@ffice of the !ZIttornep@enera
%btateof Qexae
DAN MORALES November 17,1992
ATTORNEY
GENERAL
Honorable Bill G. Garter Opinion No. DM-182
chairman
Public Safety Committee Re: Whether Tax Code sections 154.101(h)
Texas House of Representatives and 155041(h), establishing the Tax Code as
P. 0. Box 2910 the exclusive authority for the issuance of
Austin, Texas 787682910 permits for engaging in business as a retailer
of cigarettes and other tobacco products,
preempt provisions of a city ordinance
Licensingtobacco product retailers (RQ-300)
Dear Representative Garter:
You have requested an opinion from this office as to whether sections
154.101(h) and 155041(h) of the Texas Tax Code, establishing that permits for
engaging in business as a distributor, wholesaler, bonded agent, or retailer of
cigarettes and other tobacco products shah be governed exclusively by the Tax
Code, preempt a home-rule city ordinance establishing a licensing scheme for
tobacco products retailers.
Chapters 154 and 155 of the Tax Code levy a tax on the sale of cigarettes and
other tobacco products, and establish a system for the administration, collection,
and enforcement of the tax. A crucial mechanism for the enforcement of this tax is
the requirement that all distributors, wholesalers, bonded agents and retailers of
cigarettes and other tobacco products have a permit, issued by the state treasurer, to
engage in business in their respective capacities. See Tax Code B 154.101(a). The
treasurer may deny a permit application upon finding that the applicant’s business
premises are not adequate to protect the tobacco products or revenue stamps, that
the applicant ‘has not been truthful in the permit application, or that the applicant
has previously violated provisions of the chapters. Id $# 154.107, 155.0481.
Suspension or revocation of a permit may occur if the treasurer Snds that the permit
holder violated provisions of the relevant Tax Code chapters or an administrative
p. 957
Honorable Bill G. Carter - Page 2 W-182)
rule promulgated under them. Id 00 154.114, 155.059. Recently, the legislature
amended chapters 154 and 155 to provide the following:
Permits for engaging in business as a distriiutor, wholesaler,
bonded agent, or retailer shaU be govemed er&siv& by the
pmvisiom ofthi cd?.
Tax Code 90 154.101(h), 155.041(h) (emphasis added); Acts 1991.72d Leg., ch. 409,
00 17.48 (e& June 7, KM).’
The City of Arlington has enacted Grdinancc No. 91-15, codified as the Code
of the City of Arkgto~ “Health” Chapter, Article XI (effective August 1,199l).
The ordinance is intended “to protect the health, safety, and welfare of persons
under the age of eightaan (18) from the health risks caused by tha usa of tobacco
pmdMtS.l CODE OF THE CITY OF hLU’IGTON, “Health” chapter, art x& 0 11.02
(1991). To accomplish this goal, the ordinance requires tobacco products retailers
to obtain a “tobacco dealer’s license” from the city. As you state in your briec the
licensing provisions allow the city “to prevent a retailer, by license suspansion or
revocation, from selling tobacco products after one or more instances of tobacco
sales to minors.” Once the administrator of the licensing program revokes a license
held by a retailer, that retailer must remove all tobacco products from the place of
business. Id 0 11.15(C). Failure to comply with this or other provisions of the
ordinance is punishable by a fine not to exceed S2CKtO.Id 80 11.15(D), (E),
11.16(A).
p. 958
Honorable Bill G. Carter - Page 3 0X4-182)
The City of Arlington is a home-rule city. The Texas Constitution grants
such cities all the power of self-government not qprt&y denied them by the
legislature. Tex.Cons~ar~XI,~5;CiryofLMusv.DuUurMemha~~~&
ConcessioMins Ash, 823 S.W.2d 347 (Tex, App.-Dallas 1991, writ granted). The
Texas Constitution prohibits a home-rule city from enforcing any legislation
inconsistent with state laws or the state constitutior~ Tex. Const. art. XI, 0 5. The
Texas Supreme Court has instructed that, in determining whether an ordinance is
fatally inconsistent with state law on the same subject matter, courts must seek to
construe the two in a way that will leave both in effect, if possible. Ci@ of
Richoniron v. RespondIt? Dog Owen of Tacu, 794 S.W.2d 17 (Tex 1990).
Moreover, it is well established that “legislative intent to limit the broad powers of
home-rule cities must appear with mmdstakable clarity.” Cify OfDrJIpr, 823 S.W.2d
at 353 (citing Gxpur Christi v. CiAnentul Bur Sys, 445 S.W.2d 12,17 (T&x. Civ.
App.-Austin 1%9), writ refd nxc. per curimn,453 S.W.2d 470 (‘Rx. 1970)).
The plain language of the relevant Tax Code provisions clearly demonstrates
the legislature’s intent to prohibit local governments, including home-rule cities,
from using a licensing system to regulate tobacco sales. As noted above, the Tax
Code provides that “b]ermits for engaging in [tobacco sales] shaIl be govemed
allusively @ the provisionr of this code.” Tax Code $0 154.101(h), 155.041(h)
(emphasis added). In addition, legislative history reveals that the legislature
intended to exclude local governments from the regulation of the tobacco industry
by permits. Senator Tee1 Bivins, in introducing sections 154.101(h) and 155.041(h)
before the Senate State Affairs Committee, testified as follows:
This amendment makes it clear that it is only the Treasurer’s
office who is to administer these permits and that local
govermnents are not to be involved in this permitting process.
Hearings on S.B. 689 Before the Senate State Affairs Comm, 72d Leg. (Apr. 8,
1991) (statement of Senator Tee1 Bivins) (tapes available from Senate Staff
Services). It has been suggested that the Tax Code provisions and the city ordinance
can be harmonized because although both the statute and the ordinance require a
retailer to obtain a document before selling tobacco products, the two permitting
processes address distinct governmental concerns - ic, revenue collection in the
case of the Tax Code provisions, and health regulation in the case of the city
ordinance. We believe, however, that the legislature, in enacting sections
W.lOl@) and 155.041(h) of the Tax Code, intended to vest the state treasurer with
the sole power to determine which businesses are entitled to permits to sell tobacco
p. 959
Honorable Bill G. Carter - Page 4 (m-182)
products because a dual permit system would confuse and interfere with the tax
collection process. Thus, regardless of the city ordinanc& regulatory purpose, we
believe its permitting scheme is preempted by the Tax Code.
SUMMARY
A home-rule city ordhancc, which establishes a licensing
system for the retail sale of cigarettes and other tobacco
produe is preempted by sections W.lOl(h) and 155.041(h) of
the Tax Code, which provides that permits to engage in business
as a retailer of cigarettes and other tobacco products shaIl be
governed exclusively by the Tax Code.
DAN MORALES
Attorney deneral of Texas
WILL PRYOR
First Assistant Attorney General
MARYKJXLJZR
Deputy Assistant Attorney General
RENEAHICKS
Speclal Assistant Attorney General
MADELEINE B. JOHNSON
Chair, Opinion Committee
Prepared by Mary R Croutar
Assistant Attorney General
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