Untitled Texas Attorney General Opinion ( 1969 )

.
OF XAS
Senator William T. (Bill) Moore Opinion No, M-370
State Capltol
Austin, Texas 78711 Re: Whether S. B. No. 683,
by Schw;;;;, :;I" Leg.,
R. s.,
Dear Senator Moore: originate 1; the Senate
In your capacity as Chairman of the Senate State Affairs
Committee you ask our opinion whether Senate Bill 683 (by
Senator Schwartz), now pending before your Committee In the
Regular Session of the 61st Legislature, may be Initiated In
the Senate in view of Article III, Section 33 of the Constitution
of Texas, which reads as follows,
"All bills for raising revenue shall
originate in the House of Representatives,
but the Senate may amend or reject them as
other bills."
Our answer to this question precludes our consideration of
your second question.
Our opinion Is that the primary purpose of this Bill is
to raise revenue and that Article III, Section 33, of our
Constitution prohibits its origin in the Senate.
Senate Bill No. 683 amends Article 13.02(l) of Title 122A,
Taxation-General, Revised Civil Statutes, to primarily and
materially increase the tax incident to the operation of coin-
operated machines. The only tax imposed by the present
A$;;;; :3.02(l) is an nccupatfiontax of Ten Dollars ($10.00)
coin-operated machine . Senate Bill No. 683 increases
the occupation tax incident to the operation of "coin-operated
machines in three respects, which are:
1) It Increases the tax on billiard
tables from $10.00 to $15.00;
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Senator William T. (Bill) Moore, Page 2 (M-370)
2) It requires every "owner" of any
"coin-operated machine' to pay an
annual license fee of $500.00;
3) It requires each employee of an
"owner" to pay an annual license
fee of $5.00.
The State Comptroller advises us that during the fiscal
Tear enftedAugust 31, 1968, the State issued permits to 4,713
owners of "coin-operated machines" and that the tax imposed
by Article 13.02(l) upon such machines yielded to the State
for that fiscal year the sum of $402,750.85. The fact that
all "owners" of such machines would be liable for a license
fee of $500.00 each and that each of their employees would be
liable for a license fee of $5.00 each, clearly means that
the State's revenue from this tax will be materially Increased
beyond the $402,750.85 yielded by this tax for the fiscal year
ended August 31, 1968.
The Bill requires each "owner" of a "coin-operated
machine" and each of his employees to apply to the Comptroller
of Public Accounts on a form prescribed by him for a permit,
which shall be under oath. The application shall recite that
the applicant is of good moral character and has not been
convicted of a felony involving moral turpitude within the
immediately preceding three years and shall be accompanied by
a certificate from the Department of Public Safety reflecting
convictions, if any, of felony offenses of the applicant within
the preceding three years. The Bill further provides that
every such "owner" and each of his employees shall report to
the Consumer Credit Commissioner, in conformity to his regulations,
any loan they may make to any licensee or permitee under the
Texas Liquor Control Act.
The sum of Twenty-five Thousand Dollars ($25,OOO.OO)
derived from the license fees under the present law is allocated
to the General Revenue Fund for enforcement of this tax.
Article 13.08, Title 122A. The net revenue from the tax imposed
on coin-operated machines is then allocated in the proportions
of one-fourth to the available School Fund and three-fourths to
the Omnibus Tax Clearance Fund. Articles 13.14 and 24.01 of
Title 122A. In this context we note that Article 7, Section 3
of the Constitution of Texas requires that one-fourth of the
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Senator William T. (Bill) Moore, Page 3 (M-370)
revenue derived from the State Occupation Taxes shall be set
apart to the available School Fund.
Our opinion, when we consider Senate Bill 683 as a
whole and in the context of the inherent relevant facts herein-
above recited, is that the primary purpose of the Bill and of
the fees required by it is the raising of revenue and not
regulation of the persons and properties taxed by it.
The controlling applicable law Is stated in Hurt v. Cooper,
130 Tex. 433, 110 S.W.2d 896 (1937), wherein the Court said,
"It is sometimes difficult to determine
whether a given statute should be classed as
a regulatory measure or as a tax measure.
The principle of distinction generally recog-
nized is that when, from a consideration of
the statute as a whole, the primary purpose
of the fee8 provided therein is the raising
of revenue, then such fees are in fact
occupation taxes, and this regardless of the
name by which they are designated. On the
other hand, if its primary purpose appears
to be that of regulation, then the fees levied
are license fees and not taxes. . . .'I
(at P. 899).
Our Supreme Court stated in City of Fort Worth v. Qulf
125 Tex. 512, 83 S.W.2d 610, bl'( (1935) as
"An occupation tax is levied primarily
for the purpose of raising revenue, and
unless the measure before us is primarily
a revenue measure, it is not an occupation
tax. A license law is one which
confers ;p& those who comply therewith a
right denied all others, and it is immaterial
whether or not it provides a fee therefor. , . ."
At page 618 the Court stated another distinction between
a license fee and a tax for revenue as follows:
"As to the reasonableness of a
license fee, the rule is that the sum
levied cannot be excessive nor more
than reasonably necessary to cover the
costs of granting the license and
exercising proper police regulation;
or, as stated in another way, the sum
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Senator William T. (Bill) Moore, Page 4 (M-370)
levied should bear some reasonable
relationship to the legitimate object of
the licensing ordinances. Where
the exaction is imposed undir'the power to
regulate or in the exercise of the police
power, as distinguished from the power to
tax for revenue, as heretofore explained,
the general rule obtains that the sum
levied cannot be excessive nor more than
reasonably necessary to cover the costs
of granting the license and of exercising
proper police regulation. . . .I'
Accord, Qulf Ins. Co. v. James, 143 Tex. 424, 185 S.W.2d 966,
971 (1945).
SUMMARY
Senate Bill No. 683, 61st Legislature,
Regular Session has for its primary
purpose the raising of revenue.
Article III, Section 33 of our State
Constitution prohibits its originating
in the Senate.
Prepared by W. E. Allen
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Kerns B. Taylor, Chairman
George M. Kelton, Vice-Chairman
W. 0. Shultz
Jack Sparks
Jack Goodman
Rex White
W. V. Geppert
Staff Legal Assistant
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