. .

Hon. Robert S. Calvert Comptroller of Public Accounts Austin, Texas Opinion No. V-1246

Dear Mr. Calvert: Re: Several questions respecting the effective date ofincreases in &ore and mercantile establishment taxes imposed by House Bill No. 285, Acts 52nd Legislature, 1951.

You request the opinion ofthis office upon the questions presented inyour letter of June 29, 1951, which’is as follows:

“Before the enactment of House Bill No. 285 ofthe Regular Session ofthe Fifty-second Legislature this department was collecting chain store taxes under Article lllld ofthe Penal Code,

“Section XVI 

### ofHouse Bill Not 285 ofthe Regular Session ofthe Fifty-second Legislature am.ends certain sections ofArticle 111Id by increasing the amount ofthe application fee, the amount ofthe license, and bringing in a fee for exempted stores. The last paragraph ofSection XVI reads as follows:
Q‘(d) All fees listed above are for aperiod of twelve (12) months, Upon the issuance of any license after the first day of January ofany one year for the remainder ofthe year, there shall be collected such fractional part ofthe license fee hereinabove fixed
as the remaining months in the calendar ytar (including the month inwhich such license is issued) bears to the twelve (12) month.period.’
“House Bill No. 285 carried an emergency clause and received the required number 

### ofvotes 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 ofthe 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. Ishall thank you to give
me answers to the following questions:

“1. Does Section XVI require the collection on the increased rate ofthe 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 111Id ofthe 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 toArticle 111Id for the period September 1to December 31, 19517 .~’

“3. Onwhat 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 inthe 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 1the 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 onSeptember 1, 1951?
“Under Section XVI of House Bill No. 285, if a store operator is delinquent inthe payment ofhis 1951. .

Hon. Robert S. Calvert, Page, 3(V-1246)

additional application and license fee, can alicense issue ‘tohim for the year 1952 before these additional fees have been paid?~ Would the same rule apply to the issuance of an exemption certificate to aplace ofbusiness exempted under the statute? Inanswering these

~. two questions reference is made to the last paragraph of 111Id ofthe Penal ‘Code, as amended by the Acts of the First Called Session ofthe Fiftieth Legislature, Section 5;:

To answersyour questions we must ascertain (1) the date upon which the Legislature intended House Bill 285 to become effective, and (2) the intention ofthe Legislature as to whether all the tax rates prescribed therein bgcame operative upon that date. Itis therefore necessary to set forth the legislative history of House Bill 285 and apply the ‘rules of statutory construction inorder to arrive atthe intention ofthe Legislature.
After the close ofthe.R:egular Session ofthe 51st Legislature in 1949, it became apparent that the revenues to be collected under the rates provided inthe taxing statutes then in effect’would be insufficient to meet thenecessary current expenditures ofthe State for the biennium ending August 31, 1951, and in order to avert the deficit forecast by the Comptroller and toprovide sufficient funds for the operation ofthe State Hospitals and Special Schools, the Legislature was called into Special Session for the purpose of enacting tax legislation to raise revenues insanamount sufficient to avert the deficit and provide for the needs oftheState 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% ofthe 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 onAugust 31st. The revenues derived therefrom
were allocated to the State Hospital Fund with the exception of the portion required by Section 3, Article VII ofthe Constitution of Texas to be set apart for the benefit ofthe public free schools.

At the Regular Session ofthe 52nd Legislature in 1951, House.Bill 285, as introduced in its original form, provided for
acontinuation ofthe 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 ofthe taxing statutes by lo%,, using practically the identical language contained in House Bill 3with certain exceptions for the purpose of clarifying the application ofthe 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 ofSection XVI ofthe present act. With certain other amendments not pertinent to this opinion, House Bill 285 was then passed by the House and sent to theSenate where itwas ‘referred to asubcommittee ofthe Committee on State Affairs.

