.   .




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

                                             Re:   Several questions respecting
                                                   the effective date of increases
                                                   in &ore and mercantile    estab-
                                                   lishment taxes imposed by
                                                   House Bill No. 285, Acts 52nd
        Dear    Mr.    Calvert:                    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    Legisla-
               ture 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 cer-
               tain 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 para-
               graph 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 (includ-
               ing 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 ex-
                                                                              .~’
    emption 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 pay-
    ment.    But on September  1 the new rate of $4.00 for a
    license and $1.00 for an application fee becomes     effec-
    tive. 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 is-
            sue ‘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 busi-
            ness 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 be-
        come 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 legis-
        lative history of House Bill 285 and apply the ‘rules of statutory
        construction   in order to arrive at the intention of the Legisla-
        ture.

                   After the close of the.R:egular Session of the 51st Legis-
        lature 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 clarify-
ing 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, cre-
ated additional exemptions        therefrom,    provided for exemption
certificates    and fees therefor,     and other changes, and provided
for service fees, penalties,       etc., in connection with the collec-
tion of the tax.

          House Bill 285 as submitted to the Senate contained
the customary   emergency     clause, and the writer called the at-
tention of the Committee    to the fact that if the act was passed
as an emergency    measure there might be a period up to Septem-
ber 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 adjourn-
ment 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 stat-
        utes 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      establish-
        m,ents (Sec. XVI), insurance taxes on gross premium receipts
        (Sets. XV, XVIII, and XXI), and gross receipts on motor car-
        riers (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 ascer-
        tain 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 ascer-
        taining the true intention oft the ~Legislature,   the existing condi-
        tion 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 legisla-
        tion, 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 con-
        struing any statute is to ascertain from the language used in
        the statute the intention of the Legislature,     and where the stat-
        ute is a taxing statute. the act should be construed in connection
        with other flaws relating to the assessment      and collection    of tax-
        es. 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 mani-
fested by its history and by the emergency      clause that it should
become effective as a revenue producing measure upon its ef-
fective 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.   Popham
v. Patterson,   121 Tex. 615, 51 S.W.2d 680 (1932).

          Applying these rules of statutory construction       to House
Bill 285, and bearing in mind that House Bill 3 imposed an ad-
ditional tax of 10% in practically    all of the taxing statutes amended
by House Bill 285, with certain exceptions       above noted, the con-
tinuance 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 in-
crease 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 up-
on September    1, 1951, without regard to whether the tax was paya-
ble 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 tax-
ing 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 in-
     creased 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 Legis-
lature in its passage was to raise additional revenues to meet
the necessary   expenditures    of State governm,ent,   it is our opin-
ion that the rates of the taxing statutes contained in House Bill
285 will become effective for, all purposes      as to each of the sec-
tions 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 Arti-
     cle 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 dif-
ference 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            es-
tablishments      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 ap-
plicable 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 pas-
        sage 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 remain-
        ing 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 ap-
        plication fees and exemption fees from those stores
        or mercantile    establishments     that came under the ex-
        emption classification     to Article   111 Id for the period
        September    1 to December     31, 19517”

           Since Section XVI requires that an application for ex-
        <.
emption be made by those coming within its exemptive provi-
sions and the payment of exemption fees therefor,          it also re-
quires the payment of an. application fee in connection with the ap-
plications   for exemption., $ince XVI in its entirety becomes          ef-
fective from and after September       1, 1951, exemption fees should
be collected from all classes     of stores and mercantile       establish-
ments 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 exemp-
tion 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 Sec-
     tion XVI become effec,tive covering the period, from
     September. 1, 1951 to December     31, ,1951?”
                                                                             \
           The penalty provisions     of Section XVI other than the           l\’
$5.00 service fee,_ap~-l~~~.~~~,..tn..~aewal    appl~cat~ons,~an~f-there-
fore will not attach to the a,dditional license-ffees levied~ by House
                                                                                   i
Bill 285 until after December      31, 19:,51, and then only as to renew-         !
als.  As Comptroller     you are authorizedand       empowered under the
provisions   of Secti,on 2(b) of Section XVI, House ,Bill,285,       to pro-
mulgate 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 depos-
     ited 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,.pro-
vides that all moneys collected by the Comptroller,of          Public Ac-
counts under the provisions      of the Act shall be paid into the
State Treasury;    one-fourth   of which shall be credited to the ac-
county of, the. Available  School Fund and the remainder to the ac-
count of the General Fund. Section XXV, House Bill 285, pro-
vides 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 addi-
     tional license fees for stores and mercantile             estab-
     lishments     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 Avail-
     able School Fund and the remainder              to the account of
     the General Fund in the State Treasury.

                                            Yours      very truly,

APPROVED:                                    PRICE DANIEL
                                            Attorney General
Charles D. Mathews
First Assistant
                                            By-4
Price Daniel                                       C   K. Richards
Attorney General                                          Assistant

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