1


                                               R-894

            THE    A’ITORNEY    GENERAL.
                       ‘09~TEXAS



                   November 24, 1947

    Ron. George H. Sheppard
    Comptroller of Public Accounts
    Austin, Texas                  Opinion No. V-4 j$i
                                    Re:   The appllcablllty    of the
                                          1% motor vehicle use tax
                                          when automobiles are ex-
                                          changed outside Texas by
                                          Texas residents   for   use
                                          In ~the State .
    Dear Sir :
              You have requested the opinion     of this   Department
    in answer to the following  questions:
               “You will please edvise this departTent
         whether or not the 1% Motor Vehicle Use       ,x should
         be paid by e resident     of Texas who goes outside the
         State and purohases a motor vehicle,     and brings It
         back Into Texas for use upon our public highvays,
         in the following   cases:
               “1.  In regard to the 1% Motor Vehicle Use
         Tax to be charged on motor vehicles  that are pur-
         chased outside of this State by a resident of the
         State and brought Into Texas for use upon our pub-
         lic hlghvags, a motor vehicle having a value of
         $1,500.00 is evenly traded for another motor ve-
         hFcle having a value of $1,500.00,  and the resident
         of Texas brings the motor vehicle,  for which he
         traded in another State, back Into Texas for use
         upon our highways.   Should the tax be paid?
               “2.  A resident of Texas trades a motor ve-
         hlcle having a value of l,OOO.OO for a motor ve: ~”
         hlcle havin a value of t 1,500.00,   paying the&f-
         ference of 8 500.00 in cash, and brings the $1,500.00
         motor vehicle back into Texas for use upon our high-
         vags.    Must the tax be paid on the $1,500.00 motor
         vehlc le?
Hon. Geo. H. Sheppard, Page 2 (no. v-439)
                                    ,

            “3.    The resident of Texas trades a motor
     vehicle
       ___      having
                _ _     a velue of l,OOO.OO for a motor
     vehicle mvmg a value _of_ t sOO.00_    and
                                             __. receives._
     a difference     of $200.00 in casn, and brings the
     $800.00 vehiole back into Texas for use upon our
                    Must a tax be paid on the $800.00 ve-
     ;gps        *

             The answers to your questions must be governed by
the provisions    of Article VI, Chapter 184, Acts of the 48th
Legislature,    Regular 3esslon,  1941, page 269, known as the
“Omnibus Tax Bill” and codified     as Artlole 7047k, V. C. 3.
The pertinent    ,~seatlons OS the above Article are as follovs:
           “Sectlon 1. (a)   There Is hereby levied a tax
     upon every retail   sale of every motor vehicle sold
     in this State, such tax to be equal to one (1) per
     cent OS the total consideration    paid or to be paid
     to the seller  by the buyer, which consideration      shall
     include the amount paid or to be paid SrcPsaid motor
     vehicle and all accessories   attached thereto at the
     time OS the sale, whether such consideration       be in
     the nature of cash, credit,    or exchange of other prop-
     erty, or a combination OS these.     In the event the
     consideration  received b7 the seller    Includes any
     tax imposed by the Federal Government, then such
     Federal tax shall be deducted from such consldera-
     tlon for the purpose of computing the amount of tax
     levied by this Article   upon suah retail    sale.
            “(b)  In all cases OS retail  sales Involvingthe
     exchange of motor vehicles,    the party transferring
     the title   to the motor vehicle having the greater
     value shall be considered the seller,     and no tax is       .
     imposed upon the transfer    of a motor vehicle traded
     In upon the purchase price OS some other sotor ve-
     hlcle.
            “Sec. 2.. There fs hereby levied a use tax upon. ‘.
      every motor vehicle purchased at retail     mts.$de        ~‘,
      of this State and brought into this State for use upon
      the public highways thenof    by a resident   OS this State
      or by Sims OF c
      In this State.
      cent of the tota
      said vehicle et said retail   sale.  The tax shall be the
      obligation  of and be paid by the persod, firm, or Oorpora-
      tion operating said motor vehicle upon the public hlgh-
      ways of this State.
                                  .
Hon. Gee., Ii. Sheppard - Page 3 (Ho. V-439)


            ‘Sea. 3.     (a)  The term ‘aale’ or ‘saleaf as
     herein used shall Include lnstalment and credit
     sales, and the exohange OS property,        as well as the
     sale thereof for money, every closed transaction
     constituting    .a sale.    The transaotlon  whereby the
     possession   OS property Is transferred      but the seller
     retains title     as security   for the payment OS the
     price shall be deemed .a sale.
            “(b)    The term ‘retail sale’ or ‘retail aales’
     aa herein used shall Include all sales of motor ve-
     hicles    except those whereby the purchaser acquires
     a motor vehiole for the exclusive     purpose of resale
     and not for use.
            “(0)  The term ‘mOtOr vehicle’ as herein used
     shall mean every self-propelled    vehicle   In, or by
     which, any person or property Is or may be transported
     upon a public highway, except devices moved only by
     human power or used exclusively     upon stationary  rails
     or tracks; but this definition    shall not Include trao-
     tors used exclusively   to pull farm machinery or rosd-
     bulldlng    mschinery.
           “Sec. 4.   The license   fees and taxes imposed by
     or under this Article    shall be in addition  to any and
     all license  fees and taxes imposed by or under any other
     law of this State.
            “Se0 . 5. The taxes levied la this Article     shall
     be oollected    by the Assessor   and Collector of Taxes of
     the county in which any such motor vehicle      is first
     registered    or first transferred   after such a sale; the
     Tax Collector    shall refuse to accept for registration
     or for transfer any motor vehicle until the tax there-
     on is paid.
             ‘@Whena tax becomes due on a motor vehicle pur-
      chased outside of this State and brought into this
      State for use upon the highvays, the person, firm, or
      corporation   operating said motor vehicle     upon the pub-
      lic  hlghvays of this State shall   pay the tax Imposed
      by Section 2 to the Tax Collector    of the county In
      which such motor vehicle    is to be registered.     The tax
      shall be paid at the time application     Is q ade.Sor reg-
      istration   of said motor vehicle,  and the Tax Collector
      shall refuse to issue the registration      license  until
      the tax Is paid.


