. .
Hon. Robert S. Calvert
Comptroller of Public Accounts
Austin, Texas Opinion No. V-1246
Re: Several questions respecting
the effective date of increases
in &ore and mercantile estab-
lishment taxes imposed by
House Bill No. 285, Acts 52nd
Dear Mr. Calvert: Legislature, 1951.
You request the opinion of this office upon the questions
presented in your letter of June 29, 1951, which’is as follows:
“Before the enactment of House Bill No. 285
of the Regular Session of the Fifty-second Legisla-
ture this department was collecting chain store taxes
under Article lllld of the Penal Code,
“Section XVI of House Bill Not 285 of the Regular
Session of the Fifty-second Legislature am.ends cer-
tain sections of Article 111 Id by increasing the amount
of the application fee, the amount of the license, and
bringing in a fee for exempted stores. The last para-
graph of Section XVI reads as follows:
Q ‘(d) All fees listed above are for a period of
twelve (12) months, Upon the issuance of any license
after the first day of January of any one year for the
remainder of the year, there shall be collected such
fractional part of the license fee hereinabove fixed
as the remaining months in the calendar ytar (includ-
ing the month in which such license is issued) bears
to the twelve (12) month.period.’
“House Bill No. 285 carried an emergency clause
and received the required number of votes to make it
become effective immediately. However, the emergency
. .
Hon. Robert S. Calvert, Page 2 (V-1246)
clause carries the following provision:
ti ‘The crowded condition of the calendar creates
anemergency and an imperative public necessity that
the constitutional rule requiring bills to be read on
three several days in each House be suspended, . . .
and this Act shall take effect and be in force from and
after the first day of September, A.D. 1951.’
“It follows, therefore, that Section XVI becomes
effective September 1, 1951. I shall thank you to give
me answers to the following questions:
“1. Does Section XVI require the collection on
the increased rate of the application fees and license
fees for the period of September 1, 1951 to December
31, 1951 on those stores or mercantile establishments
that have been issued licenses for the year 1951 under
Article 111 Id of the Penal Code ?
“2. Does Section XVI require the collection of
application fees and exemption fees from those stores
or mercantile establishments that came under the ex-
.~’
emption classification to Article 111 Id for the period
September 1 to December 31, 19517
“3. On what date will the penalty provision of
Secti,on XVI become effective covering the period from
September 1, 1951 to December 31, 19517
“4. To what fund will the penalties collected be
deposited in the State Treasury ?
“For example: A store operator, on January 1,
1951, paid the store tax and license fee for the year
1951, of $1.58. On September 1, 1951 two-thirds of
the year will have been earned under this license pay-
ment. But on September 1 the new rate of $4.00 for a
license and $1.00 for an application fee becomes effec-
tive. What does this store operator owe on application
and license fees on September 1, 1951?
“Under Section XVI of House Bill No. 285, if a
store operator is delinquent in the payment of his 1951
. .
Hon. Robert S. Calvert, Page, 3 (V-1246)
additional application and license fee, can a license is-
sue ‘to him for the year 1952 before these additional
fees have been paid ?~ Would the same rule apply to the
issuance of an exemption certificate to a place of busi-
ness exempted under the statute? In answering these
~. two questions reference is made to the last paragraph
of 111 Id of the Penal ‘Code, as amended by the Acts of
the First Called Session of the Fiftieth Legislature,
Section 5;:
To answers your questions we must ascertain (1) the
date upon which the Legislature intended House Bill 285 to be-
come effective, and (2) the intention of the Legislature as to
whether all the tax rates prescribed therein bgcame operative
upon that date. It is therefore necessary to set forth the legis-
lative history of House Bill 285 and apply the ‘rules of statutory
construction in order to arrive at the intention of the Legisla-
ture.
After the close of the.R:egular Session of the 51st Legis-
lature in 1949, it became apparent that the revenues to be collected
under the rates provided in the taxing statutes then in effect’would
be insufficient to meet thenecessary current expenditures of the
State for the biennium ending August 31, 1951, and in order to avert
the deficit forecast by the Comptroller and to provide sufficient
funds for the operation of the State Hospitals and Special Schools,
the Legislature was called into Special Session for the purpose of
enacting tax legislation to raise revenues ins an amount sufficient
to avert the deficit and provide for the needs of the State Hospitals
and Special Schools. House Bill 3, adopted by the Legislature at
the Special Session (Acts 51st Leg., 1st C.S. 1950, ch. 2, p. 10)
provided for an additional tax,of 10% of the basic levies of all the
taxing statutes, with certain exceptions not here pertinent, such
additional tax to be in effect for the years 1950 and that part of
1951 ending on August 31st. The revenues derived therefrom
were allocated to the State Hospital Fund with the exception of
the portion required by Section 3, Article VII of the Constitution
of Texas to be set apart for the benefit of the public free schools.
