Mr.ReaganHuffmsn ~&ion No. W- 598

Chairman Liquor Regulation Coinmltlree Re: House of Representatives .~ Constitutionality H.B. 57, 56 Leg., Austin, Texas latlng to whether not the State may 

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Of
reor tax

Dear Mr. Huffman: beer sold to and oonsumed on MllltsrgReservatlons

within-the State.
We quote from your opinion request as follows:
"Pursuantto'.a

motion duly.madeand.passed by the Liquor RegulationCommittee,I am herewith submittingto you the original H.B. 57 for'

an opinion as to its constltutiona1ity. "The specificquestion involved. is whether or not the State of Texas may tax beer whloh Is sold to and consumedon Military Reservatlons within this State." Section 1 of B.B.'

57 amends Article 667-2&(d) V.P.C. to omit the exemptionand refund provisionpertaining 'to beer "shipped to any installation of the NationalMilitary Establishment,

wherein the State of Texas has ceded police jurlsdlctlon,

for consumption

by military personnelwithin 'said installation." Section 2 omits the exceptlon.of ."mllltary beer consignedto military installations" from the requirement that all beer shipped into this State be consignedto.the holder of a Manufacturer's,,General DIstrIbutorIs,

Branch Distributor's or Local Distributor'slicense,and adds the sentence2

"Nothingin this seotlonBhall prohlbit'the" holders of a Manufaoturerls, General Dlstrl-. 'butor.'s.

Branch Dlstrlbutor+s. or Looal Dlstrlbutor'sLloense to sell beer, on whloh the tax 'thereon

levied In Seotlon 2 F sio mlole raf'the Te~q~~l%~~en rid, EEdKlqrnmen Iiiiin~l~slnte. Sta~.phasls added) -- ~. :

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Mr. Reagan Huffman,page 2 (Opinion No. w-598)

Article 667-23,V.P.C., provides: "There is hereby levied and assessed a tax at the rate of $1.37 per barrel on the first zhof all beer manufactured&Texas and lmwrW-A2n this Setate." (Emphks adm mall imported into --
Title 4, U.S.C.,A., Section 105 grants to the States the power to levy and collect sales and use taxes within Federal.areas. S.ection 107(a) states that this shall not be deemed to authorize the levy or collectionoff w tax o-n or from the United States or any Instrumentality therz. or the, levy ar collectionof any tax with respect to & -- or u of tangiblepersonal. property sold orany instrumentality.thereof to,any authorlzed~~purchaser. (Section107(b) defines "authorized purchaser.")

The foregoingprovisionsare controlling. The state may not tax importations ~ofbeer by any Federal Government Instrumentality;

nor.may It tax "first sales" of beer to,.ang Government instrumentality, or by such.

Instrumentality

to "authorized

persons." w-582. See AttorneyGeneral'sOpinionNo.

The State has the authority to tax all other "importak~ tlons'. and'first sales," tions" and "first sales" regardlessof whether such "importa-,.~ occurredwithin Federal areas. For the reasons stated In the Attorney General'sOpinion cited, supra, no issue of constitutionality is raised by repeal of theexemptionand refund provisionsregardingbeer shipped to Mill? tary Establishments.

.Thespecificquestion ig~your opinion request was whether or not the State may tax beer which Is sold to and consumed on MilitaryReservations. However, Section 2 of H.B. 57 raises another issue so intimatelyrelated to this problem ,that

It must.,also

be considered,i.e., the validity ' o-f the amendment to.,Section 29 of Article 667, V.P.C. The amendment Is designed to aid collectionof the tax on beer sold to Military Establishments. Omission of the exemption of 'military

beer cons~igned

to military Installations" from the requirementthat all beer imported into the State be consigned to the holder of one of the enumeratedpermits in effect.,, requires a permit for the importationof beer into m?.litary establlshmentst In cases where~the State of Texas has ceded police jurlsdlctlon to the Unl,ted

States, the State is without, power to Issue or require the.purchaseof permits or licenses': sInbe .such

permitsnorlicenses are imposed under the State's Police Power to control~thetilcoholio beverage business. AttO* General'sOpinionNo. WW-354, O-3216. See.also Collins v. Voz'bh-.

