Court Opinion

ID: 4133256
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:35:48.44032+00
Date Added: 2024-06-11T14:35:14.464157
License: Public Domain

Honorable Alex R. Tandy                            Opinion    No.     H- 122
District Attorney
Parker County                                      Re:    The power of a city to
Weatherford,    Texas 76086                               tax coin-operated
                                                          amusement     machines
                                                          designed exclusively
Dear Mr.   Tandy:                                         for children

       You have requested an opinion of this office on the question of whether
a city may tax the “coin-operated      amusement machines designed exclusively
for children, !’ specifically  excluded from the regulatory   provisions of Article
13.17, Taxation-General,      Vernon’s  Texas Civil Statutes.

      In our opinion, a city cannot impose        an occupation tax on coin-operated
amusement   machines such as you describe          because no such tax has been
imposed or authorized   by the Legislature.

      Article     8, $1, of the Constitution   of Texas   provides:

                       !I . . . provided further that the occupation tax
                levied by any county, city or town for any year on
                persons or coporations      pursuing any profession   or
                business,    shall not exceed one half of the tax levied
                by the State for the same period on such profession
                or business. ”

       This provision has been interpreted   to mean that, unless the Legislature
imposes a tax on a profession   or business,   no occupational tax can be imposed
by any county, city or town.   In Hoefling v. City of San Antonio,   20 S.W. 85,
88-89 (Tex. 1892). the Supreme Court stated:

                                        p. 590
The Honorable    Alex R.   Tandy,   page 2 (H-122)

             “Under the constitution,     the sum a municipal corpor-
             ation may collect as a tax on a given occupation can-
             not ‘exceed one half of the tax levied by the state for
             the same period on such profession        or business, ’ and
             this necessarily    involves the proposition    that the
             legislature  must determine that the occupation        shall
             be taxed for the benefit of the state before a municipal
             corporation    can tax it at all.   When the legislature    has
             declared that a named occupation        shall be taxed, and
             has fixed~the amount of the tax, then, and not before,
             has a county, city,, or town the power to tax that occu-
             potion; for the constitution     does not require occupations
             to be taxed, and only permits it when the legislature
             deems it proper. ”

This holding has been consistently        followed.

       On the other hand, if the “tax” contemplated     by the city is a legiti-
mate licensing or regulatory fee, it con be imposed.       ‘Producers   Association
of San Antonio v. Ci                      326 S.W.2d 222 (Tex. Civ.App.,       San
Antonio,  1959, error ref’d. nr r, e.); Reed v. City of Waco. 223 S.W.2d 241
(Tex. Civ. App.,   Waco, 1949, error ref’d).    In regard to the distinction be-
tween a ‘licensing fee,and an occupational   tax, the court in Producers     Asso-
ciation of San Antonio,   supra, stated:

                      “As said by the Supreme Court in Hurt v. Cooper,
             130 Tex. 433, 110 S.W.2d 896, 899, ‘It is sometimes
             difficult to determine whether a given statute should be
             classed as a regulatory      measure or is a tax measure. ’
             However,      the rule for determining   this question is well
             settled,    that if from a consideration   of the ordinance as
             a whole, the primary purpose of the fees provided for
             therein is the raising of ‘revenue, then such fees sre in
             fact occupation taxes.      On the other hand, if the primary
             purpose appears to be that of regulation,        then the fees
             imposed are license fees.        Hurt v. Cooper,    supra; city
             of Ft. Worth v. Gulf Refining Co., 125 Tex. 512, 83 S. W.

                                     p.    591
The Honorable   Alex R. Tandy,   page 3 (H-122.)

            2d 610. The word ‘revenue’ as used above means
            the amount of money which is excessive     and more
            than reasonably   necessary  to cover the cost of re-
            gulation, and not that which is necessary   to cover
            cost of inspection and regulation. ” (326 S. W. 2d
            at 224).

                                 SUMMARY

                   A city cannot impose an occupational       tax on
            “coin-operated     amusement     machines designed
            exclusively    for children, ” excluded from regulation
            under $ I(a) of Article 13.17, Taxation-General,
            V. T. C. S. ; however,    a city can impose a reason-
            able licensing or regulatory      fee on such items.

                                          Yours   very truly,

                                     //JOHN       L. HILL
                                    (/    Attorney General      of Texas

DAVID M. KENDALL,        Chairman
Opinion Commitiee

                                     p.   592