At the Regular Session of the 52nd Legislature in 1951,
House.Bill 285, as introduced in its original form, provided for
a continuation of the taxing statutes therein contained at the rates
then in .effect and contained the customary form of emergency
clause. Whilein committee, the original bill was amended, as a
:; , .
Hon. Robert S. Calvert, Page 4 (V-12,46)
whole by increasing the basic rate of all of the taxing statutes
by lo%,, using practically the identical language contained in
House Bill 3 with certain exceptions for the purpose of clarify-
ing the application of the increased rate. The amended bill alao
carried- an emergency clause, The amended bill was amended
thereafter by striking certain sections therefrom relating to the
tax upon stores and mercantile establishments and substituting
therefor the provisions of Section XVI of the present act. With
certain other amendments not pertinent to this opinion, House
Bill 285 was then passed by the House and sent to the Senate
where it was ‘referred to a subcommittee of the Committee on
State Affairs.
The Senate subcommittee called upon this office for
assistance in ch,ecking the provisions of House Bill 285, and the
writer of this opinion was present with the Senate Committee
for that purpose; Among the objectives of the Committee was
the checking of House Bill 285 for the purpose of ascertaining
that the 10% increase of the basic tax rates of all of the taxing
statutes had been figured correctly. This check was made by
comparison of the basic tax statute with the additional 10%
tax provided by House Bill 3, and where the language in House
Bill 3 was inconsistent with the language of the original statutes
the language of House Bill 285 was carefully checked so that
.
the 10% increase should be clear and unmistakable. The sole
exception to the languag’e raising the basic rate of 10% was
found in Article XVI which raised the basic rate of the tax on
stores and mercantile establishments in excess of 105, cre-
ated additional exemptions therefrom, provided for exemption
certificates and fees therefor, and other changes, and provided
for service fees, penalties, etc., in connection with the collec-
tion of the tax.
House Bill 285 as submitted to the Senate contained
the customary emergency clause, and the writer called the at-
tention of the Committee to the fact that if the act was passed
as an emergency measure there might be a period up to Septem-
ber 1, 1951, when the taxpayer would be paying two 10% increases,
one under House Bill 3 and the other under House Bill 285. As
an alternative, if the act took effect ninety days after the adjourn-
ment of the Legislature without an emergency clause, there might
be a period between September 1, 1951, and the effective date of
the act when the 10% increase would not be effective and the taxes
would be levied at the rate provided in the taxing statutes prior
- .
Han Robert S& Calvert, qage 5 (V-1246)
to their amendment by.House Bill 285. The Committee then
stated &t Article XXV &nitaining the emergency clause should
be amended so as to pro&de that.House Bill. 285 should become
effective from and after September 1, 1951,. in, order to insure
continuance of the 10% additional taxprovided by House Bill 3.
The Senate Committee adopted a substitute bill’for
House Bill 285 which increased. the basic rate of all taxing stat-
utes by 105, changed the emergency clause (Sec. XXVII) so that
the act should become effective from and after September 1,
1951, repealed certain portions of House Bill 3, and contained
other amendments to House Bill 285 which are not pertinent to
this opinion. The substitute bill was passed by the Senate,
and the House refusing to concur in ,the Senate amendments,
House Bill 285 was referred, to a joint conference committee
of the House and Senate. In this connection, House Bill 285 as
finally passed. is almost identical with the Senate substitute in
so far as the taxes levied on stores and mercantile establish-
m,ents (Sec. XVI), insurance taxes on gross premium receipts
(Sets. XV, XVIII, and XXI), and gross receipts on motor car-
riers (Sec. XIII). The basic rate of the franchise tax statute,
Article 7084, Revised Civil Statutes, was raised from $1.00
to $1.25 by the conference committee (Sec. IX).
In construing a statute, the cardinal rule is to ascer-
tain the intention of the Legislature in enacting the law. This
intention, once ascertained, must be enforced although it may
not be consistent with the strict letter of the statute. In ascer-
taining the true intention oft the ~Legislature, the existing condi-
tion of the law at ,the time of i&enactment and :the,general.rules
then established and applicable to its subject matter should be
considered. States v. Dyer, 145 Tex. 586, 200 S.W.2d 813 (1947).
If the language used, in the, act leaves its intent obscure, the
courts may resort to certain aids in construction suc,h as the
purpose sought to be accomplished, the history of the legisla-
tion, and the public policy of the State. Harris v. City of Fort
Worth, 142 Tex. 608, 180 S,W.2d 131 ~(1944).. The object in con-
struing any statute is to ascertain from the language used in
the statute the intention of the Legislature, and where the stat-
ute is a taxing statute. the act should be construed in connection
with other flaws relating to the assessment and collection of tax-
es. White v. lvlc.Gill, 1.31 Tex., 231, 114 S.W..2d 860~(1938). The
Legislature is free to fix in each act the time it, as a whole or
in part, shall take effect, and may therefore provide that it shall
Hon. Robert S Calvert, Page 6 (V-1246)
take effect in whole or in part from its passage, approval, or
at a fixed date. Chambers v. Baldwin, 274 S.W. 1011 (Tex. Civ.
