Flashcards Studio

A city enacts Ordinance No. 2047-03 under Secs. 130 and 132 of the Local Government Code imposing a local business tax on cloud-kitchen platforms operating within its jurisdiction. The tax base is 0.29% of annual gross receipts from orders processed in the city. The ordinance creates two tiers: large platforms with gross receipts over ₱250,000,000 taxed at 0.42%; small platforms with receipts at or below ₱250,000,000 taxed at 0.22%. Platform Z earns ₱260,000,000 and pays 0.42%; Platform W earns ₱240,000,000 and pays 0.22%. Platform W challenges the two-tier classification as arbitrary and discriminatory, arguing it bears no rational relation to the city’s objective of promoting local cloud-kitchen competition and administrative feasibility. The city defends the law as reasonably related to promoting local commerce and revenue collection. (a) Identify the controlling doctrine governing local tax classifications under Secs. 130 and 132 and the test to apply. (b) Distinguish the controlling rule from other possible tax classifications. (c) Apply to Platform W’s challenge and state the likely outcome and rationale.