Flashcards Studio

Under Sec. 133 of the Local Government Code (Common Limitations on the Taxing Powers), a city passes Ordinance No. 21-09 imposing a local tax of 5% on gross receipts earned by digital advertising platforms for online campaigns that are fulfilled within the city’s boundaries. The tax applies uniformly to all platforms operating in the city, regardless of where the platform is registered or domiciled, and bases the tax on receipts from campaigns fulfilled in the city. A platform headquartered outside the city challenges the ordinance as invalid extraterritorial taxation. Analyze: (a) Identify the controlling doctrine under Sec. 133; (b) Is the ordinance a valid exercise of the city’s taxing power given that it taxes receipts derived from campaigns fulfilled within the city? (c) If the ordinance is valid, discuss whether the city must adopt a reasonable apportionment method and how that affects uniformity.