NE
EXAS
PRICE DANIEL
ATTORNEYGF.NER.4,.
November 17, 1948
Hon. Get. H. Sheppard Opinion No. V-718
Cmnptrdler of Public Accounts
Austin, Texas Re: The applicability of the
luxury excise tax on
gross receipts from
sales of radios, cosmet-
ics, and playing cards to
such sales by co-operative
marketing associations.
Dear Mr. Sheppard :
You request an opinion upon the following question:
“It has come to the attention of this department
that certain stores under the Marketing Association
Act, known as Chapter 8, Title 93, Revised Civil
Statutes of Texas, ,1925, are selling radios, cosmet-
ics, and playing cards, Are such stores required to
pay the gross receipts tax levied under Article 7047L.
R.C.S.. 1925. I shall thank you to advise this depart-
ment in answer to this question.”
We quote below the following pertinent provisions of
Title 93, Ch. 8,,V.C.S., commonly known as “The Marketing As-
sociation Act.” Article 5737 of this Act provides:
“In order to promote, foster and encourage the
intelligent and orderly production, cultivation and
care of citrus groves and marketing through coop-
eration and to eliminate speculation and waste; and
to make production and distribution of agricultural
products as direct as can be effectively done be-
tween the producer and consumer; and to stabilize
the production and marketing problems of agricul-
tural products, this law is passed.”
Article 5738 provides in part:
“The term ‘agricultural products’ shall include
horticultural, viticultural, forestry, dairy, live stock,
poultry, bee, and any farm and ranch products; . . .”
Hon. Geo. H; Sheppard, Page 2 (V-718)
Article 5740 provides in part:
“An Association may be organized to engage in
any activity in connection with the production, culti-
. vation and care of citrus groves or the marketing or
selling of agricultural products and citrus fruits pro-
duced by and marketed for its members, or in the
harvesting, preserving, drying, processing, canning,
storing, handling, shipping or utilization thereof, or
the manufacturing or marketing of the by-products
thereof; or in connection with the manufacturing,
selling, or supplying to its members of machinery,
equipment or supplies; or in the financing of the
above enumerated activities; or in any one or more
of the activities specified herein. Provided, how-
ever, any such activities may extend to non-members
and to the production, cultivation and care of lands
owned or cultivated by them and their products lim-
ited by Article 5738 as heretofore amended.”
Article 5742 provides in part:
“(a) To engage in any activity in connection with
the production, cultivation and care of citrus groves
and the marketing, selling, harvesting, preserving,
drying, processing, canning, pa.cking, storing, han-
dling or utilization of any agricultural products pro-
duced or delivered to it by its members, or the pro-:
duction, manufacturing or marketing of the by-prod-.
ucts thereof; or in connection with the purchase, hir-
ing or use by its members of supplies, machinery or
equipment; or in the financing of any such activities;
or in any one or more of the activities specified in
this Article.
Article 5764 provides:
“Each association organized hereunder shall pay
to th4 Cemmissioner an annual license fee of, ten dol-
lars Wit shall be exempt from all franchise or license
taxeg. For filing articles of incorporation, an asso-
ciatioar organiaed hereunder shall pay ten dollars,
and fer filing an amendment thereto, two dollars and
my ccats. w
It is observed that the foregoing Article 5737 is merely
a legislative declaration of public pи that Article 5742 defines
Hon. Geo. H. Sheppard,, Page 3 (V-718)
the powers of such associations; that Article 5740 defines the
purposee of such associations; and that Article 5764 provides
for a very limited exemption from taxation of such associations,
namely, franchise or license taxes.
It seems quite obvious to us that the sale of radios,
cosmetics, and playing cards is in no way remotely connected
with the powers and purposes for which such associations are
authoriaed. In brief, the sale of such articles is in no way rel-
evant to the powers and purposes, all closely allied to the pur-
suit of agriculture, as expressed in the foregoing Articles of
the statute. That farmer members of such associations might
be able to purchase these articles at the association’s stores
upon more favorable terms than elsewhere, if such be the case,
adds nothing to the statutory and charter powers of such asso-
ciations. It was not the intention of the Legislature that these
‘associations, formed and carried on for the express purpose
of aiding the vital industry of agriculture and those engaged in
its pursuit, should enjoy an advantage, wholly foreign to the
benevolent purposes of this legislation.
The statute imposing a tax upon persons, partnerships,
associations, or corporations selling at retail new radios, cos-
metics, and playing cards as provided in Article 7047L, V.C.S.,
is as follows:
“Each person, partnership, association, or cor-
poration selling at retail new radios or new cosmet-
ics, shall make quarterly on the first days of January,
April, July, and October of each year, a report to the
Comptroller, under oath of the owner, manager, or if
a corporation, an officer thereof, showing the aggre-
gate gross receipts from the sale of any of the above-
nunad items for the quarter next preceding; and shall
at the same time pay to the Comptroller a luxury ex-
cise tax equal to two (2) per cent of said gross receipts
as shown by said report.
“Evary person, partnership, association, or cor-
poration, selling at retail; playing cards shall make
quarterly report as provided above showing the total
number of packs or decks of such cards sold during
the preceding quarter, and shall at the same time pay
to the Comptroller a luxury excise tax of five (5) cents
per pack or deck of such playing cards so sold.
This is clearly a taxing statute, enacted solely for the
purpose of raising reverue, and is in no sense a regulatory meas-
ure. The Legislature has denominated it “a luxury excise tax.”
.*
H-. Gee. H. Sheppard, Pagei 4 (v-718)
The exemption from taxation accorded marketing ae~sociations
applies only to franchise or license taxes. In view of the prem-
ise upon which we predicate our opinion, no useful purpose
would be served to attempt to analyee what constitutes fran-
chise, license, and excise taxes, The books are replete with
decisions, by no means harmonious, pointing out the common
characteristics and distinctions of these taxes. Neither the
similarity nor difference between what the Legislature has
here called an excise tax and a franchise or license tax is
material if, in any event, liability for the tax exists because
it falls upon those engaged in ultra vires transactiona not
covered by the exemption expressed in the statute, Conven-
tional rules of statutory construction require a strict construc-
tion of statutes exempting persons and property from taxation.
As to those transactions outside,the scope of the purposes and
powers of such associations, such as the sale of radios, cos-
metics, and playing cards, there is no reason why the tax aris-
ing from such transactions should not apply in the same man-
ner as to other dealers in general.
We therefore conclude that the tax imposed by Arti-
cle 7047L, V.C.S., supra, should be paid by marketing asso-
ciations selling radios, cosmetics, and playing cards-activi-
ties clearly beyond the charter powers conferred upon such as-
sociations as defined by statute; and Article 5764 of the Market-
ing Association Act quoted above affords no basis for exemption
from the payment of such tax.
SUMMARY
Marketing associations incorporated under the
terms of what is commonly known as The Marketing
Association Act, Ch. 8, Title 93, V.C.S., are not ex-
empt from the tax imposed by Art. 7047L on radios,
cosmetics, and playing cards, as the sale of such
articles is not authorized under the terms of said
Act; and the exemption from franchise and license
taxes provided in Art. 5764 of said Act does not op-
erate to relieve such association from the payment
of the tax imposed by said Article.
Very truly yours
APPROVED: ATTORNEYGENERALOFTEXAS
Assistant
LPL/JCP