When revenue purpose of tax only secondary

In Lutz v. Araneta (78 Phil 148), the Supreme Court held that the Sugar Adjustment Act was enacted primarily under the police power of the State and designed to obtain a readjustment of the benefits derived by people interested in the sugar industry as well as to rehabilitate and stabilize the industry which constitutes one of the great sources of the country's wealth and, therefore, affects a great portion of the population of the country. Therefore, this was pursuant to non-revenue functions of taxation.

Taxes may be levied with a regulatory purpose to provide means for rehabilitation and stabilization of a threatened industry which is imbued with public interest as to be within the police power of the State. (G.R. No. 92585)

As long as a tax is for a public purpose, its validity is not affected by collateral purposes or motives of the legislature in imposing the levy, or by the fact that it has a regulatory effect. (51 Am. Jur. 381-382), or it discourages or even definitely deters the activities taxed. The principle applies even though the revenue obtained from the tax appears very negligible or the revenue purpose is only secondary. (G.R. No. L-75697, citing United States vs. Sanchez, 340 U.S. 42)

US SUPREME COURT: It is beyond serious question that a tax does not cease to be valid merely because it regulates, discourages, or even definitely deters the activities taxed. The principle applies even though the revenue obtained is obviously negligible, or the revenue purpose of the tax may be secondary. Nor does a tax statute necessarily fall because it touches on activities which Congress might not otherwise regulate. As was pointed out in Magnano Co. v. Hamilton, 292 U. S. 40, 292 U. S. 47 (1934):

"From the beginning of our government, the courts have sustained taxes although imposed with the collateral intent of effecting ulterior ends which, considered apart, were beyond the constitutional power of the lawmakers to realize by legislation directly addressed to their accomplishment."

These principles are controlling here. The tax in question is a legitimate exercise of the taxing power despite its collateral regulatory purpose and effect. (Sonzinsky v. United States, 300 U. S. 506, 300 U. S. 513-514, 1937; Hampton & Co. v. United States, 276 U. S. 394, 1928)