                                                NE

                                                  EXAS


PRICE  DANIEL
ATTORNEYGF.NER.4,.


                                          November    17, 1948


            Hon. Get.         H. Sheppard                 Opinion No. V-718
            Cmnptrdler           of Public Accounts
           Austin,         Texas                          Re:    The applicability of the
                                                                 luxury excise tax on
                                                                 gross receipts from
                                                                 sales of radios, cosmet-
                                                                 ics, and playing cards to
                                                                 such sales by co-operative
                                                                 marketing associations.

           Dear      Mr.     Sheppard :

                            You request   an opinion upon the following      question:

                       “It has come to the attention of this department
                  that certain stores under the Marketing Association
                  Act, known as Chapter 8, Title 93, Revised     Civil
                  Statutes of Texas, ,1925, are selling radios, cosmet-
                  ics, and playing cards,   Are such stores required to
                  pay the gross receipts tax levied under Article     7047L.
                  R.C.S..  1925. I shall thank you to advise this depart-
                  ment in answer to this question.”

                      We quote below the following pertinent provisions of
            Title 93, Ch. 8,,V.C.S.,  commonly   known as “The Marketing As-
            sociation Act.”   Article 5737 of this Act provides:

                         “In order to promote, foster and encourage the
                  intelligent and orderly production,   cultivation and
                  care of citrus groves and marketing through coop-
                  eration and to eliminate speculation    and waste; and
                  to make production and distribution    of agricultural
                  products as direct as can be effectively    done be-
                  tween the producer and consumer;      and to stabilize
                  the production and marketing problems       of agricul-
                  tural products, this law is passed.”

                            Article   5738 provides   in part:

                        “The term ‘agricultural    products’ shall include
                  horticultural, viticultural,  forestry,  dairy, live stock,
                  poultry, bee, and any farm and ranch products;       . . .”
    Hon. Geo. H; Sheppard, Page 2 (V-718)



              Article   5740 provides    in part:

              “An Association    may be organized to engage in
        any activity in connection with the production, culti-
.       vation and care of citrus groves or the marketing          or
        selling of agricultural    products and citrus fruits pro-
        duced by and marketed for its members,           or in the
        harvesting,   preserving,    drying, processing,    canning,
        storing, handling, shipping or utilization thereof, or
        the manufacturing     or marketing of the by-products
        thereof; or in connection with the manufacturing,
        selling, or supplying to its members        of machinery,
        equipment or supplies;      or in the financing of the
        above enumerated activities;       or in any one or more
        of the activities  specified herein.     Provided, how-
        ever, any such activities     may extend to non-members
        and to the production, cultivation and care of lands
        owned or cultivated by them and their products lim-
        ited by Article   5738 as heretofore     amended.”

              Article   5742 provides    in part:

              “(a) To engage in any activity in connection with
        the production, cultivation and care of citrus groves
        and the marketing,   selling, harvesting,      preserving,
        drying, processing,   canning, pa.cking, storing, han-
        dling or utilization of any agricultural      products pro-
        duced or delivered to it by its members,         or the pro-:
        duction, manufacturing     or marketing     of the by-prod-.
        ucts thereof; or in connection with the purchase, hir-
        ing or use by its members      of supplies,    machinery   or
        equipment; or in the financing of any such activities;
        or in any one or more of the activities       specified in
        this Article.




             Article    5764 provides:

               “Each association    organized hereunder shall pay
         to th4 Cemmissioner      an annual license fee of, ten dol-
         lars Wit shall be exempt from all franchise      or license
         taxeg.   For filing articles   of incorporation, an asso-
         ciatioar organiaed hereunder shall pay ten dollars,
         and fer filing an amendment thereto, two dollars and
         my ccats. w

                It is observed that the foregoing   Article  5737 is merely
    a legislative    declaration of public p&icy;   that Article 5742 defines
Hon. Geo.   H. Sheppard,,   Page   3 (V-718)



the powers of such associations;   that Article   5740 defines the
purposee of such associations;   and that Article   5764 provides
for a very limited exemption from taxation of such associations,
namely, franchise  or license taxes.

