Case Information
*1 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 or business, no occupational tax can be imposed imposes a tax on a profession 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:
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 In regard to the distinction be- (Tex. Civ. App., Waco, 1949, error ref’d). 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 fees. Hurt v. Cooper, supra; city imposed are license 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