Reagan Ruffman,.page 3

.. ,(Opinlon No..WW-598)

mite Park & Curry Company,304 U.S. 518 (1938). Since the state cannot require the licensingof a consignee within a Federal area In which police jurisdiction has been ceded, It cannot accomplishthe ssme result Indirectly by ,requlrlng

that all beer Imported Into the state be consignedto the holder of a license. Further, such a requirement would constitute

an undue Interference with Interstatecommeroe. The case of Murphy v. Dove, 249 Fed. 2d 783 (U.S. D.C. 1957, Cert.Den. 355 U.S. 9%) contains the following statementon point:

"SinceKansas does not have territorial jurisdiction

to regulate liquor In the Federal enclave ,lt

has no authorityto impose revenue measures concerningliquor which are Inseparable from such regulatoryaspects of-the~Act. The effect of what It seeks to do by the regulatory provisionsof Its 1aw.l.s to make Impossiblethe purchase 'orsale of llawr on the.Reservatlon. or Importationof iiquor in Interstate0ommerEe Into the Reservation. Such-a construction would not only place a burden on irrterstate~cosunarce of liquor to the Reservationbut would star, It ,,.,,_

Texas be respects

. Therefore,the requirementthatall beer importedInto

consigned to the holder of a license Is Inoperative as beer consignedto military establishments in which pollc~ JU??iFKliCtiOn has been ceded.

entirely. In Johnson v. Yellow CabTransl5 Com- ~~;lO~Clr., 137 F; 26 274 279 we sa&d that

state has no pow& to'forbld the transporta~l&'ln Interstatecommerce of Intoxicating liquor through Its territorial boundarles.~ and that a State r... ..has no jurlsdlotionto require or grant permits for the Importationof intoxicating liquors into.

. . ."a reservation." [Emphasis added)

The last sentence of the amended Seotlo,n 29 implicitly requires the payment of taxes on all beer sold to Federal C(overnment lnstrument~ltles. .Sucha requirement is in direct conprovision Is void.
SUMMARY

The State my not.,ta$ lmportations~

of beer by any Federal Qoverhment~Ins:trumentallty~,nor
,, ,' .;.

.

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Mr. Reagan Huffman, Page 4 (OpinionNo. W-598)

may It tax "first sales" of beer to any Government Instrumentality, or by sudh Instrumentality to any "authorized purchaser." The State has the authorityto $ax all other "importations" and "first sales regardlessof whether such "importations"

0; "first sales" occurredwithin Federal areas. The State has no power to require the licensing of consigneesof beer in Federal areas where police jurisdiction has been ceded, and cannot Indirectlyaccomplishthe same result by requiring that all beer imported into the State be consignedto the holder of a license; such a requirementis further unconstitutional as constituting

an undue Interference with interstate commerce. Therefore,the requirementthat all beer imported into Texas be consignedto 'the holder of a license is inoperative as respects beer shipped to consignees within military establishmentsin which police jurisdiction has been ceded. .~. The implicitrequirementof the iast sentence of Section 2, H.B. 57, that taxes be paid on all beer sold to Federal Government instrumentalities Is In direct contravention of the constitutional

prohibitionagainst taxation of the Federal Governmentby the State Government embodied In Title 26, U.S.C.A.,Section 107, and is void.
Yours very truly,

WILL WILSON

JNP:cm
APPROVED:
OPINION COMMITTEE: Geo. P. Blackburn;Chairman
C. Dean Davis C. K. Richards Elmer McVey Linward Shivers
REVIEWED FOR THE ATTORNEY GENERAL By: W. V. CtEPPWT