The Honorable Cue D. Boykin Opinion No. H-1012

Chairman Texas Industrial Accident Board Re: Whether governmental Austin, Texas 78711 bodies are exempt from tax imposed by article 8306, 9 28 onworkmen's compensation self-insurers. Dear Mr. Boykin: You have requested our opinion concerning whether governmental bodies are constitutionally exempt from thepayment of the gross premium tax imposed.by section 28of article 8306, V.T.C.S. Article 8309h, V.T.C.S., provides forworkmen's compensation forpolitical subdivisions. Section 2(a) permits such subdivisions tobecome self-insurers. Section 3(a)(1)inpart adopts section 28of article 8306. Section 28 of article 8306 provides for agross premium tax upon insurers and further states: All self-insurers under any of theWorkmen's

Compensation Acts of the State of Texas shall report to the State Board of Insurance the total amount of their medical and indemnity costs for theprevious year and pay a like amount of tax asprovided above on said total amount ofmedical and indemnity costs. Moneys received pursuant to section 28of article 8306 "shall be used by the [IndustrialAccident] Board for thepurpose Of paying costs of the administration of the law. . . ." The provisions of section 28as adopted by article 8309h clearly apply to self-insuring political subdivisions. You have asked if such an application is ccnstitutional. In State v. City of El Paso, 143 S.W.Zd 366 (Tex. 19401, the court upheld the application of amotor fuel tax to the city of El Paso. After reviewing article 8, section 1, and

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The Honorable Cue D. Boykin -page 2 (H-1012)

article 11, section 9of the Texas Constitution, the court stated: [Tjhe
. . .constitutional provisions
. . .

operate to exempt municipal corporations from only three classes of taxes. These are advalorem taxes, occupation taxes, and income taxes. Id. at 369. ical Bank &Trust Co.,>90 S.W.Zd 48 (Tex.1945)-(&%$%

Corn-, Lower Colorado River Authorit constitutional a tax upon the property of theAuthority) with -,- State v. City of El Paso, supra. The view 'expressedby the City of El Paso court has been followed. v, SanAntonio Independent School (Tex.Civ.App. -- El Paso 130 (Jan. 5, **NO.** 2v. City of --Ft. Worth 1959,writ7emn.r.e.). The tax imposed by section 28 is clearly not an ad valorem or income tax. Normay itbe classified as an occupation tax, which "is levied for the exercise of the privilege of carrying on a business." Youle v. Calvert, 348 S.W.2d 5,34,535 (Tex. Civ.App. --Austin 1961, writ ref'd n.r.e.1; Brunk v. State, 6S.W.2d 353 (Tex.Crim. App. 1927). See also-Attorney General

__ Opinion WW-204 (1957). Accordingly, the Constitution does not protect governmental bodies from its application; in our opinion self-insuring political subdivisions are liable for the taxprovided in section 28of article 8306. SUMMARY _-_-.-- Political subdivisions which are selfinsurers under article 8309h of theWorkmen's Compensation laws are liable for the tax provided in section 28of article 8306. Very truly yours,

Attorney General of Texas

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The Honorable Cue D. Boykin -page 3 ~~-1012)

APPROVED:

DAVID M. KENDALL, First Adsistant

C. ROBERT HEATH, Chairman Opinion Committee klw

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