                                                                                   569




                                 July 21, 1949


Hon. L. A. Woods                          Opinion No. V-858.
State Superint~endent
Depattm+     of Education                 Re:   The authority .of ,*mpa In-
Awtin. Texas ’                                  depende:nt School District to
                                                assess taxes on liquor on the
                                                retailer *s entire. cost includ-
                                                ing.‘Federaltaxes paid.



              Yow.reqaest.     for an opinion reads:

             ?We yo$d like .to ask ir’the Pampa Inde&dent
      gchool District. is. jus$fled.in assessing *es      ‘on liq-
     ‘.uor’in retail liq.uor, stores againgt the’entire‘cost ofthe:        ~I’
       liquor&, the dealer which includes the 6,0% ‘Federal’tax
      which. is attached to the merchandise in the’form of tax
      StX+S.“.’


              $&iop~$      of.Article   VIII of the Cptititition   p?oyides?

              ‘T+xation shall’be eqnal and ur&orm. .All prop-
      erty...    shall be taxed in proportion to its value, which
      shall be ascertained as may be.provided by law. a (Em-
      Rhasis added throughout.)

            x Section 11 of the &me +r’ficle Rrovldes:

             ‘IAnd all lands and other properiy ; :.         shall be ,,
      assessed at its -fairvalue.  . .”

            . Section 20 of .the same Article provides:
                     ._
              ‘+I0 property of any kind iti this State shall eJrer
      be assessed for ad valorem taxes at b greater value.
       than its fair cash market value nor shall any board of
       equal.izaEux ot any county or political subdivision or
      ,&%ing district within this state’.& the value of any prop-
       erty at more than its fair cash market value.”

                  Article 7147, v. C. s., provides in par&

              uPersonal property, for the purposes of taxation.
       shall be construed tominclude all goods. chattels ‘and.
Hon. L. A. ~Woods, Page 2 (Vt858)



         effects, and all moneys. credits. bonds~and other evi-
         dences.of debt owned by citizens of this State.”

               Article   7149. V. C, S.. in defining the term ‘value’ pro-
vides:

                 *The term, ‘hue and full value’ wherever~ used
          shall be held to mean ,ee. fair market value, in cash,
          at the place where the property to which the term is
          applied shall be at the time of a,ssessment, being the
         ‘pr~ice $ich could be obtained therefor’ht privates sale,
          and not at forced or: auction sale.”
                  ‘.
               Article   7174.,‘V. 9. S., provides in part:

               ‘Personal property of every description shall
         be valued at its true and full value in money.”

             .Scho.ol districts ‘do.not ~hbve the inherent or, implied
power to.@&     However, the authority to levy and collect tares for
the suppo$%‘iind maintenancei-‘of:the public’free schools has beef
conferred b’y grants contained in’t&~or&ltu&n~and           statutes.  The
taxing powers hmf~rredeon       the schooi districts include ,$be power.
to tax pe.sonal~proper.ty a5.,yep,as r.e,alt+;2 :.
           .. .
            It is clear from the &stitutional  and statutory pro+
sip% p&e; mentioned that ,the standard or basis for the valuation
of personal property for tax piuposes~ls that of the’fair cash mar-
~ketvalue of the property.3




             We now pa.ss to that par.t of yo.4~ que5tion in which you.
are primar.ily interestedi~ The legality ‘of the incbi5lon of Federal
tare5 as a part of the. fair .ma.rket value of liquor.5 stocked by re,tail
liquor dealers for ad valorem tan purposes.          ‘~

                                                  .:.
’ Tex. Con$t. Art. VII, Sec5.‘3., 3s; Art&“3I$ Sec. 10; Art. 7$15g-71
  .Sec. 2; +; Ct k;; 37 T& ~Jm..99O,‘School5; Sec;llS,

2 40 Tsr.      Jm. ‘29, Taxation;.‘Sec:.15.

3   40   Tex.’ Jur. ~148-154, Taxatio,n; ‘Seer 193~1<09:.
                                ;    ..’
Hon. L. A.. Woods, Page 3 (V-S%)



           ~. The Federal tax~stamps attached to.the merchandise of
the retailliquor dealers evi$lence,.thq’paynient ofthe:internal reve-
nue taxes on alcoholic liquors unde,r the ‘D&ed’ State&Internal Reve-
nue Laws.?     It is well’settled that’neither the.State. nor its political
subdivision, has the power to tax the property of.the. United States
or any Federal instrumentality or agency when such tax would oper- .
ate as a direct burden on the governmentbl.interest~affected.5        How-
ever, the tax on distilled spirits is ‘paid’by tlie ‘distiller or manufac-
turer as soon as it is pioduced,6 and ihe istailer neither directly
collects nor pays the internal revenue taxes on the dis~tilled spirits.