The Senate subcommittee called upon this office for assistance in ch,ecking the provisions 

### ofHouse Bill 285, and the writer ofthis opinion was present with the Senate Committee for that purpose; Among the objectives ofthe Committee was the checking ofHouse Bill 285 for the purpose of ascertaining that the 10% increase ofthe basic tax rates of all ofthe taxing statutes had been figured correctly. This check was made by comparison ofthe basic tax statute with the additional 10% tax provided by House Bill 3, andwhere the language inHouse Bill 3was inconsistent with the language ofthe 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 inArticle XVI which raised the basic rate ofthe 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 ofthe tax.

House Bill 285 as submitted to the Senate contained the customary emergency clause, and the writer called the attention ofthe Committee to the fact that if the act was passed
as an emergency measure there might be aperiod upto September 1, 1951, when the taxpayer would be paying two 10% increases, one under House Bill 3and the other under House Bill 285. As
an alternative, ifthe act took effect ninety days after the adjournment ofthe Legislature without an emergency clause, there might be aperiod 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 inthe 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 topro&de that.House Bill. 285 should become effective from and after September 1, 1951,. in,order to insure continuance ofthe 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 ofHouse 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,theSenate amendments, House Bill 285 was referred, to ajoint conference committee ofthe House and Senate. Inthis 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 ofthe franchise tax statute, Article 7084, Revised Civil Statutes, was raised from $1.00 to $1.25 by the conference committee (Sec. IX).

Inconstruing a statute, the cardinal rule is to ascertain the intention ofthe Legislature in enacting the law. This intention, once ascertained, must be enforced although it may not be consistent with the strict letter ofthe statute. Inascertaining the true intention oftthe~Legislature, the existing condition ofthe law at,thetime of i&enactment and:the,general.rules then established and applicable to its subject matter should be considered. Statesv. Dyer, 145 Tex. 586, 200 S.W.2d 813 (1947). Ifthe language used, inthe,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 ofthe legislation, and the public policy ofthe State. Harris v. City of Fort Worth, 142 Tex. 608, 180 S,W.2d 131 ~(1944).. The object inconstruing any statute is to ascertain from the language used in the statute the intention ofthe Legislature, andwhere the statute is ataxing statute. the act should be construed in connection with other flaws relating tothe assessment and collection oftaxes. White v. lvlc.Gill, 1.31Tex., 231, 114 S.W..2d 860~(1938). The Legislature is free to fix in each act the time it, as awhole or inpart, shall take effect, and may therefore provide that it shallHon. Robert S Calvert, Page 6 (V-1246)

take effect inwhole or inpart from its passage, approval, or at afixed date. Chambers v. Baldwin, 274 S.W. 1011 (Tex. Civ. App. 1925). The intention ofthe Legislature being clearly manifested by its history andby 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). Indetermining the legislative intent, the entire act should be looked to and this includes the caption, the body ofthe 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, andbearing inmind that House Bill 3imposed an additional tax of 10% inpractically all ofthe taxing statutes amended by House Bill 285, with certain exceptions above noted, the continuance ofthe 10% increase in effect after the expiration date of House Bill 3onAugust 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 ofthe provisions of,House Bill 285 together, the intendment was to keep the 10% additional levy except where the basic levy ofthe taxing statute was raised, inwhich case the increase was to become effective uponSeptember 1, 1951, without regard towhether 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 ofthe act and to continue such sections in effect atthe rate provided inthe taxing statute prior to amendment and after the lapse ofHouse Bill 3would not only be discriminatory butwould thwart the intention ofthe Legislature.

InMann 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 inwhich itis payable, or may be increased at any time before the expiration ofthe period for the enforcement ofthe tax, although the tax first levied or fixed has been paid in advance.”Hon. Robert S. Calver&Page 7 (V-1246)

Inthe 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~onof the Legislature to make:the amended act effective on May 1, 1941, as expressed inthe act.