                                        .
Hon. Geo. If. Sheppard, Page 4         (Ho. V-439)


            %ec.    5rJ.  At the time the tax herein
      levied is paid to said Tax Collector         the
      pwchaser shall file        with aald Tax Golleotor
      the affidavit      OS such DurChrrSer (or if a
      corporation    the atfldavlt    of the President,
      Vice President,      Secretrry,   or Manager) set-
      ting forth the then value in dbllars         of the
      total con&erafi
      oelved by such seller       or his nominee. whether
      In money or other thing OS value.”          (Emphas,ls
      added)
              It vi11 be noted that the situations  referred  to
in your three questions all Involve the exchange of motor
vehicles;     and if these exchange8 had taken plrce within the
State OS Texas, the tax would be based upon Section 1 of
the Act, being a “sales” tax.      However, the tax imposed by
Section 2 1s.a “use” tax as is disclosed      by the speolflc
verbiage    above emphasised and which Is based upon the “total
consideration     paid or to be paid for said vehicle at such
retail    sale.”
           ,Ho provision        is contained in Section 2 similar to
Section l(b),       although the term “retell       sale” is used without
any quallSlcatlon        throughout the act except a8 qualified           in
Section 1. Sir&e Section 1 Imposes a “sales” tax and Section
2 imposes a “use” tax, each must be viewed in the light of
the intention       of the:Leglslature      at the time the law was en-
acted.
                             I.
                            .,.
            Both thb sa,les. tax and the use tax are revenue                   .
measureg.    HOWeW?rj      .lt 18 a well-known principle       of law thst
the essential’ bases for-,these two taxes are entirely              different.
The sales tax is based upon the sale of the property within
the state, the tax liability           accruing  at the time of the actual
sale of the property.           The use tax Is based upon the use within
the state of the property,          vhioh 3.s purchased outside of the
state, and the tax liability           accrues  upon the first     use of the
property within the state.           These principles    of law are too
well known to necessitate          the citation    of authorities.
           IS the Legislature   had intended to apply the methods
of lscertalnlng   the bait3 of taxes due upon the retail   sales
InVolved In the exchs e of property,      as was done by the en-
aotment of Section l(b7     to the use tax levied by Section 2,
it could have easily edcted     Section 2(b) In similar terms cr
if the Legislature   had desired to apply the same basis where
the exchange of property Is Involved as to both the sale8 and
Eon. Gee. Ii. Sheppard,    Page 5 (lo.   V-439)


use taxes, It could have included it in the general def-
initions  to Abe Sound in Section 3 OS the Act.     However,
it did neither of these things; therefore,      the presump-
tion must exist that the method OS oomputatlon of all re-
tall sales involved the exchange of property prescribed
In Section l(b) Is applicable    only to retail   sales OS
motor vehicles   sold In this State as provided In Sec. 1
(6).
             Section 5a provides that when the tax herein
levied,   i.e.,   both under Sections 1 and 2, Is paid to the
tax collector,     the purchaser  shall file with the tax col-
lector an affidavit     setting forth “the then value in dol-
lars of the total consideration      received or to be recelv-
ed by such seller     or his nominee, either In money or
other thing of value.”
           Based upon the foregoing construction  OS the Act
and psrtlcularlg  the emphasized portion of Section 5a,
supra, the answers to your questtons are as Sollovs:
          1.    The 1% motor vehicle use tax should be paid
on the sum’of   $1,500.00,   being the total consideration   re-
celved by the   seller   In payment of the motor vehicle   to be
used upon the   highways of Texas.
          2.    The 1% motor vehicle use tax should be paid
on the sum of   $1.500.00.  being the total consideration   re-
ceived by the   seiier  In-paymekt of the motor vehicle   to be
used upon the   highways of Texas.

          3.    The 1% motor vehicle use tex should be paId
on the sum of   $800.00, being the total consideration  re-
celved by the   seller  in payment of the motor vehicle to be
used upon the   highva ys of Texas.
                          SUMMARY
            A resident   of this State, who goes without
      the State and there trades his motor vehicle
      for another motor vehicle which he brings Into
      this State for use upon the public highways
      thereof,   is required to pay the use tax Imposed
     Hon. Geo. Ii. Sheppard, page         6 (V-439)



              by Section 2, Art. 7047k V.C.S.,   upon such
              vehicle  calculated on the total conslden-
              tlon, measured In dollars,  received by the
              person from whom he acquired such vehicle.
                               Yours very truly
                           ATTORRHY
                                  GXVRRAL9p, ‘PEXILS.


                                           C. K:. Richards
                                                 AssLstant




          .                 ATTORNEY
                                   GENERAL




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