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Question I
I. KM Corporation, doing business in the City of Kalookan, has been a distributor and retailer of clothing and household materials. It has been paying the City of Kalookan local taxes based on Sections 15 (Tax on Wholesalers, Distributors or Dealers) and 17 (Tax on Retailers) of the Revenue Code of Kalookan City (Code). Subsequently, the Sangguniang Panlungsod enacted an ordinance amending the Code by inserting Section 21 which imposes a tax on "Businesses Subject to Excise, Value-Added and Percentage Taxes under the National Internal Revenue Code (NIRC)," at the rate of 50% of 1 % per annum on the gross sales and receipts on persons "who sell goods and services in the course of trade or business." KM Corporation paid the taxes due under Section 21 under protest, claiming that
(a)(a) local government units could not impose a tax on businesses already taxed under the NIRC and
(b)(b) this would amount to double taxation, since its business was already taxed under Sections 15 and 17 of the Code.
(a) May local government units impose a tax on businesses already subjected to tax under the NIRC? (2.5%)
(b) Does this amount to double taxation? (2.5%)
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