Untitled Texas Attorney General Opinion ( 1973 )

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
imposes a tax on a profession or business, no occupational tax can be imposed
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:
p. 590
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
(Tex. Civ. App., Waco, 1949, error ref’d). In regard to the distinction be-
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
imposed are license fees. Hurt v. Cooper, supra; city
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
p. 592