. .,”

Inview,of the.legislative history of House @ill 285 and .~ taking into consideration that the manifest intention ofthe Legislature in its passage was to raise additional revenues to meet the necessary expenditures ofState governm,ent, it is our opinion that the rates ofthe taxing statutes contained inHouse Bill 285 will become effective for, all purposes as to each ofthe sections therein contained from, and after September 1, 1951.

Your first question is:
“Does Section XVI require the collection onthe increased rate ofthe application fees and license fees for the period ofSeptember 1, 1951 to December 31, 1951 onthose stores or mercantile establishments that have been issued licenses for the year 1951 under Article 111Id ofthe Penal Code ?*

Itsis clear that the Legislature intended by the adoption ofHouse Bill 3atthe Special Session in 1950, and House Bill 285 atthe Regular Se,ssion in,1951,, that the license fees collected for 1951 would be those prescribe inArticle ,111Id, Vernon’s Penal Code, plus,two-thirds of 10% thereof, plus one-third ofthe difference between the .rates prescribed, inArticle 11lld and those prescribed inHouse 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 adeficit inthe State’s General Revenue Fund, thereby keeping the State on a cash b,asis inaccordance with the,mandate expressed in Se&ion, 49a of,Article IIIoftheConstitution of Texas.

Ifthe 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)

InMann v. Gulf States Utilities Co., supra, the Court said, indiscussing the case of Texas Co. v. Stephens, supra.

.I

. . . The Court heid that in view ofthe evident intention ofthe 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 ofthe quarter between the date ofthe passage ofthe act and the end ofthe first quarter fixed by the act.”
The Court also said,
.I

. . .A mere mathematical calculation would determine the portion ofthe quarter period remaining after the effective date ofthe act,

. . .W
: ,,, Applying the rule stated ‘inthe Mann case, Section XVI ofHouse Bill 285 requires the collectiononr after September 1, 1951, of additional license fees for the last four months ofthe year 1951, as follows: one-third ofthe 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 111Id for the period September 1to 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 5ofSection XVI, House Bill 285J which were exempt thereunder on September 1, 1951, for the last four months ofthe year 1951 as follows: one-third ofthe 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 ,thepenalty provision ofSection XVI become effec,tive covering theperiod, 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 ofSecti,on 2(b) ofSection 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 ofHouse Bill 285 ,andonthe effective date thereof. Under such rule making power’as Comptroller you~could require payment ofthe additional fees for the balance ofthe y.ear~1951 onSeptember 1, 1951, or any date subsequent thereto which you may deem reasonable and proper.

Your fourthsquestion is as follows:

“To what fund will the penaltie~s collected be deposited in the State Treasury?”
The sole penalty provision contained inSection XVI is the 5% penalty added to the amount ofthe license fee where the taxpayer fails to make application for license onthe due date thereof. Section 9ofArticle lllld, Vernon’s Penal Code,.provides that all moneys collected by the Comptroller,of Public Accounts under the provisions ofthe Act shall be paid into the State Treasury; one-fourth ofwhich shall be credited tothe accountyof, the.Available School Fund and the remainder to the account ofthe General Fund. Section XXV, House Bill 285, provides that except as otherwise provided inthe 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 ofHouse Bill 8, Acts ofthe 47th Legislature, which amended Section 5, Article lllld, Vernon’s Penal Code, provided that the taxes levied byArticle lllld should be allocated as provided therein. Since the 5% penalty is apart of’the tax, one-fourth of all penalties should be credited by the State Treasurer to the account ofthe Available School Fund andthe remainder to the account ofthe General Fund.Hon. Robert S. Calvert, Page 10 (V-1246)

SUMMARY
The provisions ofHouse 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 ofthe year 1951, of one-third ofthe 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 5of $ec.7 # I, H.B. 285, which ”“were exempt therCundei%n S ember 1, 1951, on the basis of one-third ofthe 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 oflicense, 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 ofthe 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-4C K. Richards

Assistant