App. 1925). The intention of the Legislature being clearly mani-
fested by its history and by the emergency clause that it should
become effective as a revenue producing measure upon its ef-
fective date, that intention should’ control. Texas Co. v. Stephens,
100 Tex. 628, 103 S.W. 481 (1900). In determining the legislative
intent, the entire act should be looked to and this includes the
caption, the body of the act, and the emergency clause. Popham
v. Patterson, 121 Tex. 615, 51 S.W.2d 680 (1932).
Applying these rules of statutory construction to House
Bill 285, and bearing in mind that House Bill 3 imposed an ad-
ditional tax of 10% in practically all of the taxing statutes amended
by House Bill 285, with certain exceptions above noted, the con-
tinuance of the 10% increase in effect after the expiration date of
House Bill 3 on August 31, 1951, makes it a reasonable conclusion
that the Legislature intended to carry the 10% increase into effect
for the entire calendar year 1951 except in cases where such in-
crease was specifically repealed. Construing all of the provisions
of,House Bill 285 together, the intendment was to keep the 10%
additional levy except where the basic levy of the taxing statute
was raised, in which case the increase was to become effective up-
on September 1, 1951, without regard to whether the tax was paya-
ble in advance upon an annual, quarterly, or monthly basis.
To permit certain sections of House Bill 285 to become
effe&ive upon dates other than September 1, 1951, because the
taxes might be payable upon an annual or quarterly basis which
had been paid in advance prior to the effective date of the act and
to continue such sections in effect at the rate provided in the tax-
ing statute prior to amendment and after the lapse of House Bill
3 would not only be discriminatory but would thwart the intention
of the Legislature.
In Mann v. Gulf States Utilities Co., 167 S.W.2d 55.7 (Tex.
Civ..App. 1942, error’ ref.) the.Court:held:
“An occupation or excise tax may be, increased
during the year in which it is payable, or may be in-
creased at any time before the expiration of the period
for the enforcement of the tax, although the tax first
levied or fixed has been paid in advance.”
Hon. Robert S. Calver&Page 7 (V-1246)
In the same case the,~Qurt.said,
6.
. . . To hold that the Le&lat&e intended that
the amended act should .becopq.effective on July 1,
1941, would render nugatory the specific intenti~on of
the Legislature to make:the amended act effective on
May 1, 1941, as expressed in the act. . .,”
In view,of the.legislative history
.~ of House @ill 285 and
taking into consideration that the manifest intention of the Legis-
lature in its passage was to raise additional revenues to meet
the necessary expenditures of State governm,ent, it is our opin-
ion that the rates of the taxing statutes contained in House Bill
285 will become effective for, all purposes as to each of the sec-
tions therein contained from, and after September 1, 1951.
Your first question is:
“Does Section XVI require the collection on the
increased rate of the application fees and license fees
for the period of September 1, 1951 to December 31,
1951 on those stores or mercantile establishments that
have been issued licenses for the year 1951 under Arti-
cle 111 Id of the Penal Code ? *
Its is clear that the Legislature intended by the adoption
of House Bill 3 at the Special Session in 1950, and House Bill 285
at the Regular Se,ssion in ,1951,, that the license fees collected for
1951 would be those prescribe in Article ,111 Id, Vernon’s Penal
Code, plus,two-thirds of 10% thereof, plus one-third of the dif-
ference between the .rates prescribed, in Article 11 lld and those
prescribed in House Bill 285, It,was manifestly the legislative
intent to increase the license fees on stores and mercantile es-
tablishments in order to pay the incre,ased’cost of government
and avoid a deficit in the State’s General Revenue Fund, thereby
keeping the State on a cash b,asis in accordance with the ,mandate
expressed in Se&ion, 49a of, Article III of the Constitution of Texas.
If the Legislature had.desired, to make. the provisions of
SectionXVI effective so that,the increased fees would only be ap-
plicable for the, licenses issued on January 1, 1952,,nnd thereafter,
it could have sp,ecifically~provided ther,efor in.the statute. Ca
bers v. Baldwin, supra. This it did not do.
Hon. Robert S. Calvert, Page 8 (V-1246)
In Mann v. Gulf States Utilities Co., supra, the Court
said, in discussing the case of Texas Co. v. Stephens, supra.
.I
. . . The Court heid that in view of the evident
intention of the Legislature, and the fact that the act
was passed with the emergency clause, it took effect
from the date of its passage, and imposed the tax for
the fraction of the quarter between the date of the pas-
sage of the act and the end of the first quarter fixed by
the act.”