              The Supreme Court.& Georgia held in a recent opinion
that a municipality could lawfully ‘include the amount’of Federal and
State taxes as ‘an element ,in the value ,of the liquor .for tax purposes -
and that such inclusion was not a tax on the taxes already paid. Con-:
.&olidate.dDistributors, In&; v. .Gity of:Atlanta.- 193 Ga. 853. 20 m
;Ezl .(lY4L. cert; den-7   ...~.           e.court at pbge 424 said:
  ‘.      1_.    .
                ~*Suchtaxes, even though theymay-in effect have
         %een $zissed. on’ .ultimataly to’& purchaser by. an~in-
        .crease in the purchase-price covering the amount of tax,
        .werc an element of cost,..first.to the dealer and then to
         the, purchaser, by this increased amount which each was
         re’quiied to pay. Indetetinining the costto.the dealer.
         it is’+umateriai whether .he or ‘the nGnirfa~cturei.paid
         the stamp’itaxunder .the arrangement between them,.since
         in .either event the amount paid became part of the actual
         rest to the dealer. Since the City of Atlanta was.:author-
         ized under i%- charter tb levy hnd collect *an ad valorem
         tax on.all * * * persoiu$.property” (Ga.Li 1874,.-p. .122.
         Set; 25).1which amountwouId ordinarily be based on.the
         true market value in the usual course-oItFdde!(Code;
         Sec. 92-4101;. Z6: R.C;L;, .Sec. 323),$4q:s.ince,‘in ascer-
         taiping such value eveiyfact’and     circumstance bearing’
         thereon should be considered (State ex rel. Attorney Gen-
         eral v:I-lalliday, .61 Ohlo St. 352. 56 N.E,~118. 49 L.R.A.
         427). and since liquors.on sale without payment,of the tax
         required to make a sale’lawful would be illegal and value-
         less in the ordinary course of trade, but their value would

 ,.
4 U.S.C.A... .Title 26. Ch. 26, Sets.     2800-3045.         ,~

5     40 Tex. ‘Jur. 24, 31. Taxation, Sets. 11. 16; 51 Am; Jur. 278, Taxa-
      tion, Set, 218; Cooley on Taxation (4tb Ed. 1924). p. i286,Sec.  606.

6:.Parrott    and Co. v. D. S.,   156 F.,2d 943 .(C.C.A..+        1946).
 :“‘.          _’
,572

       H~n.‘L. A. Woods. Page 4 (V-858)



            : be. augme.nted to the..extent of. such a paid tax! the.City
             ‘in this case .was authorized to require that $ad.tax+%.
              zncreasiug to that extent the cost to the dealer, .should
              be 1ncLudedas an element in assessing the value of.
              the .liquor, Accordingly, we pe,titromng wholesale.deal-
              er was not entitled to deduct these amounts from the
              total. price. paid. upon its contention that s,uch an.as-
              sessment in effect compelled the. dealer, to pay a tax
              upon the ~goverplent taxes already paid. and not upon
              the; property. The apparently few pertinent decisions
              seem to support with unanimity tbls conclusion. Leh-
              manv. Grantham. 78 N-C. 115. 116 (88. 89): Williams.



                    It. is therefore cur .opinion that ,tae retail liquor, dealers
       should. not be permitted to deduct the amount of the Federal taxes ‘on
       distilled spirits; is evideqced,by ‘tax s&p5       attached to each bottle;
       in determining the valuation of personal property for the. purpose of.
       assessing ad y$y.rern taxes levied b.y,an~independent, school district.
                                      : I
                                      .S U.&&A R.Y

                   :Xhe:value of personal pr:ope&y fox tax p&poses
             is determined by the‘fair .market&lue. ‘of.~such’p$op,p-
             erty.. Tex. Con&. Art. VIII, S,e.ce.:l. ‘11, 20; Arts, -7147.:
            1.7149, 7L74, Y.. c. $3..

               . : Federal inter.nal.revenue taxes c.$lected on‘die-,
             tilled spirits held as stock in trade by retail @q&r.
             .dealers. sho.uld not be deducted from .tbe fair market
             value .of thenproperty forkad valorem tax purpose,s, :
              Consolidat.ed.Distributors. Inc. vi City of.Atlan.ta,, 193
              Gai 653, ZO.S.K.Cd 421 (1942. cert, den, 317 U.S. 662)..
                                                               ..




       ATTOREfEY GE%ZAL                                   Frank:Lake
                                                           ‘Assistant
       FL,/mM?
                                                 ).   ;
                                                                              *   . .
       7 See als’o. Si Sr,JC;-Stiaw~..~eir&i& Corp+tion   v; Cemmonweplthr
         185 Va. 1355 41 S E 2d 7b (1947       Gruen Watch .Cot v. Evatt, 143
         Ohib, St. 46i: 55 N:E:2.d 794 (194g):