            It seems quite obvious to us that the sale of radios,
 cosmetics,     and playing cards is in no way remotely connected
with the powers and purposes for which such associations             are
authoriaed.      In brief, the sale of such articles is in no way rel-
evant to the powers and purposes,        all closely allied to the pur-
 suit of agriculture,     as expressed  in the foregoing Articles     of
the statute.     That farmer members       of such associations    might
be able to purchase these articles       at the association’s    stores
upon more favorable terms than elsewhere,            if such be the case,
adds nothing to the statutory and charter powers of such asso-
ciations.     It was not the intention of the Legislature     that these
‘associations,    formed and carried on for the express purpose
of aiding the vital industry of agriculture       and those engaged in
its pursuit, should enjoy an advantage, wholly foreign to the
benevolent purposes of this legislation.

           The statute imposing a tax upon persons,    partnerships,
associations,   or corporations selling at retail new radios, cos-
metics,   and playing cards as provided in Article   7047L, V.C.S.,
is as follows:

           “Each person, partnership,   association,   or cor-
     poration selling at retail new radios or new cosmet-
     ics, shall make quarterly on the first days of January,
     April, July, and October of each year, a report to the
     Comptroller,   under oath of the owner, manager,      or if
     a corporation,  an officer thereof, showing the aggre-
     gate gross receipts from the sale of any of the above-
     nunad items for the quarter next preceding;       and shall
     at the same time pay to the Comptroller      a luxury ex-
     cise tax equal to two (2) per cent of said gross receipts
     as shown by said report.

          “Evary person, partnership,    association, or cor-
     poration, selling at retail; playing cards shall make
     quarterly  report as provided above showing the total
     number of packs or decks of such cards sold during
     the preceding quarter, and shall at the same time pay
     to the Comptroller   a luxury excise tax of five (5) cents
     per pack or deck of such playing cards so sold.

        This is clearly a taxing statute, enacted solely for the
purpose of raising reverue,  and is in no sense a regulatory meas-
ure. The Legislature   has denominated it “a luxury excise tax.”
                                                               .*




H-.    Gee.   H. Sheppard,   Pagei 4 (v-718)



The exemption from taxation accorded marketing ae~sociations
applies only to franchise      or license taxes.    In view of the prem-
ise upon which we predicate our opinion, no useful purpose
would be served to attempt to analyee what constitutes           fran-
chise, license,    and excise taxes,     The books are replete with
decisions,     by no means harmonious,      pointing out the common
characteristics     and distinctions   of these taxes.    Neither the
similarity     nor difference  between what the Legislature       has
here called an excise tax and a franchise         or license tax is
material    if, in any event, liability for the tax exists because
it falls upon those engaged in ultra vires transactiona         not
covered by the exemption expressed          in the statute,   Conven-
tional rules of statutory construction       require a strict construc-
tion of statutes exempting persons and property from taxation.
As to those transactions      outside,the   scope of the purposes and
powers of such associations,        such as the sale of radios, cos-
metics,    and playing cards, there is no reason why the tax aris-
ing from such transactions        should not apply in the same man-
ner as to other dealers in general.

           We therefore   conclude that the tax imposed by Arti-
cle 7047L, V.C.S.,    supra, should be paid by marketing asso-
ciations selling radios, cosmetics,    and playing cards-activi-
ties clearly beyond the charter powers conferred upon such as-
sociations   as defined by statute; and Article  5764 of the Market-
ing Association   Act quoted above affords no basis for exemption
from the payment of such tax.

                              SUMMARY

            Marketing associations     incorporated    under the
      terms of what is commonly known as The Marketing
      Association    Act, Ch. 8, Title 93, V.C.S.,   are not ex-
      empt from the tax imposed by Art. 7047L on radios,
      cosmetics,    and playing cards, as the sale of such
      articles   is not authorized under the terms of said
      Act; and the exemption from franchise         and license
      taxes provided in Art. 5764 of said Act does not op-
      erate to relieve such association      from the payment
      of the tax imposed by said Article.

                                         Very    truly yours

APPROVED:                       ATTORNEYGENERALOFTEXAS




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