The Court also said,
.I . . . A mere mathematical calculation would
determine the portion of the quarter period remain-
ing after the effective date of the act, . . . W
: ,,,
Applying the rule stated ‘in the Mann case, Section XVI
of House Bill 285 requires the collectiononr after September
1, 1951, of additional license fees for the last four months of the
year 1951, as follows: one-third of the difference between the
fees levied under Article Illld, Vernon’s Penal Code, and those
levied by House Bill 285.
Your second question is:
“Does Section XVI require the collection of ap-
plication fees and exemption fees from those stores
or mercantile establishments that came under the ex-
emption classification to Article 111 Id for the period
September 1 to December 31, 19517”
Since Section XVI requires that an application for ex-
<.
emption be made by those coming within its exemptive provi-
sions and the payment of exemption fees therefor, it also re-
quires the payment of an. application fee in connection with the ap-
plications for exemption., $ince XVI in its entirety becomes ef-
fective from and after September 1, 1951, exemption fees should
be collected from all classes of stores and mercantile establish-
ments named in subsection 5 of Section XVI, House Bill 285J
which were exempt thereunder on September 1, 1951, for the last
four months of the year 1951 as follows: one-third of the exemp-
tion fees levied by Section XVI, House Bill 285.
Hon. Robert S. Calvert, Page 9 (V-1246)
Your third question is:
“On what date will ,the penalty provision of Sec-
tion XVI become effec,tive covering the period, from
September. 1, 1951 to December 31, ,1951?”
\
The penalty provisions of Section XVI other than the l\’
$5.00 service fee,_ap~-l~~~.~~~,..tn..~aewal appl~cat~ons,~an~f-there-
fore will not attach to the a,dditional license-ffees levied~ by House
i
Bill 285 until after December 31, 19:,51, and then only as to renew- !
als. As Comptroller you are authorizedand empowered under the
provisions of Secti,on 2(b) of Section XVI, House ,Bill,285, to pro-
mulgate regulat,ions to apply for the collection of, the ,amount of
license and application fees due under the provisions of House Bill
285 ,and on the effective date thereof. Under such rule making
power’as Comptroller you~could require payment of the additional
fees for the balance of the y.ear~ 1951 on September 1, 1951, or any
date subsequent thereto which you may deem reasonable and proper.
Your fourths question is as follows:
“To what fund will the penaltie~s collected be depos-
ited in the State Treasury?”
The sole penalty provision contained in Section XVI is
the 5% penalty added to the amount of the license fee where the
taxpayer fails to make application for license on the due date
thereof. Section 9 of Article lllld, Vernon’s Penal Code,.pro-
vides that all moneys collected by the Comptroller,of Public Ac-
counts under the provisions of the Act shall be paid into the
State Treasury; one-fourth of which shall be credited to the ac-
county of, the. Available School Fund and the remainder to the ac-
count of the General Fund. Section XXV, House Bill 285, pro-
vides that except as otherwise provided in the act, the taxes
levied~ shall be allocated a.$ provided by Article XX; House Bill
8, Acts, 47th Leg., 1941, ch. 84, p. 269, and any amendments
thereto. However, Article XIX of House Bill 8, Acts of the 47th
Legislature, which amended Section 5, Article lllld, Vernon’s
Penal Code, provided that the taxes levied by Article lllld
should be allocated as provided therein. Since the 5% penalty
is a part of’the tax, one-fourth of all penalties should be credited
by the State Treasurer to the account of the Available School
Fund and the remainder to the account of the General Fund.
Hon. Robert S. Calvert, Page 10 (V-1246)
SUMMARY
The provisions of House Bill 285 require the
collection on or after September 1, 1951, of addi-
tional license fees for stores and mercantile estab-
lishments for the last four months of the year 1951,
of one-third of the difference between the fees levied
under Article lllld, V.P.C., and those levied by H.
B. 285. Exemption fees should be collected from all
classes of stores and mercantile establishments
named in subsection 5 of $ec.7 I, H.B. 285, which
” “were exempt therCundei%n S # ember 1, 1951, on
the basis of one-third of the exemption fees levied
by Sec. XVI, H.B. 285. The penalty provisions of
Sec. XVI, other than the $5.00 service fee, apply only
to applications for renewal of license, and therefore
will not attach to the additional license fees levied
by H.B. 285 until after December 31, 1951. The
penalties collected under Section XVI of H.B. 285
are allocated one-fourth to the account of the Avail-
able School Fund and the remainder to the account of
the General Fund in the State Treasury.
Yours very truly,
APPROVED: PRICE DANIEL
Attorney General
Charles D. Mathews
First Assistant
By-4
Price Daniel C K. Richards
Attorney General Assistant
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