith.
MORGAN, C. J., and BARDGETT, RENDLEN, SIMEONE, JJ., and FINCH, Senior Judge, concur.
DONNELLY, J., dissents in separate dissenting opinion filed.
WELLIVER, J., not participating because not a member of the Court when cause was submitted.