. . 

Hon. Robert S. Calvert 

Comptroller of Public Accounts 

Austin, Texas Opinion No. V-1246 

Dear Mr. Calvert: 

Re: Several questions respecting 

the effective date of increases 

in &ore and mercantile establishment taxes imposed by 

House Bill No. 285, Acts 52nd 

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 Legislature 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 certain 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 paragraph 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 (including 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 exemption 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 payment. But on September 1 the new rate of $4.00 for a 

license and $1.00 for an application fee becomes effective. 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 issue ‘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 business 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 become 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 legislative history of House Bill 285 and apply the ‘rules of statutory 

construction in order to arrive at the intention of the Legislature. 

After the close of the.R:egular Session of the 51st Legislature 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 clarifying 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, created additional exemptions therefrom, provided for exemption 

certificates and fees therefor, and other changes, and provided 

for service fees, penalties, etc., in connection with the collection of the tax. 

House Bill 285 as submitted to the Senate contained 

the customary emergency clause, and the writer called the attention of the Committee to the fact that if the act was passed 

as an emergency measure there might be a period up to September 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 adjournment 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 statutes 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 establishm,ents (Sec. XVI), insurance taxes on gross premium receipts 

(Sets. XV, XVIII, and XXI), and gross receipts on motor carriers (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 ascertain 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 ascertaining the true intention oft the ~Legislature, the existing condition 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 legislation, 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 construing any statute is to ascertain from the language used in 

the statute the intention of the Legislature, and where the statute is a taxing statute. the act should be construed in connection 

with other flaws relating to the assessment and collection of taxes. 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 manifested by its history and by the emergency clause that it should 

become effective as a revenue producing measure upon its effective 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. 

v. Patterson, 121 Tex. 615, 51 S.W.2d 680 (1932). 

Popham 

Applying these rules of statutory construction to House 

Bill 285, and bearing in mind that House Bill 3 imposed an additional tax of 10% in practically all of the taxing statutes amended 

by House Bill 285, with certain exceptions above noted, the continuance 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 increase 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 upon September 1, 1951, without regard to whether the tax was payable 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 taxing 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 increased 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 Legislature in its passage was to raise additional revenues to meet 

the necessary expenditures of State governm,ent, it is our opinion that the rates of the taxing statutes contained in House Bill 

285 will become effective for, all purposes as to each of the sections 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 Article 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 difference 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 establishments 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 applicable 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 passage 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 remaining 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 application fees and exemption fees from those stores 

or mercantile establishments that came under the exemption classification to Article 111 Id for the period 

September 1 to December 31, 19517” 

<. 

Since Section XVI requires that an application for exemption be made by those coming within its exemptive provisions and the payment of exemption fees therefor, it also requires the payment of an. application fee in connection with the applications for exemption., $ince XVI in its entirety becomes effective from and after September 1, 1951, exemption fees should 

be collected from all classes of stores and mercantile establishments 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 exemption 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 Section XVI become effec,tive covering the period, from 

September. 1, 1951 to December 31, ,1951?” 

\ 

The penalty provisions of Section XVI other than the 

$5.00 service fee,_ap~-l~~~.~~~,..tn..~aewal appl~cat~ons,~an~f-therel\’ 

fore will not attach to the a,dditional license-ffees levied~ by House 

Bill 285 until after December 31, 19:,51, and then only as to renewi ! 

als. As Comptroller you are authorizedand empowered under the 

provisions of Secti,on 2(b) of Section XVI, House ,Bill,285, to promulgate 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 deposited 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,.provides that all moneys collected by the Comptroller,of Public Accounts under the provisions of the Act shall be paid into the 

State Treasury; one-fourth of which shall be credited to the accounty of, the. Available School Fund and the remainder to the account of the General Fund. Section XXV, House Bill 285, provides 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 additional license fees for stores and mercantile establishments 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 Available School Fund and the remainder to the account of 

the General Fund in the State Treasury. 

Yours very truly, 

APPROVED: 

Charles D. Mathews 

First Assistant 

Price Daniel 

Attorney General 

CKR;mf 

PRICE DANIEL 

Attorney General 

By-4 

C K. Richards 

Assistant